Wall Street lower after payrolls; Apple to join Dow

NEW YORK (Reuters) - U.S. stocks fell on Friday, with the S&P 500 on track for a second week of declines, as a strong monthly jobs report heightened expectations the U.S. Federal Reserve could raise interest rates sooner than anticipated.

Nonfarm payrolls rose 295,000 last month, topping estimates for a gain of 240,000 jobs, after a downwardly revised 239,000 gain in January. The unemployment rate ticked down to 5.5 percent from 5.7 percent in January.

"People are trying to figure out whether the Fed is going to increase rates, probably now on a June time frame versus the September that was kind of the default the market had been looking at before. So this much stronger-than-expected number could push that date up," said Tracie McMillion, head of asset allocation at Wells Fargo Investment Institute in Winston-Salem, North Carolina.

The data boded well for economic growth, she said.

"This is a surprise to markets, we were expecting potentially a number below the expected number because of weather and other factors, but to get a number this strong given the expected loss of jobs in energy and the impact of weather is very positive for the U.S. economy."

In a shakeup on the Dow Jones Industrial Average, Apple Inc AAPL.O, the nation's largest company by market value, will join the index later this month, replacing AT&T Inc T.N, S&P Dow Jones Indices said. Apple shares rose 1.2 percent to $127.91 while AT&T shed 1 percent to $33.66.

"This brings the Dow into reality and the twenty-first century," said Richard Sichel, chief investment officer AT Philadelphia Trust Co in Philadelphia. "It will make the Dow a more interesting index to watch, but also more volatile since it is replacing a nice, steady old name with an interesting and exciting tech and retail company."

The Dow Jones industrial average fell 90.16 points, or 0.5 percent, to 18,045.56, the S&P 500 lost 7.3 points, or 0.35 percent, to 2,093.74 and the Nasdaq Composite dropped 7.81 points, or 0.16 percent, to 4,975.01.

The S&P 500 is down 0.2 percent for the week. Moves for major Wall Street indexes have been modest in either direction since March 2, when the both the Dow and S&P hit records and the Nasdaq climbed above 5,000 for the first time in 15 years.

All 31 U.S. banks passed a test of how they would do in another possible economic crisis, the Federal Reserve said on Thursday, but those with large trading books came out weak because of new elements in the check-up. Bank of America BAC.N shares rose 3.2 percent to $16.51 to lead financials .SPSY up 0.6 percent as the best performing S&P sector.

Declining issues outnumbered advancing ones on the NYSE by 2,082 to 685, for a 3.04-to-1 ratio; on the Nasdaq, 1,375 issues fell and 869 advanced for a 1.58-to-1 ratio.

The benchmark S&P 500 index posted 8 new 52-week highs and no new lows; the Nasdaq Composite recorded 26 new highs and 20 new lows.

(Reporting by Ryan Vlastelica; Editing by Bernadette Baum)