US STOCKS-Wall St jumps on big-tech strength, short squeeze worries ease

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* Weekly jobless claims dip, but still remain high
* Q4 GDP grows at consensus-matching 4% rate
* GameStop, AMC fall as platforms restrict trading
* Indexes up: Dow 1.97%, S&P 1.86%, Nasdaq 1.22%

(Adds comments, updates prices throughout)
By Devik Jain and Shreyashi Sanyal
Jan 28 (Reuters) - Wall Street's main indexes jumped on
Thursday as mega-cap technology stocks tried to regain lost
ground following a sharp sell-off after fears eased around hedge
funds selling off long positions to cover a short squeeze.
Shares in GameStop Corp GME.N and AMC Entertainment
Holdings Inc AMC.N tumbled as trading platforms including
Robinhood and Interactive Brokers restricted trading in stocks
that soared this week in a social media-driven trading frenzy
that shook stock markets. "If it (GameStop) had kept going higher, that just means
more hedge funds would have had margin calls. I think when it
backed off a little bit, the market breathed a sigh of relief,"
said Thomas Hayes, managing member at Great Hill Capital LLC in
New York.
All of the 11 major S&P 500 sectors were higher by early
afternoon trading.
Heavyweights including Microsoft Corp MSFT.O , Facebook Inc
FB.O , Netflix Inc NFLX.O and Alphabet Inc GOOGL.O led
gains, after the U.S. stock indexes suffered their worst day in
three months on Wednesday.
With the quarterly earnings season in full swing, market
participants have now started to question whether companies
including Apple Inc AAPL.O , Facebook and Tesla Inc TSLA.O
could sustain their high 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 2%. Facebook rose 0.7% on soundly beating quarterly revenue
estimates, while Tesla shed 3.2% after posting disappointing
fourth-quarter results and failing to provide a clear target for
2021 vehicle deliveries. A Commerce Department report showed fourth-quarter gross
domestic product increased at a 4% annualized rate, in line with
expectations, as the virus and lack of another spending package
curtailed consumer spending. A separate report showed 847,000 more people likely filed
jobless claims last week, lower than expectations of 875,000.
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.
At 12:02 p.m. ET the Dow Jones Industrial Average .DJI was
up 597.54 points, or 1.97%, at 30,900.71, the S&P 500 .SPX was
up 69.83 points, or 1.86%, at 3,820.60, and the Nasdaq Composite
.IXIC was up 162.39 points, or 1.22%, at 13,432.99.
Among other stocks, Comcast Corp CMCSA.O added 6.9% 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 2.33-to-1 ratio
on the NYSE and a 1.20-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and no new
low, while the Nasdaq recorded 74 new highs and eight new lows.