US STOCKS-Nasdaq tumbles as investors dump tech megacaps

* All 11 S&P 500 sectors trading in the red
* CVS Health gains on raising 2021 profit outlook
* Indexes down: Nasdaq 2.02%, Dow 0.75%, S&P 1.07%

(Adds comments, updates prices to open)
By Shreyashi Sanyal and Sruthi Shankar
May 4 (Reuters) - The Nasdaq index fell more than 2% on
Tuesday as steep declines in megacap growth stocks led Wall
Street below record trading levels, with investors seeking
shelter in more defensive parts of the market.
Highly valued technology companies including Microsoft Corp
MSFT.O , Alphabet Inc GOOGL.O , Apple Inc AAPL.O , Amazon.com
Inc AMZN.O and Facebook Inc FB.O fell between 0.6% and 2.4%.
All of the 11 major S&P 500 sectors fell in early trading,
with technology .SPLRCT , communication services .SPLRCL and
consumer discretionary .SPLRCD falling more than 1.5% each.
The defensive consumer staples .SPLRCS , utilities
.SPLRCU and real estate .SPLRCR sectors fell the least.
"When you're at all-time highs and the market pulls back,
the ones that tend to lead to the downside are often the
high-beta stocks such as technology," said Randy Frederick, vice
president of trading and derivatives for Charles Schwab in
Austin, Texas.
"When we have pauses or pull backs people tend to move out
of growth stocks into more defensive names."
Copious stimulus measures, speedy vaccination drives and the
Federal Reserve's accommodative policy stance have spurred a
strong rebound in the U.S. economy and pushed Wall Street to
record highs this year. The so-called "pandemic winners",
however, have recently started to fall out of favor.
U.S. and European stock markets also saw a sudden 0.5% drop
in hefty volumes around 7:30 a.m. ET on Tuesday, leaving traders
scratching their heads and one calling it a "micro flash crash".
At 10:03 a.m. ET the Dow Jones Industrial Average .DJI was
down 256.42 points, or 0.75%, at 33,856.81, the S&P 500 .SPX
was down 45.00 points, or 1.07%, at 4,147.66, and the Nasdaq
Composite .IXIC was down 280.58 points, or 2.02%, at
13,614.54.
Among other stocks, CVS Health Corp CVS.N gained 2.8% on
reporting a first-quarter profit above analysts' estimates and
raising its 2021 profit forecast. First-quarter earnings have been largely upbeat. Average
profits at S&P 500 companies are expected to have risen 46% in
the quarter, compared with forecasts of a 24% growth at the
start of April, according to IBES data from Refinitiv.
Investors also waiting for data through the week, including
the Labor Department's non-farm payrolls data, slated to be
released on Friday. The report is expected to show a rise in job
additions in April.
Declining issues outnumbered advancers for a 3.19-to-1 ratio
on the NYSE and a 5.83-to-1 ratio on the Nasdaq.
The S&P index recorded 42 new 52-week highs and no new low,
while the Nasdaq recorded 45 new highs and 59 new lows.