(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 * Dow down 1.54%, S&P 500 down 1.93%, Nasdaq down 1.64% (Adds Fed statement, changes byline) NEW YORK, Jan 27 (Reuters) - U.S. stocks dropped more than 1% on Wednesday, showing little reaction to the latest Fed statement, as major indexes were weighed down in part by a slump in Boeing and hedge funds selling off long positions to cover a short squeeze. Shares of videogame retailer GameStop Corp and movie theater operator AMC Entertainment Holdings Inc each more than doubled on Wednesday, continuing a torrid run higher over the past week, as amateur investors again piled into the stocks, forcing short-sellers such as Citron to abandon their losing bets. “Fears are circulating that some investment funds might be quickly closing out positions as a way of shoring up their cash positions. It is early days yet but we might see selling pressure ramp up for fear there could be a stampede for the exit,” said David Madden, market analyst at CMC Markets UK. Stocks largely held losses in the wake of the statement from the Federal Reserve. The central bank kept overnight interest rate near zero and made no change to its monthly bond purchases, as was widely expected, and pledged to keep that support intact until a full economic rebound is in place. “The statement itself really did not contain much new information, but it did put a lid on fears that the Fed may be considering tapering asset purchases sooner than expected. If anything, the Fed added a statement recognizing that the pace of recovery has moderated in recent months,” said Jason Pride, chief investment office for private wealth at Glenmede in Philadelphia. The Dow Jones Industrial Average fell 475.41 points, or 1.54%, to 30,461.63, the S&P 500 lost 74.39 points, or 1.93%, to 3,775.23 and the Nasdaq Composite dropped 223.16 points, or 1.64%, to 13,402.91. Both the Dow and S&P 500 were on track for their biggest daily percentage decline since Oct 28. Meanwhile, Boeing Co fell 2.56% and was among the top drags on the Dow 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 0.83% after its results as the software maker continues to benefit from remote working and learning trends globally. Microsoft’s results set a positive tone for other technology-related companies including Apple 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, rising coronavirus cases and uneven distribution of vaccine rollouts have heightened investor worry about a pullback and increase in volatility in the near-term. Shares of Apple were little changed, while Facebook slipped 2.56%. The CBOE Market Volatility index, often used as a gauge for investor anxiety, rose as high as 29.65, the its highest level since Dec 21. Walgreens Boots Alliance Inc jumped 4.80% after the drugstore chain named the outgoing chief operating officer of Starbucks, Roz Brewer, as its CEO. Declining issues outnumbered advancing ones on the NYSE by a 3.40-to-1 ratio; on Nasdaq, a 3.52-to-1 ratio favored decliners. The S&P 500 posted 27 new 52-week highs and no new lows; the Nasdaq Composite recorded 155 new highs and 20 new lows. (Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; editing by Diane Craft)