* Financial sector set to fall for second day in a row
* Defensive utilities, real estate stocks outperform
* Dow down 0.01 pct, S&P up 0.01 pct, Nasdaq down 0.23 pct (Updates to late afternoon)
By Lewis Krauskopf
Dec 29 (Reuters) - Wall Street was little changed on Thursday as bank share declines were countered by gains in utilities and other defensive groups in quiet holiday trading as traders looked to position for the new year.
U.S. equities have paused in recent days, after rallying in the wake of Donald Trump's Nov 8 election as U.S. president as investors bet on benefits from his plans to cut taxes and regulations and introduce fresh economic stimulus.
The post-election surge has put the benchmark S&P 500 on pace for a roughly 10 percent gain for the year, but has left some market participants nervous about a potential correction.
"We are headed into the new year having seen the market post one of the most dynamic, robust moves higher we've seen in quite some time," said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York. "I don't think there is a lot left in the tank for the bulls here."
The Dow Jones Industrial Average fell 1.27 points, or 0.01 percent, to 19,832.41, the S&P 500 gained 0.14 points, or 0.01 percent, to 2,250.06 and the Nasdaq Composite dropped 12.67 points, or 0.23 percent, to 5,425.88.
The Dow has yet to breach the 20,000 mark, after repeatedly coming within 20 points of the milestone.
The S&P 500 financial index dropped 0.8 percent, the worst-performing sector, but has still risen about 20 percent in 2016.
Bank of America, Citigroup and Morgan Stanley were down more than 1 percent each. Goldman Sachs and JPMorgan weighed the most on the Dow.
Utilities and real-estate - which have lagged since the election - led the way up on Thursday.
"What you're seeing is some of the investors looking at the more recent losers and picking them up and rotating out of some of the post-election winners," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
A drop in U.S. exports last month pushed the country's trade deficit in goods higher while the number of Americans filing for unemployment benefits fell last week in a positive sign for the labor market, reports showed.
Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates Inc in Toledo, Ohio, said the jobless claims data was "right in line" and "corresponds with what we've had the past week - nothing that will move the needle from the standpoint of buyers getting enthused or sellers panicking out."
In corporate news, drug developer Cempra tumbled 57 percent after U.S. health regulators rejected its antibiotic.
Advancing issues outnumbered declining ones on the NYSE by a 1.35-to-1 ratio; on Nasdaq, a 1.29-to-1 ratio favored decliners.
The S&P 500 posted 1 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 63 new highs and 41 new lows. (Additional reporting by Chuck Mikolajczak in New York and Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva and Chizu Nomiyama)