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Weekly jobless claims at 219,000, below estimates

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Crypto stocks fall tracking losses in bitcoin

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Indexes down: Dow 0.30%, S&P 500 0.25%, Nasdaq 0.23%

(Updates after markets open)

By Medha Singh and Purvi Agarwal

Dec 26 (Reuters) -

Wall Street's main indexes drifted lower in light trading

volumes on Thursday, as rising yields pressured some shares,

while investors looked for a year-end boost from the so-called

Santa Claus rally.

Yields on government bonds inched higher across the board,

with the yield on the benchmark 10-year note hitting

its highest since early May at 4.64%.

Among megacap stocks, Amazon.com ( AMZN ) slipped 0.3%,

while Meta Platforms ( META ) shed 0.6%.

Rate-sensitive real estate stocks were among the

worst hit, down 0.4%, while consumer discretionary

fell 0.5%.

"Now we're at an inflection point on the Treasury yield,

especially the 10-year ... any move higher and it tends to

create equity market weakness and that's what I'm seeing this

morning," said George Cipolloni, portfolio manager at Penn

Mutual Asset Management.

At 09:40 a.m. ET, the Dow Jones Industrial Average

fell 123.50 points, or 0.30%, to 43,173.53, the S&P 500

lost 15.13 points, or 0.25%, to 6,024.91 and the Nasdaq

Composite lost 46.45 points, or 0.23%, to 19,984.67.

Markets in Europe, London and parts of Asia were closed on

Thursday.

The S&P 500 and the Nasdaq wrapped up Tuesday's truncated

session with a third straight day of gains, lifted by megacap

and growth stocks.

Gains in Apple ( AAPL ), Tesla, Alphabet,

Amazon ( AMZN ), Nvidia ( NVDA ), Microsoft ( MSFT ) and Meta

Platforms ( META ) accounted for more than half of the S&P 500's

28.4% total return this year, according to S&P Dow Jones Indices

Senior Index Analyst Howard Silverblatt.

Without the Magnificent Seven stocks, the benchmark index's

total return would have been 13.2% in 2024, Silverblatt added.

U.S. stocks have hit a speed bump this month following

an election-led rally in November as they contend with the

Federal Reserve's projection of fewer interest rate cuts in

2025.

The three main indexes have hit multiple record highs

this year on hopes of a lower interest rate environment and the

prospects of artificial intelligence boosting corporate profits.

However, investors are starting to question the sustainability

of the rally due to stretched valuations and as megacaps

continue to attract more investor funds.

Yet, investors are hoping for a typically strong finish

in the final days of the year - called the "Santa Clause rally"

- a pattern attributed to low liquidity, tax-loss harvesting and

investing of year-end bonuses.

The S&P 500 has gained an average of 1.3% in the last

five trading days of December and the first two days of January

since 1969, according to the Stock Trader's Almanac. A December

without a Santa rally has been followed by a weaker-than-average

year, data from LPL Financial going back to 1950 showed.

Meanwhile, a Labor Department report showed the number of

new Americans filing for jobless benefits last week fell to

219,000, compared with the 224,000 expected by economists in a

Reuters poll.

Cryptocurrency-related stocks were down after bitcoin

fell over 3%. Coinbase Global ( COIN ) was off 1.4%, while Riot

Platforms ( RIOT ) and Mara Holdings ( MARA ) shed over 2.4%

each.

Declining issues outnumbered advancers by a 3.08-to-1

ratio on the NYSE and by a 2.03-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and one new low

while the Nasdaq Composite recorded 17 new highs and 24 new

lows.

(Reporting by Medha Singh and Purvi Agarwal in Bengaluru;

Editing by Anil D'Silva)