US STOCKS-S&P 500, Nasdaq dragged by tech as upbeat data fans inflation fears

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* Weekly U.S. jobless claims hit new pandemic low

* Services industry activity index at record high in May

* GM gains on ‘significantly better’ first-half results

* AMC sees more frenzied trade after share sale

* Dow up 0.04%, S&P down 0.23%, Nasdaq falls 0.75% (Updates with U.S. afternoon trading)

By Lewis Krauskopf, Shashank Nayar and Medha Singh

June 3 (Reuters) - U.S. stocks wavered on Thursday, with tech shares dragging on the S&P 500 and Nasdaq, as investors balanced concerns about inflation and the Federal Reserve reining in stimulus with relief about corporate tax hikes.

The Dow was little changed as stocks rebounded after reports that President Joe Biden offered to scrap his proposed tax hike. In talks with Republicans, the Democrat offered to drop plans to hike corporate rates as high as 28%, and instead set a 15% minimum tax rate for companies, sources told Reuters.

“To set those rates at 15%, I think it would be great for the market, if they could do that and take away some uncertainty there,” said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas.

A better-than-expected U.S. weekly unemployment report and private payrolls numbers for May pointed to strengthening labor conditions, ahead of the closely watched U.S. payrolls report due on Friday. A measure of service sector activity increased to a record high.

Investors are focused on whether robust economic reports could prompt the Fed to pare back monetary support put in place during the coronavirus pandemic sooner than expected.

“The market is digesting strong economic data with some inflationary pressures and factoring in whether this will change the timing of Fed tapering and how to factor that into stock prices,” said Brad Neuman, director of market strategy at Alger in New York.

Sparking fears over easing support was the Fed’s announcement on Wednesday that it will begin to unwind its corporate bond holdings acquired last year through an emergency lending facility launched to calm credit markets at the height of the pandemic.

The Dow Jones Industrial Average rose 13.55 points, or 0.04%, to 34,613.93, the S&P 500 lost 9.85 points, or 0.23%, at 4,198.27 and the Nasdaq Composite dropped 103.85 points, or 0.75%, to 13,652.48.

The S&P 500 tech sector fell 0.6%. Tech and other growth stocks are seen as particularly vulnerable if inflation drives up bond yields and more heavily discounts the value of future cash flows.

The energy and financials sectors were logging gains. Those and other value stock segments that are expected to outperform in an expanding economy have topped tech and other growth shares for much of 2021. Overall, the S&P 500 is up roughly 12% for the year and within about 1% of its record high.

In company news, General Motors Co shares rose 6.3%, after the carmaker estimated “significantly better” first-half profits than previously forecast. Rival Ford added 7.4%.

Frenzied trading continued in retail investor favorite AMC Entertainment Holdings. Following a dip in the session, AMC shares were up 7.4% after the theater chain operator said it completed a share offering it announced earlier in the day.

Declining issues outnumbered advancers on the NYSE by a 1.40-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored decliners.

The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 67 new highs and 27 new lows. (Reporting by Shashank Nayar and Medha Singh in Bengaluru; Editing by Maju Samuel and Richard Chang)