Wall Street flat after September jobs data

By Medha Singh

(Reuters) - Wall Street was set to open little changed on Friday after September jobs data showed further tightening in the U.S. labor market and moderate inflation pressures, doing little to deter predictions of gradual rate hikes by the Federal Reserve.

U.S. job growth slowed sharply in September, the Labor Department said, likely due to the effect of Hurricane Florence. The unemployment rate fell to near a 49-year low and wages rose steadily. Jobs numbers for July and August were revised higher.

U.S. stock futures briefly turned positive after the data, likely due to the lower-than-expected 134,000 job additions last month, before reversing course to edge slightly lower.

The benchmark 10-year government yield briefly dipped before rising back to seven-year high.

"At first blush, folks are saying this is a miss and now looking under the surface it is showing up as still a pretty solid report that is likely to keep interest rates continuing to move a bit higher," said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

"The futures initially rallied as it was kind of viewed as a goldilocks, but it is interesting yields kind of looked at it and said no this is still going to be a solid report, a strong report and 10-year yields continued to increase and now futures are off."

At 9:04 a.m. ET, Dow e-minis were down 7 points, or 0.03 percent. S&P 500 e-minis were down 1.5 points, or 0.05 percent and Nasdaq 100 e-minis were down 12 points, or 0.16 percent.

Fears of accelerating inflation, especially after a string of strong economic data and bullish views from Federal Reserve Chairman Jerome Powell, have dampened the appetite for stocks.

A surge in bond yields has weighed on Wall Street, with the S&P 500 and the Nasdaq posting their worst day since late June on Thursday.

Among stocks, Tesla shares fell 2.7 percent in premarket trading after Chief Executive Officer Elon Musk stirred nerves about the settlement of his securities fraud lawsuit by mocking the U.S. Securities and Exchange Commission on Twitter.

Generic drugmaker Mylan slipped 0.8 percent after Mizuho downgraded the stock to "neutral" from "buy".

(Reporting by Medha Singh in Bengaluru, additional reporting by Charles Mikolajczak in New York; Editing by Anil D'Silva)