* S&P 500, Dow hit new intraday highs
* Investor focus now on earnings, valuations
* JetBlue up after June traffic report
* Dow up 0.02 pct, S&P flat, Nasdaq down 0.01 pct (Adds details, comments, updates prices)
By Yashaswini Swamynathan
July 13 (Reuters) - After a three-day record-setting rally, U.S. stocks took a breather on Wednesday, with investor focus now on corporate reports to see if the higher valuations are justifiable.
A strong U.S. jobs report on Friday, easing political tension in Japan and Britain and increased prospects of central banks providing stimulus post Britain’s vote to leave the European Union, calmed nerves and boosted faith in equities.
The S&P hit a record high for the third consecutive day on Wednesday. However, the three major U.S. indexes struggled to sustain momentum as investors looked for new catalysts.
“Markets are digesting their recent gains and are somewhat directionless. I think that it will be hard for us to go up much from here unless there are some positive surprises,” said Daniel Kern, chief investment strategist at TFC Financial Management in Boston.
“There is nervousness around current valuations in the U.S. and anxiety about second-quarter earnings.”
The S&P 500 is currently trading at 17.3 times forward earnings, compared with its 10-year average of 14.7, according to StarMine data.
While second-quarter earnings of S&P 500 companies are expected to fall 5 percent, along the same lines as the first, growth is expected to occur throughout the second half of 2016.
At 11:10 a.m. ET (1510 GMT), the Dow Jones Industrial Average was up 2.94 points, or 0.02 percent, at 18,350.61, easing slightly after hitting a record 18,390.16.
The S&P 500 was up 0.1 points, or 0 percent, at 2,152.24. It hit a record of 2,156.45.
The Nasdaq Composite was down 0.41 points, or 0.01 percent, at 5,022.41, barely hanging onto its gains for the year. The index on Tuesday turned positive for the first time in 2016.
Five of the 10 major S&P indexes were higher. The gains were led by the traditionally defensive telecom services, utilities and consumer staples sectors, which held back in the past couple of days.
The energy index dropped 1.4 percent after a steep fall in crude prices.
JetBlue rose 3.1 percent to $18.61 after reporting an 11.6 percent rise in June passenger traffic.
Another boost to the stock markets has been a hesitance by the U.S. Federal Reserve to raise interest rates in the near term. The Fed at 2 p.m. ET will release its so-called Beige Book, a collection of remarks on the health of the economy, which investors will parse to see if fundamentals remain strong.
Declining issues outnumbered advancing ones on the NYSE by 1,464 to 1,392. On the Nasdaq, 1,406 issues fell and 1,229 advanced.
The S&P 500 index showed 49 new 52-week highs and no new lows, while the Nasdaq recorded 101 new highs and seven new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D‘Souza)