By Tanya Agrawal
REUTERS - U.S. stocks fell in early afternoon trading 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 and opened 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 for companies. 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.
U.S. overnight indexed swap rates rose after the latest jobs data, suggesting traders were pricing a 52 percent chance that rates would be raised in September, up from 47 percent prior to the data, according to John Briggs, head of cross-asset strategy at RBS Securities Inc in Stamford, Connecticut.
The jobs data and comments from Federal Reserve officials suggest that weak inflation and outside risks such as China's recent stock market crash are unlikely to dissuade the Fed from raising rates at its 16-17th September meeting.
"Everything seems absolutely perfect for the Fed to raise rates in September," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh, Pennsylvania.
"They have made a big deal about being a data-driven organization, so unless something super-bad information comes to them in the next 30 days, it's pretty likely they are going to raise rates."
At 12:51 p.m. ET (1651 GMT) the Dow Jones industrial average was down 117.72 points, or 0.68 percent, at 17,302.03. The S&P 500 was down 12.17 points, or 0.58 percent, at 2,071.39 and the Nasdaq composite was down 37.35 points, or 0.74 percent, at 5,019.09.
Nine of the 10 major S&P sectors were lower, with the energy index's 1.26 percent fall leading the decliners as oil prices headed for a sixth straight week of losses.
Exxon Mobil's 1.5 percent loss weighed the most on the S&P 500.
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.
Cablevision Systems' shares fell 5.6 percent to $25.04 after the company managed to stem video subscriber losses, but at the cost of margins.
Earnings continue to remain in focus. With about three-quarters of the S&P 500 companies having reported second-quarter results, 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 quarterly revenue.
Groupon fell 7.1 percent to $4.35, while Hershey was down 3.4 percent at $89.04 after the companies reported results.
Declining issues outnumbered advancers on the NYSE by 1,805 to 1,139. On the Nasdaq, 1,773 issues fell and 926 advanced.
The S&P 500 index showed three new 52-week highs and 13 new lows, while the Nasdaq recorded 22 new highs and 123 new lows.
(Editing by Saumyadeb Chakrabarty and Savio D'Souza)
