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U.S. unemployment rate rises to 4.1%

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All three major indexes set for weekly gains

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Macy's up on report Arkhouse, Brigade Capital raise buyout

offer

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Indexes: Dow down 0.08%, S&P flat, Nasdaq up 0.23%

(Updated at 9:50 a.m. ET/1350 GMT)

By Ankika Biswas and Lisa Pauline Mattackal

July 5 (Reuters) - The Dow and the S&P 500 struggled for

direction on Friday as investors assessed mixed payrolls data

for cues on the Federal Reserve's pace of policy easing, while

gains in megacap tech stocks lifted the Nasdaq.

Futures initially rose after the U.S. Labor Department's

closely watched report showed the unemployment rate ticked

higher to 4.1% in June, compared with expectations of it

remaining unchanged at 4%.

However, the headline non-farm payrolls number rose by

206,000 jobs in June, higher than the expected 190,000 increase.

Numbers for May were also revised sharply lower to 218,000 from

272,000.

Average hourly earnings rose 0.3%, as expected, and lower

than the 0.4% rise in May.

"It's a relatively benign report. The market was generally

expecting the job gains to be a little bit lower, but the number

was lower than May's report that had really worried some

people," said Emily Bowersock Hill, CEO of Bowersock Capital

Partners.

"If you're the Fed, you're saying - what happened in May is

not quite as hot as we thought. The data isn't bad enough to

alarm markets, and not bad enough to worry the Fed."

Treasury yields slipped after the data, lifting

rate-sensitive megacap stocks such as Apple ( AAPL ), Amazon.com ( AMZN )

and Meta Platforms ( META ) which were up between 0.7%

and 2.2%.

Alphabet's shares rose 1.6% to a record high.

Utilities and consumer discrectionary stocks

led sectoral gains, while the energy sector led

declines.

Chances of a 25-basis point September interest rate cut

stood at about 75% after the payrolls data, according to LSEG,

with traders holding bets steady on about two cuts this year.

Tesla reversed early gains, pulling back 0.6% after

hitting its highest level since early January on Wednesday.

Other data this week pointed to the U.S. economy losing

steam, prompting market participants to strengthen their bets

for multiple rate cuts this year.

That helped the S&P 500 and the Nasdaq notch record closing

highs during Wednesday's holiday-shortened trading. With the

equity market also staying shut for U.S. Independence Day on

Thursday, trading volumes have been light throughout the week.

At 9:50 a.m. ET, the Dow Jones Industrial Average was

down 33.29 points, or 0.08%, at 39,274.71, the S&P 500

was up 0.80 points, or 0.01%, at 5,537.82, and the Nasdaq

Composite was up 41.80 points, or 0.23%, at 18,230.10.

All the three major Wall Street indexes remain on course for

weekly gains. With second-quarter earnings on the horizon, it

remains to be seen whether Wall Street's rally will broaden

beyond major megacap stocks and whether earnings for those

companies can continue to support steep valuations.

Macy's jumped 10% after a report said Arkhouse

Management and Brigade Capital raised their bid to buy the

department store chain for about $6.9 billion.

Declining issues outnumbered advancers for a 1.55-to-1 ratio

on the NYSE and a 1.51-to-1 ratio on the Nasdaq.

The S&P index recorded 12 new 52-week highs and six new

lows, while the Nasdaq recorded 18 new highs and 54 new lows.