US STOCKS-Tech lifts Nasdaq, S&P to record; IBM weighs on Dow

* Morgan Stanley rises as profit beats expectations

* CSX forecast miss weighs on Union Pacific, Kansas City
Southern

* Vertex at record high on positive cystic fibrosis
treatment data

* Indexes up: Dow 0.12 pct, S&P 0.35 pct, Nasdaq 0.59 pct
(Updates to early afternoon)

By Tanya Agrawal

July 19 (Reuters) – The Nasdaq and the S&P were trading at
record levels in early afternoon on Wednesday, powered by
technology stocks, while gains on the Dow were capped by a sharp
drop in shares of IBM.

IBM fell 4.7 percent to a one-year low after the
company’s quarterly revenue came in below expectations. The
stock was the biggest drag on the Dow and the S&P 500.

The S&P tech sector has been the best performing sector this
year despite concerns about stretched valuations as investors
look for growth sectors immune to policy uncertainties.

“At least in the second quarter and for the next quarter
technology is the only sector that will see double-digit
growth,” said Tom Cassidy, chief investment officer at Univest
Wealth Management Division.

“If you look at the sector, it isn’t all that overvalued
compared to the broader S&P index, except for a few names.”

Microsoft and Facebook were among the
top-three boosts to the S&P and the Nasdaq. They are due to
report results this week and next.

Netflix’s stellar results had propelled the Nasdaq
to close at a record high on Tuesday, helping the index post its
longest streak of gains since February 2015.

At 12:38 p.m. ET (1638 GMT), the Dow Jones Industrial
Average was up 25.36 points, or 0.12 percent, at
21,600.09, the S&P 500 was up 8.83 points, or 0.35
percent, at 2,469.44.

The Nasdaq Composite was up 37.60 points, or 0.59
percent, at 6,381.91.

Nine of the 11 major S&P 500 sectors were higher, with the
energy index and health sector leading the
advancers.

Vertex Pharmaceuticals jumped as much as 26.3
percent to an all-time high after the company reported positive
results for its cystic fibrosis treatment. The stock was the
biggest boost on the S&P and the Nasdaq.

Investors will continue to focus on quarterly earnings to
see if high valuations are justified in the face of mixed
economic data, tepid inflation and policy gridlock in
Washington.

Analysts estimate an 8.7 percent rise in second-quarter
earnings and a 4.6 percent increase in revenue for the S&P 500
companies from a year earlier, according to Thomson Reuters
I/B/E/S.

Morgan Stanley rose 2.1 percent after the Wall Street
bank reported better-than-expected profit and bond trading
revenue declines that were modest compared with arch-rival
Goldman Sachs’. Goldman was down 0.5 percent.

CSX fell 6.5 percent after the third-largest U.S.
railroad operator’s forecast missed expectations. Other railroad
companies such as Union Pacific fell 2 percent, while
Kansas City Southern edged down 0.7 percent.

Advancing issues outnumbered decliners on the NYSE by 2,057
to 750. On the Nasdaq, 1,852 issues rose and 906 fell.
(Reporting by Tanya Agrawal; Editing by Arun Koyyur)

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