US STOCKS-Wall Street retreats after rallying on recovery optimism

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* U.S. weekly jobless claims drop below 2 million
* Nasdaq 100 index hits intraday record high
* American Airlines rises on plans to boost U.S. flights in
July
* Charles Schwab, TD Ameritrade rise as DOJ approves deal
* Indexes off: Dow 0.37%, S&P 500 0.59%, Nasdaq 0.78%

(Adds comments, updates prices to early afternoon)
By Devik Jain and Shreyashi Sanyal
June 4 (Reuters) - The Nasdaq 100 index retreated from an
intraday record high on Thursday, with the S&P 500 and Dow Jones
indexes also slipping as a rally fueled by hopes of a
post-coronavirus economic recovery fizzled out.
Wall Street's main indexes had gained in early trading as
U.S. weekly jobless claims fell below 2 million for the first
time since mid-March, bolstering optimism around a pickup in
business activity as economies reopened. American Airlines Group Inc AAL.O surged 24.9% after
revealing plans to fly more than 55% of its July 2019 domestic
capacity and boost its U.S. flight schedule next month. The NYSE
Arca airlines index .XAL jumped 8.2% to a near three-month
high.
But nine of the 11 S&P 500 sectors were trading lower by
midday, with the defensive real estate .SPLRCR and utilities
.SPLRCU indexes leading declines.
"There's a belief the economy is going to reopen and when
you partner that up with the liquidity provided by global
central banks, now is a somewhat safe time to be investing in
equities," said Robert Pavlik, chief investment strategist at
SlateStone Wealth LLC in New York.
"But (the market is) going to go through periods where it
takes a little bit of a pause, especially after seeing the kind
of gains we've had in the last couple of days."
Wall Street's main indexes have recovered sharply from their
March lows and the Nasdaq Composite index .IXIC , which is
wider and more closely watched than the Nasdaq 100 .NDX , is
now only 2% below its record high hit in February.
The rebound has been partly driven by tech-related firms,
including Amazon.com Inc AMZN.O and Netflix Inc NFLX.O ,
deemed "stay-at-home" stocks during the weeks of a lockdown
imposed to contain the novel coronavirus.
The NYSE FANG+TM index .NYFANG , which includes Facebook
Inc FB.O , Apple Inc AAPL.O , Amazon.com, Netflix, Alphabet
Inc GOOGL.O , Baidu Inc BIDU.O and Twitter TWTR.N also hit
a record high in morning trading.
"In this market, you need to be selective and technology
continues to be one of our favorite sectors," said Larry Adam,
chief investment officer at Raymond James in Baltimore,
Maryland.
Meanwhile, nationwide protests over the death of an unarmed
black man in police custody dwindled overnight into early
Thursday after prosecutors leveled new charges against four
Minneapolis policemen implicated in the killing.
At 12:57 p.m. ET, the Dow Jones Industrial Average .DJI
was down 97.96 points, or 0.37%, at 26,171.93, the S&P 500
.SPX was down 18.33 points, or 0.59%, at 3,104.54 and the
Nasdaq Composite .IXIC was down 75.61 points, or 0.78%, at
9,607.30.
Jif peanut butter maker J.M. Smucker Co SJM.N fell 4%
after forecasting a decline in full-year sales. But Charles Schwab Corp SCHW.N gained 1.9% after it
received an anti-trust approval from the Department of Justice
for its purchase of TD Ameritrade Holding Corp AMTD.O . TD
Ameritrade rose 5.1%. Declining issues slightly outnumbered advancers on the NYSE
and the Nasdaq.
The S&P index recorded 13 new 52-week highs and no new low,
while the Nasdaq recorded 46 new highs and seven new lows.