US STOCKS-S&P 500, Nasdaq hit record highs on IBM, chip power

* IBM shares jump on strong forecast, earnings
* Chipmakers rise after upbeat ASML outlook
* J&J slides after disappointing FY profit forecast
* Indexes up: Dow 0.06%, S&P 0.26%, Nasdaq 0.50%

(Changes comment, updates prices)
By Sruthi Shankar
Jan 22 (Reuters) - The S&P 500 and the Nasdaq hit record
highs on Wednesday as a strong forecast from IBM added to
optimism over earnings, while investors assessed risks from a
virus outbreak in China.
International Business Machines Corp IBM.N shares jumped
3.5% after the company forecast full-year profit above market
expectations on strength in its high-margin cloud computing
business. Technology stocks .SPLRCT , which have played a pivotal
role in Wall Street's recent record run, rose 0.8%, with chip
stocks gaining from a strong forecast by Dutch semiconductor
equipment maker ASML Holding NV ASML.AS . The Philadelphia Semiconductor index .SOX jumped 1.7%.
Beijing stepped up measures to curb the outbreak of a new
flu-like virus that has killed 17 and infected 540 in the
country, reassuring investors after concerns over the fallout
pulled Wall Street off its record highs on Tuesday. The outbreak, which revived fears of a pandemic similar to
the Severe Acute Respiratory Syndrome (SARS) in 2003, had roiled
travel and airline stocks in the previous session, as millions
of people prepared to travel for the Chinese Lunar New Year.
Many of those stocks recouped some losses. The NYSE Arca
airlines index .XAL rose 0.9% after falling 2.6% on Tuesday.
"Investors have been very bullish, thanks to de-escalating
risks, which is causing valuations to expand - the sort of
context that becomes more sensitive when a new risk like the
virus emerges," said Salman Baig, a cross-asset investment
manager at Unigestion.
"Earnings so far have been fairly good. We're not seeing
outsized surprises, but good results, and I think that's also
helping markets."
Netflix Inc's NFLX.O shares gave up early gains to trade
2.1% lower after the streaming video pioneer beat estimates for
quarterly subscription growth, but warned of a tough first
quarter. At 11:31 a.m. ET, the Dow Jones Industrial Average .DJI
was up 0.06% at 29,214.26.
The S&P 500 .SPX gained 0.26% to 3,329.27 and the Nasdaq
Composite .IXIC jumped 0.50% to 9,417.90.
Among other weak spots was Johnson & Johnson JNJ.N ,
dropping 1% after the healthcare conglomerate forecast full-year
profit largely below expectations. The Dow came under pressure as Boeing Co BA.N extended
losses after announcing further delay in the return of its 737
MAX jets to service.
Advancing issues outnumbered decliners by a 1.36-to-1 ratio
on the NYSE and a 1.23-to-1 ratio on the Nasdaq.
The S&P index recorded 103 new 52-week highs and one new
low, while the Nasdaq recorded 143 new highs and 18 new lows.