Dow, S&P slip on weak retail, energy shares

NEW YORK (Reuters) - The Dow and S&P 500 dipped on Thursday as disappointing sales from top retailers dented hopes about the holiday shopping season and energy shares fell with oil prices.

Telecommunications shares, including AT&T and Verizon , were among top drags on the Dow.

Several big U.S. retailers missed estimates for December sales after a post-Christmas blizzard that slowed a two-month shopping spree, driving down consumer shares. Target Corp fell 6.1 percent to $55.33.

The disappointing retail sales contrasted with Wednesday's economic data showing a much stronger-than-expected gain in private-sector jobs for December, which buoyed optimism about Friday's unemployment report from the Labor Department.

The retail weakness "was both surprising and disturbing, but the fact that it was so broadly based makes me think it had more to do with weather than fundamentals," said Walter Todd, who helps manage about $900 million as chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina.

Analysts noted recent market gains have put the S&P 500 in overbought territory, suggesting a temporary pullback could be in store in the near term. The S&P 500 is up about 8 percent since the start of December.

"It leaves the market vulnerable to profit-taking if there's a negative reaction to the jobs data," said Chris Burba, short-term market technician at Standard & Poor's in New York.

The Dow Jones industrial average <.DJI> was down 36.06 points, or 0.31 percent, at 11,686.83. The Standard & Poor's 500 Index <.GSPC> was down 0.3 percent at 1272.59. The Nasdaq Composite Index <.IXIC> was up 3.75 points, or 0.14 percent, at 2,705.95.

Energy shares added to losses as oil prices tumbled more than 2 percent to $88.37 a barrel. The S&P energy index <.GSPE> fell 0.7 percent.

"We think demand for commodities should continue to improve, but in the short term there's a negative correlation between the dollar and commodities," Todd said. The dollar <.DXY> was up 0.7 percent against other major currencies.

Among Nasdaq gainers was Microsoft Corp , which took a big step away from its alliance with Intel Corp to team up with Britain's ARM Holdings in the red-hot tablet and smart phone arena. U.S.-listed ARM shares rose 6.4 percent to $23.29, Intel fell 1.3 percent to $20.67. Microsoft was up 0.9 percent at $28.26.

In other economic data, new jobless claims rose more than expected for the week, but the four-week average dropped to it lowest in more than 2 years, indicating labor market improvement remained intact.

Economists raised forecasts for government payrolls numbers due Friday.

(Additional reporting by Ryan Vlastelica; Editing by Kenneth Barry)

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