S&P, Dow flat as tech losses offset gains in banks

By Ankur Banerjee

(Reuters) - The S&P 500 and the Dow Jones Industrial Average were little changed in early trading on Thursday as a rise in bank stocks were offset by a slide in the technology sector.

Shares of the top six U.S. banks rose after the Federal Reserve cleared them in the second part of its annual stress test, allowing them to raise dividend payouts and share buybacks.

The financial index led the two gainers among the 11 S&P 500 sectors, rising 1.74 percent.

"The banks will be in the spotlight today as all of the U.S. banks passed the stress test," said Peter Cardillo, chief market economist at First Standard Financial in New York.

Wall Street rallied sharply on Wednesday, with the benchmark S&P 500 index scoring its biggest one-day percentage gain in about two months, as financial and technology stocks led a broad market rebound.

The Nasdaq posted on Wednesday its best session since Nov. 7, the day before the U.S. presidential election.

Tech stocks, which have led the S&P 500's 9-percent gain this year, pulled back recently as some investors questioned the sector's high valuations.

Nine S&P 500 sectors were lower, with the technology index's 0.85 percent fall leading the decliners.

Apple, Alphabet and Microsoft were the biggest drags on the Nasdaq and the S&P.

At 9:40 a.m. ET (1340 GMT), the Dow Jones Industrial Average was up 12.99 points, or 0.06 percent, at 21,467.6, the S&P 500 was down 1.82 points, or 0.07 percent, at 2,438.87.

The Nasdaq Composite was down 27.94 points, or 0.45 percent, at 6,206.47.

Oil prices rose to a two-week high, extending the rally into the sixth straight session, after a decline in weekly U.S. production eased concerns about deepening oversupply. [O/R]

The markets were little changed after data showed the U.S. economy slowed less sharply in the first quarter than initially estimated due to unexpectedly higher consumer spending and a bigger jump in exports.

The number of Americans filing for unemployment benefits edged up last week, but the underlying trend remained consistent with a tight labor market.

Among stocks, Staples rose 2 percent after private equity firm Sycamore Partners agreed to acquire the U.S. office supplies chain for $6.9 billion.

Walgreens Boots Alliance was up 4.8 percent after it terminated agreement to buy Rite Aid Corp and said it would instead buy nearly half of Rite Aid's stores for $5.18 billion. Rite Aid slumped 24 percent.

Declining issues outnumbered advancers on the NYSE by 1,472 to 1,132. On the Nasdaq, 1,214 issues fell and 1,114 advanced.

(Reporting by Ankur Banerjee in Bengaluru; Editing by Arun Koyyur)