US STOCKS-Wall Street dips after strong jobs data fuels hawkish Fed bets

Wall Street dipped on Friday as a robust jobs report raised the odds that the U.S. Federal Reserve will increase its key interest rate at this month's monetary policy meeting. All three major U.S. indexes were lower amid a ‌broad selloff ahead of the three-day holiday weekend, leaving all three essentially unchanged for the week.

The Labor Department's August employment report showed the U.S. economy added 162,000 jobs last month, nearly three times the 56,000 consensus, while June and July payrolls were upwardly revised by a total of 55,000 jobs. Labor market participation increased while the unemployment rate held firm at 4.1%. While a stronger-than-expected jobs ‌report would generally be good economic news, markets are interpreting it as a sign that the data-dependent Fed will implement a rate hike at the conclusion of this month's policy ‌meeting in order to curb war-related energy price pressures from morphing into broader, more systemic inflation.

"(Fed Chair Kevin) Warsh said last week at Jackson Hole that the general assessment of the labor market is it's very healthy, and this report pretty much solidifies that," said Mike Dickson, head of portfolio management at Horizon Investments in Charlotte, North Carolina. "It makes the (Consumer Price Index report) next week extremely important; if we get a hot print on inflation next week, I think ⁠we get ​a September hike." Financial markets are pricing in ⁠a 58.4% likelihood of a 25-basis-point rate hike at the conclusion of the Fed's September meeting, up from 49.4% on Thursday, according to CME's FedWatch tool.

The Dow Jones Industrial Average fell 292.47 points, or 0.54%, to 53,393.64, the S&P ⁠500 lost 39.01 points, or 0.50%, to 7,708.70 and the Nasdaq Composite lost 135.14 points, or 0.51%, to 26,448.92. Among the 11 major S&P 500 sectors, consumer discretionary stocks were down the most, while the industrial ​sector , the sole gainer, held on to nominal gains.

Semiconductors were clear outperformers, gaining 2.7%, but remain down more than 18% this quarter. Software and services having gained 24% ⁠over the same period, were clear laggards, dropping 2.0%. The two indexes seem to be locked in see-saw mode, in a pattern that "seems to persist almost on a daily basis and today is no exception," Dickson said.

Lululemon Athletica tumbled 17.4% ⁠after ​the activewear brand cut its full-year profit and revenue forecasts. Adobe dropped 5.7% following its announcement that longtime CEO Shantanu Narayen will hand over the reins to insider Anil Chakravarthy.

U.S. credit reporting agencies lost ground after Federal Housing Finance Agency Director Bill Pulte said on Thursday he directed Fannie Mae and Freddie Mac, created by the U.S. Congress to support the housing market, to approve ⁠all lenders to use the credit scoring system VantageScore. Fair Isaac lost 15.7%, TransUnion was down 6.9%, while Equifax slid 7.0%.

Declining issues outnumbered advancers by a 1.11-to-1 ratio on the NYSE. ⁠There were 123 new highs and 124 new ⁠lows on the NYSE. On the Nasdaq, 2,326 stocks rose and 2,302 fell as advancing issues outnumbered decliners by a 1.01-to-1 ratio.

The S&P 500 posted two new 52-week highs and six new lows while the Nasdaq Composite recorded 48 new highs and 91 new lows. U.S. markets will be ‌closed on Monday in ‌observance of the Labor Day holiday.