US STOCKS-S&P 500, Dow dip from record highs as labor market recovery slows

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* U.S. weekly jobless claims unexpectedly rise
* Financials lead declines among S&P indexes
* Indexes: Dow down 0.71%, S&P off 0.41%, Nasdaq flat

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By Shriya Ramakrishnan and Shivani Kumaresan
Nov 25 (Reuters) - The S&P 500 and the Dow retreated from
record highs on Wednesday as a surprise rise in weekly jobless
claims added to signs the recovery of the labor market was
stalling amid a surge in COVID-19 infections.
The Labor Department's report showed initial claims for
state unemployment benefits last week increased to 778,000 from
748,000 in the prior week. Economists polled by Reuters had
forecast 730,000 applications. With the next fiscal stimulus package now expected only
after President-elect Joe Biden is sworn in on Jan. 20, momentum
in the labor market is expected to remain slow.
"The question is who wins the battle - the vaccines or the
rising cases in the short term," said Christopher Grisanti,
chief equity strategist at MAI Capital Management in Ohio.
"For the last several weeks, the market has been looking
through bad news, but then you get the statistic about the
unemployment claim and the market focuses again on the
short-term difficulties we are having."
Data also showed U.S. consumer spending, which accounts for
more than two-thirds of domestic economic activity, increased
solidly in October, but personal income fell. At 11:45 a.m. ET, the Dow Jones Industrial Average .DJI
was down 0.71% at 29,832.01. The S&P 500 .SPX was down 0.41%,
while the Nasdaq Composite .IXIC was up just 0.03%.
Nine of the 11 S&P indexes were lower, with the energy
.SPNY and financial .SPSY sectors leading declines, while
technology mega-caps including Amazon.com Inc AMZN.O and Apple
Inc AAPL.O were among the biggest gainers in early trading.
"Tech is here to stay," said Kenny Polcari, managing partner
at Kace Capital Advisors in Florida.
"What we are seeing is some shift within tech and that money
is moving out of some of those highfliers and work-from-home
stocks as the idea of the vaccine and the world coming back to
normal settles in."
Trading volumes were expected to be thin ahead of the
Thanksgiving holiday on Thursday.
Major U.S. banks JPMorgan Chase & Co JPM.N and Goldman
Sachs Group GS.N , among the most economically-sensitive, were
down more than 1%.
Hopes of a COVID-19 vaccine following promising trial data
from three major drugmakers as well as a smooth White House
transition have lifted Wall Street's main indexes to record
highs and set the benchmark S&P 500 .SPX on course for its
best November ever.
Market participants said they expected U.S. stocks to climb
even higher, with a recent Reuters poll showing the S&P 500 is
poised to rise 9% between now and the end of 2021. The index has
surged about 66% since the coronavirus-led crash in March and is
up about 12% so far this year. Declining issues outnumbered advancers 1.59-to-1 on the NYSE
and 1.31-to-1 ratio on the Nasdaq.
The S&P index recorded 12 new 52-week highs and no new lows,
while the Nasdaq recorded 81 new highs and five new lows.