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By Johann M Cherian and Sukriti Gupta

Feb 26 (Reuters) - The benchmark S&P 500 and tech-heavy Nasdaq fell on Thursday, after Nvidia shares swung to losses as investors focused on signs of increased AI spending in the industry, and data suggested a cooling U.S. economy.

Nvidia NVDA.O gave up early gains and fell 2.7% - a contrast to outsized gains the stock witnessed after some of its earlier results announcements. The company forecast upbeat quarterly revenue but its first-quarter gross margin outlook was below expectations.

Fellow chipmakers Broadcom AVGO.O and Advanced Micro Devices AMD.O fell and the broader chip index .SOX slid 2%.

Five of the S&P 500's 11 sectors traded lower, led by a 1.2% decline in technology stocks .SPLRCT.

Most megacaps fell, with Alphabet GOOGL.O and Meta META.O, among Nvidia's largest customers, dropping over 1% each.

"At this point, there's just an incredibly high bar (for Nvidia) to clear to get a big outside-stock reaction," said Ross Mayfield, investment strategist at Baird.

The launch of low-cost AI models from China's DeepSeek in January cooled a two-year, tech-driven bull run on Wall Street, with Nvidia losing half a trillion dollars in market value in a single day. More recently, an analyst report suggesting Microsoft was scrapping some data center leases also raised concerns of overcapacity.

At 10:07 a.m. ET, the Dow Jones Industrial Average .DJI rose 118.95 points, or 0.27%, to 43,552.07, the S&P 500 .SPX lost 22.68 points, or 0.38%, to 5,933.38 and the Nasdaq Composite .IXIC lost 201.70 points, or 1.06%, to 18,873.56.

Dampening some risk-taking, data showed jobless claims stood at 242,000, higher than estimates of 221,000.

The report comes on the heels of multiple data points over the past week that suggested the economy was stalling, fears of which have also put all three major U.S. indexes on track for monthly declines.

"There has already been a bit of a growth scare in markets after (business activity data) last week came in soft ... so this data is going to get a lot of attention," Mayfield added.

Separately, economic growth slowed in the fourth quarter, and the loss of momentum appears to have persisted early this quarter.

In his latest threats on trade partners, U.S. President Donald Trump floated a 25% "reciprocal" tariff on European cars and other goods.

Additionally, Trump said that his proposed tariffs on Mexico and Canada will go into effect on March 4 as scheduled.

Focus will now shift to the monthly Personal Consumption Expenditure data, the Federal Reserve's preferred inflation gauge, due on Friday.

Traders expect the Fed to lower borrowing costs by at least 50 basis points by December, according to data compiled by LSEG,

Salesforce CRM.N forecast fiscal 2026 revenue below expectations, sending shares of the business software provider down 4.1%.

Snowflake SNOW.N rose 9% after the data analytics provider forecast fiscal 2026 product revenue above estimates.

Viatris VTRS.O slumped 15.7% after the drugmaker forecast downbeat annual results, while Warner Bros Discovery WBD.O jumped 5.4% after saying it expects streaming profits to double this year.

Declining issues outnumbered advancers by a 1.63-to-1 ratio on the NYSE and by a 1.75-to-1 ratio on the Nasdaq.

The S&P 500 posted 11 new 52-week highs and five new lows while the Nasdaq Composite recorded 24 new highs and 120 new lows.

(Reporting by Sukriti Gupta, Medha Singh and Johann M Cherian in Bengaluru; Editing by Devika Syamnath)

((Sukriti.Gupta@thomsonreuters.com;))