US STOCKS-Wall St rises on big-tech strength, shrugs off bleak data

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* Weekly jobless claims dip, but still remain high
* U.S. economy contracts in 2020; worst performance since
1946
* Tesla slips after disappointing results
* American Airlines joins retail trading frenzy
* Indexes up: Dow 1.10%, S&P 1.05%, Nasdaq 0.70%

(Updates prices to open)
By Devik Jain and Shreyashi Sanyal
Jan 28 (Reuters) - Wall Street's main indexes rose on
Thursday, as a reversal of declines in mega-cap technology
stocks helped investors look past data which showed another
sharp contraction in the U.S. economy.
Heavyweights including Microsoft Corp MSFT.O , Facebook Inc
FB.O , Netflix Inc NFLX.O and Alphabet Inc GOOGL.O rose in
early trading, supporting the tech-heavy Nasdaq index .IXIC .
With the quarterly reporting season in full swing, market
participants started to question whether companies including
Apple Inc AAPL.O , Facebook and Tesla Inc TSLA.O could
justify their premium valuations.
"Investors are digesting earnings that came out overnight
and this morning, and taking a look at the fundamentals of
what's going on in specific companies, as well as any outlook
that can be provided to try to justify valuations," said Brian
Vendig, managing executive at MJP Wealth Advisors in Westport,
Connecticut.
Apple reported holiday-quarter sales and profit that beat
Wall Street expectations, however, shares of the iPhone maker
fell 1.9%. Facebook rose 2.3% after soundly beating quarterly revenue
estimates, but it warned Apple's impending privacy changes could
hurt revenue by interfering with ad targeting. Tesla shed 4.7% after the electric-car maker reported
disappointing fourth-quarter results and failed to provide a
clear target for 2021 vehicle deliveries. Data showed the U.S. economy contracted at its sharpest pace
since World War Two in 2020 as COVID-19 ravaged services
businesses such as restaurants and airlines.
A separate report showed 847,000 more people likely filed
jobless claims last week, strengthening views of a persistent
labor market weakness. "This is a market which thinks about what the economy might
look like six months from now ... and I think this is a time
when the near-term numbers are of very little consequence to
most investors," said Rick Meckler, partner at Cherry Lane
Investments, a family investment office in New Vernon, New
Jersey.
Concerns about slowing momentum in economic recovery due to
rising coronavirus cases, heightened stock market valuations,
and uneven distribution of vaccine rollouts have kept investors
on edge about a pullback and increase in volatility in the
near-term.
American Airlines Group Inc AAL.O surged 26.1%, becoming
the latest stock to lead bumper gains for a series of
social-media hyped stocks, broadening a battle between
small-time traders and major Wall Street institutions that has
shaken U.S. and European stock markets. At 9:52 a.m. ET the Dow Jones Industrial Average .DJI was
up 334.78 points, or 1.10%, at 30,637.95, the S&P 500 .SPX was
up 39.24 points, or 1.05%, at 3,790.01, and the Nasdaq Composite
.IXIC was up 93.42 points, or 0.70%, at 13,364.01.
Comcast Corp CMCSA.O added 3.5% after it reported
better-than-expected fourth-quarter revenue, as broadband demand
continued to offset pandemic-related weakness in its theme park
and filmed entertainment businesses. Advancing issues outnumbered decliners for a 3.61-to-1 ratio
on the NYSE and a 2.39-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and no new
low, while the Nasdaq recorded 47 new highs and three new lows.