(Updates with latest market prices and developments.)
US benchmark equity indexes fell intraday as a stronger-than-expected August jobs report boosted the odds of the Federal Reserve raising interest rates as early as this month.
The Dow Jones Industrial Average was down 0.5% at 53,412.4 after midday Friday. The S&P 500 and the Nasdaq Composite lost 0.3% each to 7,721.2 and 26,506.9, respectively.
Most sectors were in the red intraday Friday, led by consumer discretionary, while industrials paced the gainers.
Total nonfarm payrolls rose by 162,000 last month, the Bureau of Labor Statistics said Friday, nearly triple the 55,000 increase projected in a Bloomberg-compiled survey. July's tally was revised to show a gain of 21,000 from a 23,000 fall.
The jobs report comes as the Federal Reserve weighs labor-market conditions and inflation expectations ahead of its policy meeting later this month. Fed Chair Kevin Warsh said late last month that the US economy was "doing well" on employment, describing inflation numbers as more concerning.
Markets are pricing in a 58% probability that the Federal Open Market Committee will raise its benchmark lending rate on Sept. 16, up from 49% on Thursday, according to the CME FedWatch tool.
"The labor market strength and resilience evident in the August employment report with upward job revisions over the past two months nearly wipe away the narrative of labor market deterioration over the summer," BMO Chief US Economist Scott Anderson said in a note.
"The report adds important weight to the hawks' argument that inflation may not moderate back toward the Fed's 2.0% target in a timely manner without at least a nudge up in interest rates to help cool aggregate demand."
Fed Governor Christopher Waller said Thursday he would support keeping interest rates steady if further signs of disinflation emerge, though he seemed willing to tighten monetary policy if price pressures intensify.
Treasury yields were higher intraday, with the two-year rate rising 3.6 basis points to 4.37% and the 10-year rate up 0.6 basis point at 4.77%.
West Texas Intermediate crude oil was little changed at $91.29 a barrel, while Brent rose 0.6% to $96.06. The benchmarks were on track for weekly gains.
In company news, Lululemon (LULU) shares tanked 17% intraday, the worst performer on the S&P 500, as the athletic apparel retailer lowered its full-year outlook amid challenging market dynamics and continued pressure on the brand.
UiPath (PATH) slid 17% after the software company released its latest quarterly results late Thursday.
Zscaler (ZS) fell 4.9% even as the cloud security company reported fiscal fourth-quarter results above Wall Street's consensus and outlined a strong full-year outlook. The company's guidance is conservative and reflects factors including an expected loss of Red Canary's customers and the competitive artificial intelligence security environment, Oppenheimer said in a note.
Bucking the market's downward trend, tech-related stocks were higher intraday, with SanDisk (SNDK) up 11%, the biggest gain on the S&P 500. Super Micro Computer (SMCI), Marvell Technology (MRVL) and Western Digital (WDC) also advanced.
Spot gold was 0.8% lower at $4,435.64 per troy ounce, while silver lost 1.3% to $66.81 per ounce.
