US STOCKS-Stimulus jitters dent Wall St's early gains; Nasdaq, S&P at records

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* Cyclical stocks slip, defensives advance
* Tech, consumer discretionary sectors hit records
* Dow down 0.12%, S&P 500 up 0.36%, Nasdaq up 0.69%

(Recasts with S&P, Nasdaq at record levels)
By Chuck Mikolajczak
NEW YORK, Jan 25 (Reuters) - Major U.S. averages on Monday
closed off their best levels of the day, although the S&P and
Nasdaq still finished at record levels, as concerns over the
timing and scope 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. Stocks moved lower after Democratic Majority Leader
Chuck Schumer cautioned a stimulus bill may not pass for four to
six weeks. 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."
The Dow Jones Industrial Average .DJI fell 36.98 points,
or 0.12%, to 30,960, the S&P 500 .SPX gained 13.89 points, or
0.36%, to 3,855.36 and the Nasdaq Composite .IXIC added 92.93
points, or 0.69%, to 13,635.99.
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.
Still, a late push higher sent both the S&P and Nasdaq to
closing records, after Biden revealed his plan to boost domestic
manufacturing through U.S. government purchases. Microsoft, scheduled to report results on Tuesday, rose
1.58% 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 and communication services
.SPLRCL closed at record levels.
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. Its shares
managed to shrug off early losses and ended the session up
0.21%. Gamestop GME.N shares closed 18.12% 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.
Declining issues outnumbered advancing ones on the NYSE by a
1.33-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favored decliners.
The S&P 500 posted 28 new 52-week highs and no new lows; the
Nasdaq Composite recorded 314 new highs and 4 new lows.
Volume on U.S. exchanges was 16.37 billion shares, compared
with the 13.21 billion average for the full session over the
last 20 trading days.