Wall Street falls as jobs data supports Sept rate hike

By Tanya Agrawal

REUTERS - U.S. stocks were lower on Friday, with the major indexes poised to close in the red for the week, after solid job growth in July pointed to an improving economy, opening the door wider for an interest rate hike in September.

Wall Street took a dim view of the report as a stop to easy money will increase borrowing costs. The market has touched record highs, benefiting from near-zero interest rates for almost a decade.

Nonfarm payrolls increased 215,000 last month, fewer than the 223,000 forecast by economists, but the unemployment rate held at a seven-year low of 5.3 percent.

"The jobs report confirms that the market is progressing at a rate that will allow the Fed to raise rates in September," said James Abate, chief investment officer of Centre Funds.

The Fed has said it will raise rates only when it sees a sustained recovery in the economy. An improving labor market is key to the Fed's decision to raise rates.

"I think if we have a disastrous employment report next month, that could give them pause," said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts.

At 11:01 a.m. ET (1501 GMT) the Dow Jones industrial average was down 87.39 points, or 0.50 percent, at 17,332.36, the S&P 500 was down 8.75 points, or 0.42 percent, at 2,074.81 and the Nasdaq Composite was down 26.67 points, or 0.53 percent, at 5,029.77.

Eight of the 10 major S&P sectors were lower with the health index's 0.81 percent fall leading the decliners as biotechnology stocks slumped. The Nasdaq biotechnology index fell to a one-month low.

Wall Street ended sharply lower on Thursday as weak earnings reports from media companies stirred fears that more viewers are ditching cable TV, dragging the sector to its worst two-day loss since the financial crisis.

Earnings continue to remain in focus. With about three-quarters of the S&P 500 companies having reported, second-quarter earnings are estimated to have increased 1.6 percent while revenues are projected to have fallen 3.4 percent, according to Thomson Reuters data.

Nvidia's shares rose as much as 11.2 percent to a four-month high of $22.74, a day after the chipmaker reported a surprise rise in second-quarter revenue.

Groupon fell 3.7 percent to $4.51, while Hershey was down 4.1 percent at $88.41 after the companies reported results.

Noodles slumped as much as 25 percent to a life low of $11.37 after the pasta and sandwich restaurant chain forecast full-year adjusted profit and revenue below analysts' estimates.

Declining issues outnumbered advancing ones on the NYSE by 1,562 to 1,265. On the Nasdaq, 1,572 issues fell and 999 advanced.

The S&P 500 index showed two new 52-week highs and eight new lows, while the Nasdaq recorded 15 new highs and 101 new lows.

(Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty)