US STOCKS-Wall St cuts gains as tech stocks reverse course

* Biotech shares slip for second day this week

* Consumer confidence hits six-year high in March

* Walgreen (NYSE: WAG - news) , McCormick shares rally after results

* Dow up 0.3 pct; S&P 500 up 0.2 pct; Nasdaq off 0.2 pct (Updates to midday)

By Angela Moon

NEW YORK (Frankfurt: HX6.F - news) , March 25 (Reuters) - U.S. stocks sharply trimmed gains by midday on Tuesday as many of the market's momentum stocks turned negative.

Offsetting a strong reading on consumer confidence that had boosted the market earlier, the tech-heavy Nasdaq index led the market lower for a second day this week. The Nasdaq Biotechnology Index fell 1.2 percent after rising more than 2 percent earlier.

Selling pressure has also intensified of late as valuations reach levels not seen in almost a decade. The forward price-to-earnings ratio on the S&P 500 recently hit its highest since early 2005, and is trading above the historical median, according to Thomson Reuters IBES data.

So-called momentum stocks fell sharply near midday, including Netflix (NasdaqGS: NFLX - news) , down 3 percent at $367.50, and First Solar Inc, down 4 percent at $70.93. Netflix has declined for 14 of the past 15 sessions, falling almost 19 percent over that stretch.

Biotech shares slipped, including Regeneron Pharma (Berlin: RGO.BE - news) , down 1.3 percent at $302.78, and Biogen Idec (NasdaqGS: BIIB - news) , down 2.2 percent at $305.84.

"Anecdotally, it does seem that when there's upside momentum, people jump into risky names, and then they bail fairly quickly when they have concerns," said Randy Frederick, managing director of active trading for Charles Schwab (Frankfurt: SWG.F - news) in Austin, Texas.

"I wouldn't say that the market at large is at risk of falling just because these did. There's nothing on the S&P that would make people concerned from a technical perspective. We're well above the 50-day moving average and haven't touched the 200-day in years. So far, fund flows indicate that people aren't leaving equities."

The Dow Jones industrial average was up 49.55 points, or 0.30 percent, at 16,326.24. The Standard & Poor's 500 Index was up 3.30 points, or 0.18 percent, at 1,860.74. The Nasdaq Composite Index was down 6.83 points, or 0.16 percent, at 4,219.55.

The Dow had traded at an intraday high of 16,404.46, while the S&P 500 had climbed as high as 1,871.87 earlier in the session and the Nasdaq had hit a session high at 4,274.321..

The CBOE Volatility Index or VIX, Wall Street's so-called fear gauge, was down 1.1 percent at 14.92.

Data showed consumer confidence rose more than expected in March, climbing to its highest level since January 2008. The report was the latest in a string of positive reads on the U.S. economy that supported theories that softness early this year was related to bad weather and not weakening fundamentals.

Investors continued to watch global issues cautiously. On Monday, major stock indexes fell on concerns that the crisis in Ukraine could escalate, pushing traders to take profits in such high-flying sectors as biotech and Internet shares. Those names rebounded on Tuesday, with some of Monday's biggest decliners topping the list of advancing S&P 500 names.

In the latest on the housing market, U.S. single-family home prices rose slightly more than expected in January, according to the S&P/Case-Shiller composite index of 20 metropolitan areas, while new home sales fell more than expected in February.

In company news, Walt Disney Co agreed to buy Maker Studios, one of YouTube's largest networks, for $500 million, though the price tag could rise to $950 million if the company hits certain performance milestones. Shares of the Dow component slid 0.9 percent to $78.78.

Shares of Carnival Corp slumped 5.3 percent to $37.91 as one of the S&P 500's biggest decliners after the cruise operator warned that it might post a loss in its current quarter. (Editing by Jan Paschal)