* Jobless claims fall by 10,000 to 265,000 last week
* Dow sheds more than 111 points on Wednesday
* Nvidia falls on Citron Research tweet
* Futures up: Dow 3 pts, S&P 1.5 pts, Nasdaq up 1.25 pts (Adds details, comments; updates prices)
By Yashaswini Swamynathan
Dec 29 (Reuters) - Wall Street looked set to open little changed on Thursday, a day after the S&P 500 index suffered its biggest fall in two months, putting a damper on a post-election rally.
A report showed the number of Americans applying for jobless claims fell by 10,000 to 265,000 last week, indicating sustained strength in the labor market.
U.S. equities had been enjoying a rally since the presidential election in November on bets that Donald Trump would introduce tax cuts, deregulation and higher infrastructure spending that would spur economic growth.
The near two-month rally has seen the three main Wall Street indexes rack up double-digit percentage gains, but has left some market participants nervous about a potential correction.
The S&P 500 index suffered its biggest one-day percentage drop on Wednesday, following weak housing data and losses in the technology sector. The triple-digit loss on the Dow pulled it further away from its march towards 20,000.
"The markets are trading in a full-blown holiday mood, with little direction on either side of the equation," Peter Cardillo, chief market economist at New York's First Standard Financial wrote in a note.
Dow e-minis were up 3 points, or 0.02 percent at 8:30 a.m. ET (1330 GMT), with 15,774 contracts changing hands.
S&P 500 e-minis were up 1.5 points, or 0.07 percent, with 73,460 contracts traded.
Nasdaq 100 e-minis were up 1.25 points, or 0.03 percent, on volume of 12,695 contracts.
The dollar index fell 0.37 percent on Thursday after a sharp rise this month.
U.S. crude prices were off 0.15 percent after data showed a surprise rise in U.S. inventories.
Nvidia's shares fell nearly 3 percent to $106.06 in heavy premarket trading, setting the stock up for a second straight day of losses after short-seller Citron Research tweeted that the chipmaker's stock could fall to $90 in 2017.
Shares of Advanced Micro Devices, Nvidia's rival, were off 2.6 percent.
Cempra dropped 46.7 percent to $3.25 after the drug developer said the U.S. Food and Drug Administration rejected its antibiotic treatment for pneumonia. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)