(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window) * Boeing falls on record annual loss, to delay 777X jet * Microsoft rises after upbeat quarterly results * GameStop rally quashes hedge funds, sparks short squeeze * Big-tech earnings in focus later in the day * Indexes down: Dow 1.20%, S&P 1.61%, Nasdaq 1.30% (Adds comments, updates prices throughout) Jan 27 (Reuters) - The Dow and the S&P 500 slid more than 1% on Wednesday as Boeing slumped on posting a record annual loss, while declines were exacerbated by hedge funds selling off long positions to cover a short squeeze sparked by a sharp rally in GameStop and AMC. Shares of videogame retailer GameStop Corp and movie theater operator AMC Entertainment Holdings Inc each more than doubled on Wednesday as amateur investors again piled into the stocks, forcing short-sellers such as Citron to abandon their losing bets. “As weird as that may sound, what is partially responsible for what’s going on today in the market is that there’s a lot of selling going on to raise cash to cover some of these big shorts that are just getting pummeled,” said Sean O’Hara, president of Pacer ETF Distributors in Malvern, Pennsylvania. Focus later in the day will be on the Federal Reserve’s statement after a two-day policy meeting. The central bank is expected to keep monetary policy locked in crisis-fighting mode, with investors also looking forward to relief from ongoing vaccination programs and new fiscal spending plans. Meanwhile, Boeing Co fell 3.1% and was among the top drags on the Dow Jones Industrial Average after the planemaker took a hefty $6.5 billion charge on its all-new 777X jetliner due to the COVID-19 pandemic and the aftermath of a two-year safety crisis over its 737 MAX. In a week packed with quarterly earnings from mega-cap companies, Microsoft Corp rose 1.9% after its results as the software maker continues to benefit from remote working and learning trends globally. Microsoft’s results set a positive precedent for other technology-related companies including Apple Inc, Tesla Inc and Facebook Inc, which are set to report quarterly numbers later in the day. These heavyweight majors have recently come back into favor after blowout results from streaming giant Netflix Inc, and as investors dumped economy-linked banks, energy and small-cap stocks. However, concerns about heightened stock market valuations, raging coronavirus cases and any potential disruption to vaccine rollouts have spooked investors about a pullback and increase in volatility in the near-term. Shares of Apple were up 0.2% by mid-day, while Tesla and Facebook were down 0.6% and 2.4%, respectively. The CBOE Market Volatility index, often used as a gauge for investor anxiety, rose 5.63 points, hitting its highest since Jan. 4, the day before the Georgia runoffs. By 12:32 p.m. ET the Dow Jones Industrial Average was down 371.41 points, or 1.20%, at 30,565.63, the S&P 500 was down 61.96 points, or 1.61%, at 3,787.66, and the Nasdaq Composite was down 177.04 points, or 1.30%, at 13,449.03. Walgreens Boots Alliance Inc jumped 4.9% after the drugstore chain named the outgoing chief operating officer of Starbucks, Roz Brewer, as its CEO. Declining issues outnumbered advancers 3.41-to-1 on the NYSE and 3.71-to-1 on the Nasdaq. The S&P index recorded 25 new 52-week highs and no new low, while the Nasdaq recorded 131 new highs and 19 new lows. (Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)