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

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* U.S. weekly jobless claims unexpectedly rise
* Financials lead declines among S&P indexes
* Tesla down after hitting $500 billion in market cap
* Indexes: Dow off 0.49%, S&P down 0.27%, Nasdaq up 0.11%

(Updates to open)
By Shriya Ramakrishnan and Shivani Kumaresan
Nov 25 (Reuters) - The S&P 500 and the Dow retreated 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 10:20 a.m. ET, the Dow Jones Industrial Average .DJI
was down, or 0.49%, at 29,900 after closing above 30,000 for the
first time on Tuesday.
The S&P 500 .SPX was down 0.27%, while the Nasdaq
Composite .IXIC was up 0.11%.
Six of the 11 S&P indexes were lower, with the energy
.SPNY and financial .SPSY sectors leading declines, while
technology mega-caps were among the biggest gainers in early
trading.
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 1.9% and 1.5%, respectively.
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. Tesla Inc TSLA.O , which crossed $500 billion in market
capitalization on Tuesday, dropped 1.1% as the electric-car
maker recalled about 9,500 vehicles.
Declining issues outnumbered advancers 1.85-to-1 on the
NYSE and 1.67-to-1 on the Nasdaq.
The S&P index recorded 11 new 52-week highs and no new low,
while the Nasdaq recorded 59 new highs and four new lows.