US STOCKS-Nasdaq scales new high ahead of big-tech earnings; cyclicals lag

* Investors optimistic about mega-cap company earnings
* Cyclical stocks slip in early trading
* GameStop shares surge in short-squeeze
* Merck falls after ending COVID-19 vaccine program
* Dow down 0.55%, S&P 500 up 0.26%, Nasdaq surges 1.25%

(Updates prices to open)
By Devik Jain and Shreyashi Sanyal
Jan 25 (Reuters) - The Nasdaq index hit a record high on
Monday as investors remained optimistic at the start of a busy
week of earnings from mega-cap technology companies, while
economy-sensitive cyclical stocks gave back recent gains.
The so-called "stay-at-home" winners including Microsoft
Corp MSFT.O , Facebook Inc FB.O and Apple Inc AAPL.O rose
between 1.7% and 4.3%, following upbeat results from Netflix Inc
NFLX.O last week.
Microsoft, scheduled to report results on Tuesday, rose 0.7%
as Wedbush raised its price target on the software maker's stock
on expectations of further growth in its cloud business for
2021. "All eyes are on tech as it now has a chance to regain some
of the strength that it lost in recent months," said Thomas
Hayes, chairman of Great Hill Capital in New York.
The S&P 500 technology sector .SPLRCT rose 1.1%, while
Tesla Inc TSLA.O added 6.1% ahead of its quarterly results on
Wednesday.
Earnings for S&P 500 companies are expected to rise 23.7%
this year after falling 14.1% in 2020, according to Refinitiv.
Investors were hopeful that officials in President Joe
Biden's administration could head off Republican concerns that
his $1.9 trillion pandemic relief proposal was too expensive,
even as lawmakers from both parties agreed that getting the
COVID-19 vaccine to Americans should be a priority. "We're focused on two things this week, whether big-tech can
deliver, which we are pretty optimistic about, and whether
Congress can move ahead with the stimulus package that the
market is anticipating," Hayes said.
Wall Street's main indexes touched record highs last week on
hopes of a full economic reopening and efficient distribution of
vaccines across the country, which is suffering from more than
175,000 new COVID-19 cases a day with millions out of work.
However, the Dow Jones Industrial Average index .DJI and
the S&P 500 .SPX struggled to keep up with the tech-heavy
Nasdaq's rally, as recent gainers including sectors such as
financials .SPSY , energy .SPNY , industrials .SPLRCI and
materials .SPLRCM all took a beating on Monday.
At 10:00 a.m. ET the Dow Jones Industrial Average .DJI
fell 172.22 points, or 0.55%, to 30,824.76, the S&P 500 .SPX
gained 10.10 points, or 0.26%, to 3,851.52, and the Nasdaq
Composite .IXIC gained 169.61 points, or 1.25%, to 13,712.89.
Merck & Co Inc MRK.N fell 0.8% after the drugmaker said it
would stop development of its two COVID-19 vaccines citing
inferior immune responses. Advanced Micro Devices Inc AMD.O added 1.3% after RBC
raised its price target on the chipmaker's shares. Videogame retailer GameStop Corp GME.N surged 52.2%, after
having already gained about 250% since the beginning of 2021.
Traders noted that the jump in shares could be short-sellers
quickly buying back into the stock to cover potential losses and
retail investors piling in to benefit from the surge.
Declining issues outnumbered advancers for a 1.3-to-1 ratio
on the NYSE and matched them on the Nasdaq.
The S&P 500 posted 19 new 52-week highs and no new low,
while the Nasdaq recorded 356 new highs and six new lows.