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* Q2 GDP numbers show record contraction
* Jobless claims rise for second week in a row
* Qualcomm, UPS, up after results
* Dow down 0.85%, S&P off 0.38%, Nasdaq up 0.43% (Updates prices, market activity, volume figures)
By Sinéad Carew
July 30 (Reuters) - The S&P 500 and Dow closed lower on Thursday after data painted a worrying economic picture on a crucial day for corporate earnings reports, while President Donald Trump exacerbated investor nervousness by floating the possibility of delaying the U.S. presidential election.
The main earnings focus on Thursday was on reports from high-flyers including Apple Inc, Google parent Alphabet Inc and Facebook Inc and Amazon.com Inc .
After the bell, shares in Facebook rose 8% and Amazon climbed 6% following their reports while Alphabet climbed 2%.
Investors also worried about the expiration of enhanced employment benefits on Friday as U.S. Congress was no closer to a deal on Thursday to extend or replace the extra $600-per-week in payments to tens of millions thrown out of work by the coronavirus.
Early in the day second-quarter Gross Domestic Product (GDP) data showed the U.S. economy suffered its steepest contraction since the Great Depression, as business activity came to a halt due to lockdowns aimed at fighting the pandemic.
Also jobless claims rose last week, adding to signs the momentum of economic recovery has slowed as coronavirus cases spiraled in southern and western U.S. states.
Shortly after the data, Trump, raised the idea of a delay in elections. The idea was immediately rejected by both Democrats and his fellow Republicans in Congress, the branch of government with the power to make that change.
But the S&P gained ground as the day wore on and closed well above its session low, which was reached at 1000 EDT (1400 GMT).
The market stabilized after "opening the front hall closet and all the stuff comes tumbling out," said Carol Schleif, deputy chief investment officer, Abbot Downing in Minneapolis, Minnesota. She cited the stimulus battle along with election uncertainty on top of weak data and earnings angst.
After the initial knee-jerk reaction, Schleif said, people stepped back and focused on Federal Reserve Chair Jerome Powell's assurance on Wednesday that the central bank would "do whatever it takes" to support the economy.
"You open the door it comes piling out, you're frightened and then you settle down and start picking stuff up and putting it back where it belongs," she said.
The Dow Jones Industrial Average fell 225.92 points, or 0.85%, to 26,313.65, the S&P 500 lost 12.22 points, or 0.38%, to 3,246.22 and the Nasdaq Composite added 44.87 points, or 0.43%, to 10,587.81.
The market had gained ground on Wednesday even after the Fed also said a surge in virus cases was likely stalling the recovery, which will depend significantly on the virus path.
Of the S&P 500's 11 major sectors energy, materials , financials and lagged the most. Technology consumer discretionary and communications services were the only sectors to eke out small gains.
The tech-heavy Nasdaq was boosted by Qualcomm Inc, up 15%, after the chipmaker forecast fourth-quarter revenue largely above estimates.
But investors were anxious about earnings from the Nasdaq's so called four horsemen - Apple and Amazon, Alphabet and Facebook. Apple was the last to report of the companies which have a combined market value of about $5 trillion.
"When you have a big earnings day you're going to have volatility in the market," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
Still Wall Street's main indexes were headed for their fourth monthly gain in a row, with the benchmark S&P 500 only about 4% below its February record high.
"The markets have over the past several months been detached from reality and are being fueled by Fed buying and positive momentum," said Phil Toews, chief executive officer of Toews Corp in New York.
United Parcel Service Inc, up 14.4%, soared following its quarterly results.
Declining issues outnumbered advancing ones on the NYSE by a 1.89-to-1 ratio; on Nasdaq, a 1.24-to-1 ratio favored decliners.
The S&P 500 posted 30 new 52-week highs and no new lows; the Nasdaq Composite recorded 95 new highs and 27 new lows.
On U.S. exchanges 10.1 billion shares changed hands compared with the 10.47 billion average for the last 20 sessions. (Additional reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Patrick Graham, Shounak Dasgupta and David Gregorio)