US STOCKS-IBM, United Tech drag Dow; Apple earnings on deck

* IBM (NYSE: IBM - news) down after revenue falls for 13th straight quarter

* United Technologies cuts full-year profit outlook

* Microsoft (NasdaqGS: MSFT - news) , Yahoo (NasdaqGS: YHOO - news) fall after results; Apple (NasdaqGS: AAPL - news) on tap

* Indexes down: Dow 1.00 pct, S&P 0.43 pct, Nasdaq 0.21 pct (Updates to close, adds Microsoft and Yahoo shares)

By Chuck Mikolajczak

July 21 (Reuters) - U.S. stocks fell on Tuesday in the wake of results from IBM and United Technologies that dampened early optimism over earnings season ahead of quarterly profits from tech giants including Apple and Microsoft.

The Dow fell 1 percent, with IBM and United Tech contributing around 118 points to the 181-point drop. The decline marked the biggest percentage decline in about two weeks for the blue-chip index.

IBM's shares were down 5.9 percent to $163.07, a day after the company's revenue dropped for the 13th consecutive quarter and fell short of analyst expectations.

Fellow Dow component United Technologies tumbled 7 percent to $102.71 and was the worst performer on the Dow after cutting its full-year profit outlook for the third time this year.

"For the first time in a while, fundamentals seem to be driving the action today in an otherwise very quiet macro backdrop and probably will continue to do so for the next couple of weeks as we work through the heart of earnings season," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.

After the closing bell, Microsoft lost 3.5 percent to $45.60 and Yahoo shed 1.8 percent to $39 with Apple (Swiss: AAPL.SW - news) still expected to report. Strong earnings from technology companies have helped drive gains on the Nasdaq, which has outperformed both the Dow and S&P 500 in July.

While markets are near record highs, June-quarter earnings of S&P 500 companies are expected to dip 1.9 percent, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data. That marks an improvement from the expected decline of 3 percent on July 1, but well below the 5.9 percent gain forecast on Jan. 1.

So far, 70 percent have reported earnings above analyst expectations, above the 63 percent average beat rate since 1994.

However, 53 percent have topped revenue forecasts, below the 61 percent average beat rate since 2002. U.S. companies are expected to post their worst sales decline in nearly six years in the second quarter, in part due to the strong dollar that reduces the value of U.S. companies' overseas income.

The Dow Jones industrial average fell 181.12 points, or 1 percent, to 17,919.29, the S&P 500 lost 9.07 points, or 0.43 percent, to 2,119.21 and the Nasdaq Composite dropped 10.74 points, or 0.21 percent, to 5,208.12.

Apple shares weighed on the Nasdaq, down 1 percent at $130.75. The company experienced an outage with its App Store, Apple Music, iTunes Store and some other services for more than three hours.

NYSE declining issues outnumbered advancing ones 1,841 to 1,217, for a 1.51-to-1 ratio on the downside; on the Nasdaq, 1,630 issues fell and 1,130 advanced for a 1.44-to-1 ratio favoring decliners.

The S&P 500 posted 29 new 52-week highs and 26 new lows; the Nasdaq Composite recorded 94 new highs and 114 new lows.

Volume was light, with about 6.05 billion shares traded on U.S. exchanges, below the 6.54 billion average so far this month, according to BATS Global Markets. (Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)