(Adds U.S. market open, byline, dateline; previous LONDON)
* Pharma stocks fall after Trump says he will cut drug prices
* Rate expectations underpin dollar, eyes on trade data
* Oil prices firm, in tight range as stockpile data awaited
By Herbert Lash
NEW YORK, March 7 (Reuters) - Wall Street stocks slipped on Tuesday, led by a decline in healthcare stocks after a tweet from U.S. President Donald Trump on the need to lower drug prices, while expectations the Federal Reserve will raise interest rates supported the U.S. dollar.
Shares of large U.S. pharmaceutical and biotechnology companies sold off after President Donald Trump said he was working on a "new system" to reduce prices in the industry. Shares of Pfizer Inc (NYSE:PFE) PFE.N and Merck (NYSE:MRK) & Co MRK.N shed 1.1 percent, and Amgen Inc AMGN.O dropped 1.4 percent. U.S. dollar .DXY edged up 0.09 percent against a basket of six major trading currencies and gained 0.11 percent against the Japanese yen JPY= ahead of the Fed's meeting next week.
The monthly U.S. jobs report, due on Friday, is expected to show an increase of 186,000 jobs, probably enough to push the Fed to raise its base rate again for the second time in three months. Treasury yields rose on Tuesday, supporting the U.S. dollar, as data showed the U.S. trade deficit grew in January to its widest monthly level in nearly five years. benchmark 10-year Treasury yield US10YT=RR was up nearly 2 basis points at 2.511 percent, while two-year yield US2YT=RR edged up 1 basis point at 1.322 percent.
The market is taking in stride, unlike past years, expectations the Fed will raise rates, said Rahul Shah, chief executive of Ideal Asset Management in New York.
"As long as we keep getting macroeconomic data that's supportive of a rate hike we're going to continue to see stocks rally," Shah said. "If financials continue to rally with higher rates and industrials rally with better economic data, that could be enough to power the market higher," he said.
The Dow Jones Industrial Average .DJI fell 2.73 points, or 0.01 percent, to 20,951.61. The S&P 500 .SPX lost 3.04 points, or 0.13 percent, to 2,372.27 and the Nasdaq Composite .IXIC added 1.76 points, or 0.03 percent, to 5,850.93.
The S&P 500 healthcare index .SPXHC dropped 0.65 percent, setting it up for its worst day in more than five weeks.
Stocks in Europe traded slightly lower as weak corporate earnings and the biggest fall in German industrial orders since the depths of the global financial crisis weighed on sentiment.
Europe's FTSEurofirst index .FTEU3 of the 300 leading regional shares fell as much as 0.31 percent .FTEU3 , pulled down by healthcare and financial stocks.
MSCI's all-country world stock index .MIWD00000PUS fell 0.21 percent.
Brent crude LCOc1 added 17 cents at $56.18 a barrel while U.S. West Texas Intermediate (WTI) crude CLc1 rose 19 cents at $53.39. Both benchmarks had traded in negative and positive territory since the start of the day's Asian session.
U.S. Treasury yields rose with the 30-year yield at its highest in more than a month as investors made room for this week's supply of coupon-bearing government debt led by $24 billion worth of three-year notes.
Investors also reduced their bond holdings in anticipation of a rate increase from the Fed's policy meeting next week.
Benchmark 10-year Treasury notes US10YT=RR fell 6/32 in price to yield 2.5142 percent, while the 30-year yield US30YT=RR was up nearly 2 basis point at 3.116 percent after touching its highest level since Feb. 3, Reuters data showed.
Gold slipped 0.64 percent to $1,217.70 an ounce GCcv1 .