US STOCKS-S&P 500, Dow retreat from record highs after bleak jobless data

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* U.S. weekly jobless claims unexpectedly rise
* Tesla extends rally despite recall
* Indexes: Dow down 0.66%, S&P off 0.34%, Nasdaq up 0.25%

(Updates to afternoon, changes dateline, byline)
By Stephen Culp
NEW YORK, Nov 25 (Reuters) - Wall Street was mixed on
Wednesday as surging layoffs in the wake of a new round of
shutdowns to contain spiraling COVID-19 infections dampened
investor risk appetite.
The S&P 500 .SPX and the Dow Jones Industrial Average
.DJI retreated from record closing highs, pulled lower by
cyclicals and small caps that drove the rally earlier in the
week.
Pandemic-resilient tech and tech-adjacent market leaders
helped keep the Nasdaq afloat.
"Days like we're seeing today on the heels of strong growth
is a response to the ebb and flow of the market," said Matthew
Keator, managing partner in the Keator Group, a wealth
management firm in Lenox, Massachusetts. "It's natural to see
some profit-taking as people look at valuations and take money
off the table."
A wide range of data released in advance of Thursday's
Thanksgiving holiday was dominated by a second consecutive week
of unexpected jobless claims increases, suggesting that new
restrictions to combat spiking coronavirus cases could hobble
the struggling labor market's recovery. The market appeared to be replaying the previous two weeks,
which began with rallies driven by promising vaccine news but
pivoted back to stay-at-home plays on near-term pandemic
realities and lack of new fiscal stimulus.
Still, the vaccine developments and removal of uncertainties
surrounding the U.S. presidential election have driven Wall
Street indexes to record closing highs, and put the S&P 500 on
course for its best November ever.
"The move this month speaks to not only clarity regarding
the election uncertainties but also the potential for new
stimulus that is out there, an extremely accommodative Fed and
tremendous amount of pent-up demand from the consumer's
standpoint," Keator added.
Market participants believe U.S. stocks have more room to
climb. A recent Reuters poll showed analysts believe the S&P 500
will gain 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. The Dow Jones Industrial Average .DJI fell 197.14 points,
or 0.66%, to 29,849.1, the S&P 500 .SPX lost 12.24 points, or
0.34%, to 3,623.17 and the Nasdaq Composite .IXIC added 29.74
points, or 0.25%, to 12,067.06.
Of the 11 major sectors of the S&P 500, energy .SPNY
suffered the largest percentage loss.
The economically sensitive banking sector lost ground, with
the S&P 500 Banks index shedding 1.1%.
Tesla Inc TSLA.O , which surpassed $500 billion in market
capitalization on Tuesday, extended its gain by 2.4% even after
the electric-car maker recalled about 9,500 vehicles.
The company also plans to start manufacturing electric
vehicle chargers in China starting next year, according to
documents it submitted to Shanghai authorities. Declining issues outnumbered advancers on the NYSE by a
1.27-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored decliners.
The S&P 500 posted 14 new 52-week highs and no new lows; the
Nasdaq Composite recorded 106 new highs and five new lows.