US STOCKS-S&P, Nasdaq at records as Vertex rallies; IBM slips

* Morgan Stanley rises as profit beats expectations

* CSX forecast miss drags rail stocks lower

* Vertex at record high on cystic fibrosis treatment data

* Dow up 0.22 pct, S&P 500 up 0.50 pct, Nasdaq up 0.65 pct
(Updates to early afternoon)

By Rodrigo Campos and Kimberly Chin

NEW YORK, July 19 (Reuters) – The Nasdaq Composite and the
S&P 500 hit record highs on Wednesday, powered by technology
stocks and a more than 20 percent jump in Vertex
Pharmaceuticals, while gains on the Dow were capped by a sharp
drop in IBM shares.

Vertex jumped as much as 26.4 percent to an
all-time high of $167 a day after it reported positive results
for its cystic fibrosis treatment. The stock last traded up 21.6
percent at $160.67, and was the biggest boost on the S&P and the

IBM was a drag on the Dow industrials after its
quarterly revenue came in below expectations and the stock fell
4.4 percent to $147.16, having hit a 13-month low of $146.71.

However, the S&P 500 tech sector is on track to
break a record closing high set in March 2000. It has been the
best performing sector this year in terms of percentage gains.

The Dow Jones Industrial Average rose 48.14 points,
or 0.22 percent, to 21,622.87, the S&P 500 gained 12.34
points, or 0.50 percent, to 2,472.95 and the Nasdaq Composite
added 41.18 points, or 0.65 percent, to 6,385.48.

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

Morgan Stanley rose 3.5 percent to $46.72 after the
Wall Street bank reported better-than-expected profit and bond
trading revenue declines that were modest compared with
arch-rival Goldman Sachs’. The KBW bank index fell
0.5 percent.

Bank “earnings have come out pretty well, but apparently not
enough for investors to keep them running, to keep the prices
up,” said Giri Cherukuri, head trader at OakBrook Investments
LLC, which oversees $1.3 billion in Lisle, Illinois.

“People were expecting good earnings, and people were
expecting the Fed to raise rates which would be good for the
stocks. A lot of the expectations were built in already. It was
tough to go further.”

CSX fell 5.1 percent to $51.85 after the railroad
operator’s forecast missed expectations, and it dragged stocks
of its peers lower. Union Pacific fell 1.4 percent,
while Kansas City Southern dropped 0.8 percent.

The transport sector was also hit by declines in airlines as
United Continental Holdings fell 6.1 percent to $74.09,
a day after it forecast “disappointing” passenger unit revenue
for the third quarter.

Advancing issues outnumbered declining ones on the NYSE by a
2.93-to-1 ratio; on Nasdaq, a 2-to-1 ratio favored advancers.

(Reporting by Rodrigo Campos and Kimberly Chin; Editing by Nick