The S&P 500 and the Dow have retreated as a surprise rise in weekly jobless claims added to signs the recovery of the US labour market was stalling amid a surge in COVID-19 infections.

The Labor Department’s report showed initial claims for state unemployment benefits last week increased to 778,000 from 748,000 in the prior week.

Economists polled by Reuters had forecast 730,000 applications.

With the next fiscal stimulus package now expected only after president-elect Joe Biden is sworn in on January 20, momentum in the labour market is expected to remain slow.

“The question is who wins the battle – the vaccines or the rising cases in the short term,” said Christopher Grisanti, chief equity strategist at MAI Capital Management in Ohio.

“For the last several weeks, the market has been looking through bad news, but then you get the statistic about the unemployment claim and the market focuses again on the short term difficulties we are having.”

Data also showed US consumer spending, which accounts for more than two-thirds of domestic economic activity, increased solidly in October but personal income fell.

In early trading, the Dow Jones Industrial Average was down, or 0.49 per cent, at 29,900 after closing above 30,000 for the first time on Tuesday.

The S&P 500 was down 0.27 per cent while the Nasdaq Composite was up 0.11 per cent.

Six of the 11 S&P indexes were lower, with the energy and financial sectors leading declines while technology mega-caps were among the biggest gainers in early trading.

Trading volumes were expected to be thin ahead of the Thanksgiving holiday on Thursday.

Major US banks JPMorgan Chase & Co and Goldman Sachs Group, among the most economically-sensitive, were down 1.9 per cent and 1.5 per cent respectively.

Hopes of a COVID-19 vaccine following promising trial data from three major drug makers as well as a smooth White House transition have lifted Wall Street’s main indexes to record highs and set the benchmark S&P 500 on course for its best November ever.

Market participants said they expected US stocks to climb even higher, with a recent Reuters poll showing the S&P 500 is poised to rise 9.0 per cent between now and the end of 2021.

The index has surged about 66 per cent since the coronavirus-led crash in March and is up about 12 per cent so far this year.

Tesla Inc, which crossed $US500 billion ($A681 billion) in market capitalisation on Tuesday, dropped 1.1 per cent as the electric-car maker recalled about 9,500 vehicles.

Declining issues outnumbered advancers 1.85-to-1 on the NYSE and 1.67-to-1 on the Nasdaq.

The S&P index recorded 11 new 52-week highs and no new low while the Nasdaq recorded 59 new highs and four new lows.