S&P 500, Dow fall as jobless claims rise; megacaps boost Nasdaq

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* Weekly jobless claims hit two-month high

* Biogen up on raising full-year revenue forecast

* Southwest Airlines leads declines among carriers

* Indexes: Dow down 0.18%, S&P down 0.04%, Nasdaq up 0.17%

By Devik Jain and Shreyashi Sanyal

July 22 (Reuters) - The S&P 500 and the Dow indexes fell on Thursday after data showed weekly jobless claims hit a two-month high, while a rise in megacap growth stocks offered some support to the technology-heavy Nasdaq.

The Labor Department's report showed the number of Americans filing new claims for unemployment benefits increased by 51,000 to a seasonally adjusted 419,000 in the week ended July 17.

Still, the number likely does not suggest a material shift in labor market conditions, with another month of strong job growth expected in July.

"One data point isn't a trend, and a one-off can probably be chalked up to Delta variant concerns. If jobs data doesn't inflect soon, the markets and the Fed will be put on notice," said Cliff Hodge, chief investment officer at Cornerstone Wealth.

Investors have been closely following the health of the jobs market on which the Federal Reserve's monetary policy hinges, especially after a series of higher inflation reading recently sparked fears about a sooner-than expected paring of policy support as the economy reopens.

A shift in attention to corporate earnings and the so-called value stocks have helped Wall Street recoup most of its declines from earlier in the week that were triggered by concerns about the fast-spreading Delta variant of the coronavirus.

"The market is realizing that it's very unlikely that this variant is going to have a similar outcome to the original pandemic," said Tom Mantione, managing director at UBS Private Wealth Management in Stamford, CT.

Economically sensitive S&P 500 sectors declined in early trading, with energy .SPNY dropping 1.2% after rising in the last two sessions. The S&P 500 technology .SPLRCI sector was the biggest gainer among the 11 major sector indexes.

Second-quarter earnings are expected to grow 75% for S&P 500 companies, according to Refinitiv IBES estimates. So far, 88% of the 73 companies in the benchmark index .SPX that reported results for the quarter beat consensus expectations.

Drugmaker Biogen Inc BIIB.O gained 0.8% on raising its full-year revenue expectations.

Southwest Airlines Co LUV.N fell 3.3% after it posted a bigger-than-expected quarterly loss, pushing the S&P 1500 Airlines index .SPCOMAIR down 2.1%.

American Airlines Group Inc AAL.O reported a quarterly profit, but its shares fell 1.9%

At 10:00 a.m. ET the Dow Jones Industrial Average .DJI was down 62.20 points, or 0.18%, at 34,735.80 and the S&P 500 .SPX was down 1.53 points, or 0.04%, at 4,357.16,

The Nasdaq Composite .IXIC was up 24.87 points, or 0.17%, at 14,656.83, boosted by Apple Inc AAPL.O , Amazon.com AMZN.O , Facebook Inc FB.O , Google-owner Alphabet Inc GOOGL.O and Microsoft Corp MSFT.O .

Intel Corp INTC.O edged higher ahead of its quarterly results after markets close on Thursday.

Texas Instruments Inc TXN.O fell 4.7% after a downbeat current-quarter revenue forecast amid concerns about the chipmaker's ability to meet searing demand in the face of a global shortage.

CXS Corp CSX.O gained 3.9% as brokerages raised their price targets on the U.S. railroad operator's shares after it posted upbeat second-quarter revenue.

Declining issues outnumbered advancers for a 2.10-to-1 ratio on the NYSE and for a 2.21-to-1 ratio on the Nasdaq.

The S&P index recorded 29 new 52-week highs and no new low, while the Nasdaq recorded 42 new highs and 12 new lows.
Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel

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