US STOCKS-Wall St rebounds as earnings roll in, short 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

* Dow up 1.63%, S&P 500 up 1.80%, Nasdaq up 1.47% (Adds comments, updates prices throughout)

NEW YORK, Jan 28 (Reuters) - U.S. stocks rebounded on Thursday from sharp losses in the prior session in a broad rally as earnings season got off to a strong start and fears eased around hedge funds selling long positions to cover shorts.

Heavyweights, including Microsoft Corp, and Alphabet Inc, were among the biggest boosts to the S&P 500, a day after the three major U.S. indexes suffered their biggest daily percentage drop in three months.

Apple reported holiday-quarter sales and profit that beat Wall Street expectations. However, shares of the iPhone maker fell 1.86% after climbing about 7% to start the year.

With quarterly earnings season in full swing, market participants have looked to whether companies could justify high valuations, with the forward price-to-earnings ratio on the benchmark S&P index near 20-year highs at almost 22.7.

“You come into today and so many companies have beat estimates and yeah, maybe some of them are a little weak, because they were strong going in,” said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management in Chicago.

“What has been consistent since the pandemic is Wall Street has been too bearish on earnings estimates and I thought at some point this is going to run out of steam, and it ain’t running out so far.”

Shares in GameStop Corp and AMC Entertainment Holdings Inc tumbled after a meteoric rise in recent sessions in a social media-driven trading frenzy that shook stock markets. Trading platforms, including Robinhood and Interactive Brokers, restricted trading in several stocks that soared this week, easing concerns about a ripple effect to the broader market.

“Trading platforms are not going to want to stick their necks out and be on the frontline of what they may see as a reckless war, in part, against the elite and the system of Wall Street that’s being democratized by information and the social media,” said Eric Schiffer, chief executive officer of private equity firm the Patriarch Organization.

The Dow Jones Industrial Average rose 489.17 points, or 1.61%, to 30,792.34, the S&P 500 gained 66.88 points, or 1.78%, to 3,817.65 and the Nasdaq Composite added 193.25 points, or 1.46%, to 13,463.85.

Of the 159 companies in the S&P 500 that reported earnings through Thursday morning, 83% posted results that topped analyst expectations, according to Refinitiv data, well above the 76% beat rate over the past four quarters.

Facebook fell 1.66% in choppy trading despite soundly beating quarterly revenue estimates, while Tesla shed 2.26% after posting disappointing fourth-quarter results and failing to provide a clear target for 2021 vehicle deliveries.

But Comcast Corp jumped 7.71% 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.

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, while a separate report showed 847,000 more people filed jobless claims last week, lower than the 875,000 estimate.

Advancing issues outnumbered declining ones on the NYSE by a 2.34-to-1 ratio; on Nasdaq, a 1.44-to-1 ratio favored advancers.

The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq Composite recorded 81 new highs and 12 new lows. (Additional reporting by Medha Singh in Bengaluru; Editing by Dan Grebler)