(For a Reuters live blog on U.S., UK and European stock

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Indexes down: Dow 0.59%, S&P 500 0.49%, Nasdaq 0.23%

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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 with afternoon prices)

By Purvi Agarwal and Ragini Mathur

Sept 5 (Reuters) -

The major U.S. stock indexes pulled back from record

intraday peaks hit earlier on Friday after weaker-than-expected

August jobs data stoked worries of an economic slowdown and

dampened some of the optimism around potential Federal Reserve

rate cuts.

Data showed the United States economy created only

22,000 jobs last month compared to an estimate of 75,000

additions, confirming softening labor market conditions.

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.

Traders now see an 11.6% chance of a 50-bps rate cut

this month - 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...

If they're (the Fed) cutting in response to a weakening labor

market, that is initially not a bullish setup for the stock

market," said Kevin Gordon, senior investment strategist at

Charles Schwab.

Economically sensitive sectors bore the brunt of the

decline, with banks falling 2.3%, energy

dropping 2%, and industrials shedding 1.1%.

BofA Global Research also adjusted its outlook

following the report, forecasting one quarter-point cut each in

September and December.

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

early in the session, but the gains petered out as economic

concerns set in.

At 11:51 a.m. ET, the Dow Jones Industrial Average

fell 267.03 points, or 0.59%, to 45,354.26, the S&P 500

shed 31.98 points, or 0.49%, to 6,470.21, and the Nasdaq

Composite lost 50.90 points, or 0.23%, to 21,656.79.

Broadcom ( AVGO ) was in a bright spot, surging 9% to a

record high - and lifting the Philadelphia SE Semiconductor

index 1.1% - after the chip designer forecast

fourth-quarter revenue above estimates and expected AI revenue

growth to "improve significantly" in fiscal-year 2026.

Investors have lately been concerned about the lofty

valuations of AI-linked firms that briefly paused Wall Street's

rally in August.

Rising rate-cut bets helped drive the real estate sector

up 0.7%, while the Philadelphia Housing Index

climbed 2% to an eight-month high.

The S&P 500 and the Nasdaq were on track for weekly

gains despite September being a bad month historically for U.S.

equities. The Dow looked set for weekly declines.

Investors will be on the watch for consumer prices data,

due next week.

A 50 basis-point-cut was "not firmly" on the table

unless markets get more clarity on inflation, Gordon said.

Tesla rose 2.8% after the EV-maker proposed an

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

pegged to lofty performance targets.

Lululemon Athletica ( LULU ) plunged 18.3% 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 1.6%.

Advancing issues outnumbered decliners by a 1.48-to-1

ratio on the NYSE and by a 1.12-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 114 new highs and 77

new lows.