* Futures: Dow up 0.13%, S&P down 0.54%, Nasdaq down

1.18%

* Semiconductors slide after strong rally

* U.S. jobs increase more than expected in May

* S&P Global to not change index entry eligibility for

megacap IPOs

(Adds comment, updates prices)

By Medha Singh and Twesha Dikshit

June 5 (Reuters) - The S&P 500 and the Nasdaq were set

to fall at market open on Friday, as chipmakers lost steam

following a sharp rally, while a stronger-than-expected monthly

jobs report raised expectations of a hawkish monetary policy.

Nonfarm payrolls rose by 172,000 jobs in May after

increasing 115,000 in April. The numbers were also way higher

than the 85,000 forecast by a Reuters survey of economists.

Money markets now see a 98% chance that the U.S. Federal

Reserve will hike interest rates by 25 basis points before the

end of the year, up from a nearly 60% expectation before the

data.

The data comes ahead of new Federal Reserve Chair Kevin

Warsh's first policy meeting later this month, as he takes

charge of an economy grappling with elevated inflation, partly

exacerbated by the Middle East conflict.

"You're not talking about a labor market that's doing

fabulous, but you're also not looking at a labor market that's

completely crumbling," said Mark Malek, chief investment officer

at Siebert Financial.

"It's healthy for the market to pull back a little bit and

slow down."

Nvidia ( NVDA ), the largest company by market value, fell

1.5%, while Intel ( INTC ), Micron, AMD and

Broadcom ( AVGO ) dropped between 1.2% and 4% in premarket

trading.

Gains in semiconductor stocks were instrumental in Wall

Street's recovery from March lows to record highs. A temporary

ceasefire in the Middle East and strong earnings growth also

supported the advances.

At 08:45 a.m. ET, Dow E-minis were up 69 points,

or 0.13%, and S&P 500 E-minis were down 40.75 points,

or 0.54%. Nasdaq 100 E-minis were down 360.75 points,

or 1.18%.

If losses hold through the session, the S&P 500 would

register its first weekly decline since April. The tech-heavy

Nasdaq was also set to end the week slightly lower, while the

price-weighted Dow was on track to rise for the third straight

week.

On Thursday, Hezbollah rejected a new Lebanon ceasefire,

while Israel said it would keep troops in place, dealing a blow

to U.S. President Donald Trump's push to end the fighting and

advance talks with Tehran.

Citi said it was trimming equity exposure after a strong

run. It had taken a bullish call when the Middle East ceasefire

took hold in April. It flagged rising inflation and positioning

risks, while keeping a constructive longer-term view on U.S.

equities supported by AI-driven earnings.

Among the major market movers on Friday, Lululemon Athletica ( LULU )

slumped nearly 11% after the athletic apparel maker cut

its annual profit forecast and projected second-quarter earnings

well below Wall Street estimates.

Cooper Companies ( COO ) rose 8.4% after the maker of

contact lenses beat estimates for second-quarter results.

S&P Global said it would not change the eligibility

requirements for its major indices, which effectively rules out

a swift entry for Elon Musk's SpaceX to the benchmark S&P 500

after it goes public in what would be the world's biggest IPO.

Meanwhile, S&P Dow Jones Indices will announce the results

following its rebalancing after markets close. Chipmaker Marvell

Technology, which now boasts of more than $270 billion

in valuation, is among the contenders to be added to the

benchmark index.

(Reporting by Medha Singh and Twesha Dikshit in Bengaluru;

Editing by Shinjini Ganguli)