US STOCKS-Nasdaq tumbles as investors turn away from Big Tech

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.)

* U.S. weekly jobless claims fall to 16-month low

* Tech sector on track to fall for first time in five days

* Indexes: Dow -0.24%, S&P 500 -0.74%, Nasdaq -1.27% (Updates with afternoon trading)

By Noel Randewich and Devik Jain

July 15 (Reuters) - The Nasdaq tumbled on Thursday, pulled lower by Apple (AAPL), Amazon (AMZN) and other Big Tech companies as investors digested a fall in weekly jobless claims and concerns about a recent inflation spike.

Amazon (AMZN), Apple (AAPL) and Facebook (FB) dropped more than 1% each. Nvidia (NVDA) tumbled 4% and Tesla fell almost 2%.

The S&P 500 technology sector index fell 1.1% and was on track to snap a four-day winning streak. Earlier this week, investors' favor for heavyweight growth stocks pushed the S&P 500 and the Nasdaq to record highs.

Nine of the 11 major S&P sector indexes were down, with energy falling more than 1% and tracking a drop in crude prices on expectations of more supply after a compromise agreement between leading OPEC producers.

Fresh data showed the number of Americans filing new claims for unemployment benefits fell to a 16-month low last week as the labor market gained traction, while worker shortages and bottlenecks in the supply chain have frustrated efforts by businesses to ramp up production to meet strong demand for goods and services.

Federal Reserve Chair Jerome Powell told lawmakers that he anticipated the shortages and high inflation would abate over time. Yet many investors still worry that more sustained inflation could lead to a sooner-than-expected tightening of monetary policy.

"People are very nervous and concerned about inflation, tax rates and the (2022 midterm) election. Those three things are very much on people's minds," said 6 Meridian Chief Investment Officer Andrew Mies, describing recent phone calls with his firm's clients.

Morgan Stanley (MS) dipped 0.5% after it beat expectations for quarterly profit, getting a boost from record investment banking activity even as the trading bonanza that supported results in recent quarters slowed down.

Second-quarter reporting season kicked off this week, with the four largest U.S. lenders - Wells Fargo & Co (WFC), Bank of America Corp (BAC), Citigroup Inc (C) and JPMorgan Chase & Co (JPM) - posting a combined $33 billion in profits, but also highlighting the industry's sensitivity to low interest rates.

The Dow Jones Industrial Average was down 0.24% at 34,849.71 points, while the S&P 500 lost 0.74% to 4,341.84.

The Nasdaq Composite dropped 1.27% to 14,458.69.

Blackstone said late on Wednesday it would pay $2.2 billion for 9.9% stake in American International Group's (AIG) life and retirement business. AIG and Blackstone were both up about 2.5%.

Johnson & Johnson (JNJ) dipped 1% after it voluntarily recalled five aerosol sunscreen products in the United States after detecting a cancer-causing chemical in some samples.

Declining issues outnumbered advancing ones on the NYSE by a 2.37-to-1 ratio; on Nasdaq, a 2.71-to-1 ratio favored decliners.

The S&P 500 posted 29 new 52-week highs and no new lows; the Nasdaq Composite recorded 24 new highs and 166 new lows.

(Reporting by Noel Randewich; Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel)

Copyright © Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

News, commentary and research reports are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.