US STOCKS-Nasdaq trims losses as Facebook Microsoft gain

* Facebook up after announcing changes to privacy settings

* Tesla slumps after U.S. opens probe on fatal crash

* Indexes set for second straight month of losses

* Dow up 0.56 pct, S&P up 0.37 pct, Nasdaq down 0.06 pct (Updates to early afternoon)

By Sruthi Shankar

March 28 (Reuters) - The Nasdaq Composite index pared losses on Wednesday as gains in Microsoft and Facebook helped lessen the impact of Amazon’s losses.

The online retailer’s stock fell about 3.6 percent after reports that President Donald Trump was looking to target the company by changing its tax treatment.

Netflix, another consumer discretionary stock, was off 4.4 percent.

Facebook was up 1.2 percent after days of losses that wiped out more than $100 billion in market value.

The social network said on Wednesday it was giving users more control over their privacy by making data management easier and redesigning the settings menu, following a global outcry over data privacy issues at the company.

Microsoft was up 1 percent and helped prop up the S&P 500 technology index.

“Tech and discretionary stocks have been strong. Those are two sectors that are up year-to-date and what we’re seeing is profit-taking in the quarter-end,” said Michael O’Rourke, Chief Market Strategist, Jonestrading, Greenwich, Connecticut.

At 12:41 p.m. ET (1641 GMT) the Dow Jones Industrial Average was up 134.09 points, or 0.56 percent, helped by gains in financial shares.

The S&P 500 was up 9.84 points, or 0.37 percent and the Nasdaq Composite was down 4.18 points, or 0.06 percent, at 7,004.63.

The main indexes are on track for their second straight month of losses, hurt by fears of a trade war between the United States and China as well as rising U.S. interest rates.

Comments from top officials of the two countries had given a sense that they would negotiate over President Donald Trump’s move to impose tariffs on Chinese goods.

However, China’s state-run Global Times reported on Wednesday that the country was expected to soon announce a list of retaliatory tariffs on U.S. exports.

Tesla dropped about 6 percent after the U.S. government said it would investigate a fatal crash and vehicle fire of a Model X in California.

Lululemon Athletica surged 11 percent after the Canadian athletic apparel maker posted a surprisingly strong fourth-quarter profit and forecast further growth in the first quarter.

Advancing issues outnumbered decliners on the NYSE by 1,647 to 1,178. On the Nasdaq, 1,421 issues fell and 1,413 advanced. (Reporting by Sruthi Shankar and additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva)

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