* Dow posts biggest intraday point drop since May 17
* Rising bond yields weigh; Fed meet, Trump speech eyed
* Health stocks hit by Amazon, JPMorgan, Berkshire team-up
* VIX hits highest level since August 2017
* Indexes down: Dow 1.26 pct, S&P 0.97 pct, Nasdaq 0.81 pct (Updates to early afternoon)
By Tanya Agrawal
Jan 30 (Reuters) - Rising bond yields and a sell-off in healthcare shares sent the U.S. stock market sliding on Tuesday, with the Dow Jones Industrial Average’s 352-point tumble its steepest in eight months.
Shares of healthcare-related companies sank after Amazon.com , Berkshire Hathaway and JPMorgan said they plan to form a venture aimed at lowering healthcare costs for their U.S. employees.
The S&P health sector tumbled 1.8 percent, the most among the 11 major sectors. Health insurer UnitedHealth’s 3.2 percent drop was the most on the Dow, while Express Scripts’ 6.2 percent decline weighed the most on the Nasdaq and S&P.
U.S. Treasury long-dated yields rose in choppy trading ahead of a slew of events this week such as a Federal Reserve monetary policy decision which could help shed more light on the outlook for interest rates this year.
The Fed’s ongoing two-day meeting will be watched for comments that could raise the likelihood of rates being hiked four times this year, instead of three, especially as inflation readings have firmed in recent readings.
“Investors are getting a bit worried about inflation which has led some people to believe that the Fed might be more aggressive when it comes to raising rates,” said Robert Pavlik, chief investment strategist at SlateStone Wealth.
At 12:33 p.m. ET (1733 GMT), the Dow Jones Industrial Average was down 333.27 points, or 1.26 percent, at 26,106.21. The index fell as much as 352 points, its steepest intraday point drop since May 17.
The S&P 500 was down 27.82 points, or 0.97 percent, at 2,825.71 and the Nasdaq Composite was down 60.17 points, or 0.81 percent, at 7,406.33.
The CBOE Volatility Index, the most widely followed gauge for investors’ “fears”, rose to as much as 15.42, its highest level since August.
“I think despite this selloff, all indications point to a firming economy and I do expect to see some bargain hunters step in soon,” Pavlik said.
President Donald Trump’s first State of the Union address later on Tuesday will be monitored for his comments on a $1.7 trillion infrastructure spending plan and on trade.
Among earnings, Pfizer shares fell 3.3 percent. They had risen about 2 percent premarket, aiming for their 2002 highs, after the company’s strong results and forecast.
Harley-Davidson dropped 8.1 percent after the motorcycle maker forecast a drop in shipments this year.
Apple was down another 1.1 percent on fears that the company will cut production of the iPhone X.
Declining issues outnumbered advancers on the NYSE by 2,388 to 539. On the Nasdaq, 2,201 issues fell and 691 advanced.
The S&P 500 index showed 14 new 52-week highs and four new lows, while the Nasdaq recorded 35 new highs and 37 new lows. (Reporting by Tanya Agrawal in Bengaluru; Editing by Savio D‘Souza)