Wall Street edges lower as jobless claims unexpectedly rise

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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 down: Dow 0.21%, S&P 0.16%, Nasdaq 0.05%

By Devik Jain and Shreyashi Sanyal

July 22 (Reuters) - Wall Street's main indexes edged lower on Thursday after an unexpected rise in weekly jobless claims cooled a rally in economy-linked cyclical stocks, while gains in megacap growth firms kept declines at bay.

Data 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, hitting a two-month high. The report also showed more people returning to work, a positive trend for July's employment data.

"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 S&P 500 energy sector .SPNY fell 1.5% after rising in the last two sessions, while technology .SPLRCI was the biggest gainer among the 11 major sector indexes.

Apple Inc AAPL.O , Amazon.com AMZN.O , Facebook Inc FB.O , Google-owner Alphabet Inc GOOGL.O and Microsoft Corp MSFT.O rose ahead of their quarterly results next week.

"The market is trying to understand how economic growth will decelerate going forward ... we're going to still see energy, financials, industrials doing very well in the medium term, but the more secular growth winners will continue to drive the market for the future," said Omar Aguilar, chief investment officer of passive equity and multi-asset strategies for Charles Schwab Investment Management.

Second-quarter earnings are expected to grow 76.5%% for S&P 500 companies, according to Refinitiv IBES estimates. So far, 88.5% of the 104 companies in the benchmark index .SPX that reported results for the quarter beat profit expectations, the highest since 1994.

Drugmaker Biogen Inc BIIB.O gained 1.3% on raising its full-year revenue expectations, while Domino's Pizza Inc DPZ.N jumped 13.0% to a record high on upbeat quarterly results.

Southwest Airlines Co LUV.N fell 4.2% after it posted a bigger-than-expected quarterly loss, pushing the S&P 1500 Airlines index .SPCOMAIR down 2.2%.

American Airlines Group Inc AAL.O reported a quarterly profit, but its shares fell 2.1%.

At 12:23 p.m. ET, the Dow Jones Industrial Average .DJI was down 72.23 points, or 0.21%, at 34,725.77, the S&P 500 .SPX was down 7.04 points, or 0.16%, at 4,351.65 and the Nasdaq Composite .IXIC was down 7.64 points, or 0.05%, at 14,624.31.

Texas Instruments Inc TXN.O fell 5.0% on a downbeat current-quarter revenue forecast amid concerns about the chipmaker's ability to meet searing demand in the face of a global shortage.

Declining issues outnumbered advancers for a 2.45-to-1 ratio on the NYSE and 2.46-to-1 ratio on the Nasdaq.

The S&P index recorded 36 new 52-week highs and no new low, while the Nasdaq recorded 52 new highs and 36 new lows.
Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel

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