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Indexes down: Dow 0.76%, S&P 500 0.68%, Nasdaq 0.57%

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August nonfarm payrolls below expectations

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Broadcom ( AVGO ) up following strong AI revenue growth forecast

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Lululemon plunges after profit forecast cut

(Updates to late morning)

By Purvi Agarwal and Ragini Mathur

Sept 5 (Reuters) -

Wall Street's main indexes eased from record highs on Friday

after concerns about a slowdown in the world's largest economy

outweighed optimism about interest-rate cuts from the U.S. Fed

following a weaker-than-expected August jobs report.

Economically sensitive sectors led declines. Banks

fell 2.2%, energy shed 1.7% and industrials

lost 1%.

Data showed the U.S. economy created only 22,000 jobs

last month compared to an estimate of 75,000 additions,

confirming that labor market conditions were softening and

making a stronger case for interest-rate cuts from the Federal

Reserve in September.

Traders of futures tied to the Fed's policy rate added to

bets that the U.S. central bank will trim rates in quick

succession, starting this month, with a jumbo 50-basis-point

reduction now on the table.

While a 25-bps rate cut later this month was a near

certainty before the data, traders now also see a 16% chance of

a larger 50-bps rate cut in September - a stark change from no

such bets a month ago, CME's FedWatch Tool showed.

"This is more of a recessionary jobs report than not. It

doesn't indicate that we're necessarily in a recession now, but

it definitely is more in the negative column than it is in the

positive column," said Kevin Gordon, senior investment

strategist at Charles Schwab.

"If they're (the Fed) is cutting in response to a

weakening labor market because it's getting away from them, that

is initially not a bullish setup for the stock market."

The three major U.S. stock indexes had scaled fresh

peaks early in the session, but the gains petered out.

At 10:47 a.m. ET, the Dow Jones Industrial Average

fell 347.16 points, or 0.76%, to 45,273.92, the S&P 500

lost 44.49 points, or 0.68%, to 6,457.59, and the Nasdaq

Composite shed 128.27 points, or 0.57%, to 21,583.22.

Broadcom ( AVGO ) was in a bright spot, surging 9.8% to a

record high - lifting the Philadelphia SE Semiconductor index

0.5% - after the chip designer forecast fourth-quarter

revenue above estimates and expected AI revenue growth to

"improve significantly" in fiscal-year 2026.

Investors, unimpressed by Nvidia's ( NVDA ) quarterly

results last week and concerned after the lofty valuations of

AI-related firms briefly paused Wall Street's rally in August,

were relieved after Broadcom's ( AVGO ) results.

On the other hand, Lululemon Athletica ( LULU ) plunged

17.5% to a more than five-year low after the yogawear-maker

slashed its annual profit forecast the second time in a row,

dragging larger rival Nike ( NKE ) down 1.1%.

Tesla rose up 2% after the EV-maker proposed an

about $1-trillion compensation package for top boss Elon Musk,

subject to meeting lofty performance targets.

Advancing issues outnumbered decliners by a 1.27-to-1

ratio on the NYSE and by a 1.18-to-1 ratio on the Nasdaq.

The S&P 500 posted 28 new 52-week highs and three new

lows, while the Nasdaq Composite recorded 105 new highs and 66

new lows.