US STOCKS-Stimulus jitters dent Wall St's early gains; Nasdaq hits record

(For a Reuters live blog on U.S., UK and European stock
markets, click LIVE/ or type LIVE/ in a news window)
* Cyclical stocks slip, defensives advance
* Tech, consumer discretionary sectors hit records

(Updates to market close)
By Chuck Mikolajczak
NEW YORK, Jan 25 (Reuters) - Major U.S. averages on Monday
closed well off their best levels of the day, which included a
Nasdaq record, as concerns over the timing and size of fiscal
stimulus dented optimism at the start of a week of earning
reports from mega-cap companies.
Investors turned their focus to the U.S. Senate, which is
aiming to pass COVID-19 relief legislation before former
President Donald Trump's impeachment trial begins in early
February. Officials in President Joe Biden's administration are trying
to head off Republican concerns that his $1.9 trillion pandemic
relief proposal is too expensive. "What is really underpinning the market is the stimulus –
that is what it is all about," said Joe Saluzzi, co-manager of
trading at Themis Trading in Chatham, New Jersey.
"The market loves money, whether it is fiscal or monetary,
and right now you have both. So if you do pull the rug out from
stimulus plans, that might be a problem, but they aren't going
to do that."
Unofficially, the Dow Jones Industrial Average .DJI fell
33.77 points, or 0.11%, to 30,963.21, the S&P 500 .SPX gained
14.39 points, or 0.37%, to 3,855.86 and the Nasdaq Composite
.IXIC added 95.76 points, or 0.71%, to 13,638.82.
After climbing as much as 1.4% to an intraday record, the
Nasdaq gave back a good portion of its gains, with the so-called
"stay-at-home" winners, including Microsoft Corp MSFT.O ,
Facebook Inc FB.O and Apple Inc AAPL.O , rising after upbeat
results from Netflix Inc NFLX.O last week.
Microsoft, scheduled to report results on Tuesday, rose as
Wedbush raised its price target on the software maker's stock on
expectations of further growth in its cloud business for 2021.
The S&P 500 sectors housing large-cap growth stocks,
including technology .SPLRCT , consumer discretionary .SPLRCD
and communication services .SPLRCL , hit record highs early in
the session.
Wall Street's main indexes hit all-time highs last week on
optimism for a more complete economic reopening and smooth
vaccine distribution across the country, which is suffering from
more than 175,000 new COVID-19 cases daily with millions out of
work.
Earlier on Monday, drugmaker Merck & Co MRK.N said it
would stop development of its two COVID-19 vaccines.
Gamestop GME.N shares closed higher in volatile trading in
a session that saw the video game retailer climb as high as
$159.18 and drop as low as $61.13 on the day as investors rushed
to cover short bets. Sectors that have performed well on hopes for an economic
rebound, such as financials .SPSY , energy .SPNY and
materials .SPLRCM , led declines on Monday, while defensive
utilities .SPLRCU , consumer staples .SPLRCS and real estate
.SPLRCR outperformed. Weakness in financial names such as
Goldman Sachs GS.N and American Express AXP.N served to keep
the price-weighted Dow in negative territory.