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November nonfarm payrolls above estimates at 227,000

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Ulta Beauty ( ULTA ) gains after raising annual profit forecast

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Lululemon Athletica ( LULU ) up following upbeat annual forecast

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Indexes: Dow down 0.11%, S&P 500 up 0.26%, Nasdaq up 0.67%

(Updates with mid-session trading)

By Shashwat Chauhan and Purvi Agarwal

Dec 6 (Reuters) -

The S&P 500 and the Nasdaq hit intraday record highs on

Friday as traders increased bets on a Federal Reserve rate cut

this month following robust November nonfarm payrolls data,

while a drop in UnitedHealth ( UNH ) shares weighed on the Dow.

U.S. job growth

surged

in November after being severely hindered by hurricanes and

strikes, but a rise in the unemployment rate to 4.2% pointed to

an easing labor market, which should allow the Fed room to cut

interest rates again this month.

"(The jobs data was) little bit hotter than the Goldilocks

(situation) would probably like. However, it is sprinkling a

little optimism that the Federal Reserve will cut rates in

December," said Ken Mahoney, CEO of Mahoney Asset Management.

"We would think after a cut in December, maybe pause for

a couple of months."

Traders boosted bets the U.S. Federal Reserve would cut

interest rates this month, now signaling a more than 90% chance

of a 25-basis-point rate cut at the central bank's Dec. 17-18

meeting, versus 67% before the jobs data was released.

Brokerages including Morgan Stanley are reiterating their

expectation of a 25-basis-point interest rate cut by the Fed

following the employment data.

Meanwhile, a preliminary reading of the University of

Michigan's U.S. consumer sentiment survey stood at 74 in

December, compared with an estimate of 73, according to

economists polled by Reuters.

At 11:34 a.m. ET, the Dow Jones Industrial Average

fell 50.96 points, or 0.11%, to 44,714.75, the S&P 500

gained 15.76 points, or 0.26%, to 6,090.87, and the Nasdaq

Composite rose 131.25 points, or 0.67%, to 19,831.97.

A 5.2% drop in UnitedHealth ( UNH ) weighed on the

blue-chip Dow.

Lululemon Athletica ( LULU ) jumped 18% after the sportswear

maker increased its full-year forecasts, while cosmetics

retailer Ulta Beauty ( ULTA ) advanced 9.5% after raising its

annual profit forecast, pushing the Consumer Discretionary

sector up 1.5% to an all-time high.

Fed Governor

Michelle Bowman

said inflation risks to the economy remained and that

augured caution with further decisions on rate cuts. Chicago Fed

President

Austan Goolsbee

was noncommittal on whether he would support a reduction

this month.

Federal Reserve policymakers will enter a media blackout

that kicks in on Saturday, in the run-up to the central bank's

Dec. 17-18 policy meeting.

Accounting for the day's moves, the S&P 500 and the

Nasdaq were on track for their third consecutive weekly

gains, while the blue-chip Dow was set for minor losses.

Wall Street's three indexes have rallied this year, as

investors bought into heavyweight tech stocks in a bid to cash

in on the euphoria around artificial intelligence.

U.S. President-elect Donald Trump's win in the Nov. 5

election provided further impetus. Analysts expect his tax-cut

policies and looser regulations will support corporate

performance.

Advancing issues outnumbered decliners by a 1.06-to-1 ratio

on the NYSE, and by a 1.56-to-1 ratio on the Nasdaq.

The S&P 500 posted 26 new 52-week highs and nine new

lows, while the Nasdaq Composite recorded 85 new highs and 68

new lows.