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* Apple briefly becomes world's most valuable public company
* Caterpillar among biggest drags on Dow (New throughout, updates prices, market activity and comments to market close)
By Chuck Mikolajczak
NEW YORK, July 31 (Reuters) - The Nasdaq jumped more than 1% on Friday, powered by strong earnings from some of the largest U.S. companies, but the Dow and S&P finished with smaller gains as uncertainty about the government's next round of coronavirus aid kept economic worries on the radar.
Apple Inc shares surged to reach a high in the wake of blowout quarterly results and a four-for-one stock split announcement.
Amazon.com Inc gained after posting its biggest profit ever while Facebook jumped after the social media platform blew past revenue expectations.
Google parent Alphabet Inc fell though, one of the biggest drags on the S&P 500 and Nasdaq, as it posted the first quarterly sales dip in its 16 years as a public company.
"The results were just fabulous, just so strong," said Tim Ghriskey, Chief Investment Strategist at Inverness Counsel in New York. "These are extremely profitable companies and they produce products that people want."
The four companies are among the top five in market capitalization, representing roughly 20% of the S&P 500's total. Apple's gain pushed it ahead of Saudi Aramco as the world's most valuable public company, according to Refinitiv data.
The White House and Democrats were still negotiating on coronavirus relief aid, but not yet on a path toward reaching a deal, according to House of Representatives Speaker Nancy Pelosi, hours before the expiration of a federal unemployment benefit.
"It seems like they are far apart and supposedly they are working at it and there is a lot of name calling and as usual there is a lot of bad blood between these two parties and they have to come to some compromise, clearly, but they are not there, that’s for sure," said Ghriskey.
Unofficially, the Dow Jones Industrial Average rose 121.01 points, or 0.46%, to 26,434.66, the S&P 500 gained 25.34 points, or 0.78%, to 3,271.56 and the Nasdaq Composite added 157.60 points, or 1.49%, to 10,745.42.
It was a choppy session with each major index up and down. The Dow at one point fell more than 1%. In late trade, stocks moved higher into the close as Microsoft shares pared losses of more than 2% after reports the company was said to be in talks to buy video app TikTok.
U.S. deaths from COVID-19 appeared to be rising at their fastest rate since early June, with the epicenter of the pandemic apparently shifting to the Midwest.
The benchmark index is now about 4% shy of its February all-time high, but faltering macroeconomic data and rising COVID-19 cases in the United States are making investors cautious again.
Still, the S&P notched its fourth weekly gain in the past five and fourth straight month of gains, with lift from massive fiscal and monetary stimulus measures to buttress the U.S. economy during the pandemic.
Energy stocks were the worst performing among the 11 major S&P sectors after Chevron Corp reported an $8.3 billion loss on asset writedowns and ExxonMobil Corp recorded a second consecutive quarterly loss.
Caterpillar Inc fell after the bellwether for economic activity offered little signs of improvement in equipment sales.
(Reporting by Chuck Mikolajczak; Editing by David Gregorio)