(Updates to afternoon trading, adds analyst comments)

* Atlassian ( TEAM ) surges after Q4 profit, revenue beat

* All three indexes set for best weekly showing since April

* July nonfarm payrolls at -23,000 versus +80,000 estimate

* Indexes up: Dow 0.13%, S&P 0.44%, Nasdaq 0.97%

By Chuck Mikolajczak and Shashwat Chauhan

NEW YORK, Aug 7 (Reuters) - U.S. stocks were poised to close

out a week of strong gains on an upbeat note on Friday after

data showed the U.S. economy unexpectedly shed jobs last month,

which dampened expectations that the Federal Reserve would raise

interest rates at its September meeting.

The Labor Department said nonfarm payrolls decreased by 23,000

jobs last month, well below the estimate of economists polled by

Reuters that called for an increase of 80,000 jobs. Previously

reported job gains for the prior two months were also revised

sharply lower, while the unemployment rate fell to 4.1% last

month from 4.2% in June due to workers leaving the labor force.

Market expectations for a rate hike from the Fed at its next

meeting dropped to 44.1%, according to CME FedWatch, down from

55% in the prior session and 67% a week ago.

Signs of progress for a potential peace deal in the Iran war

have helped cool oil prices and, in turn, have eased inflation

worries that could prompt a Fed rate hike and pushed Treasury

yields lower.

A strong earnings season has also tempered concerns about

the massive spending by AI-related companies, putting each of

the three major indexes on track for their biggest weekly

percentage gains since mid-April, with the Dow and S&P hitting

record highs earlier in the week.

"You probably have to lower rates to kind of stimulate job

growth, but if you lower rates, you're going to also stimulate

inflation. So you're kind of in a pickle at this point, and yet

the market's just taken off because earnings have been stellar,"

said Tom Siomades, chief market economist at AE Wealth

Management in Topeka, Kansas.

"The market should be reacting to weak job numbers and

higher inflation and the possibility of a slow-growth economy

that may need to have rates raised rather than cut, and yet it's

not. We're setting records, so go figure."

With earnings season entering the final stretch, of the 436

companies in the S&P 500 that have already reported results

through Friday morning, 85.1% have topped analyst expectations,

according to LSEG data - well above the 68% average since 1994.

Under new Fed Chair Kevin Warsh, the U.S. central bank has

offered investors little forward guidance on monetary policy,

leading market participants to focus on economic data and

commentary from policymakers.

MAJOR INDEXES POST GAINS

The Dow Jones Industrial Average rose 72.70 points,

or 0.13%, to 53,957.80, the S&P 500 gained 34.08 points,

or 0.44%, to 7,744.09 and the Nasdaq Composite gained

254.48 points, or 0.97%, to 26,602.84.

Elon Musk's SpaceX surged 11.9% a day after the expiry

of the first of several share lockup restrictions following its

record public offering in June.

Collaboration software maker Atlassian ( TEAM ) shot up 37.4%

while chip company Microchip Tech ( MCHP ) jumped 15.2% after

both forecast quarterly revenue above estimates.

Among other movers, vacation rental company Airbnb ( ABNB ) rose

15.7% as the best performer on the S&P 500 after beating

second-quarter revenue estimates. In contrast, Trade Desk ( TTD )

plummeted 21.3% as the worst performer on the benchmark

index after the ad-tech firm forecast third-quarter revenue

below expectations.

Advancing issues outnumbered decliners by a 2.5-to-1 ratio

on the New York Stock Exchange and by a 1.96-to-1 ratio on the

Nasdaq.

The S&P 500 posted seven new 52-week highs and one new low

while the Nasdaq Composite recorded 111 new highs and 65 new

lows.