* Indexes rise: Dow 0.17%, S&P 0.62%, Nasdaq 1.3%

* Atlassian ( TEAM ) surges after Q4 profit, revenue beat

* All three indexes set for best weekly showing since April

* July nonfarm payrolls at -23,000 versus +80,000 estimate

(Updates with afternoon trading levels)

By Shashwat Chauhan and Johann M Cherian

Aug 7 (Reuters) - Wall Street's main indexes were on track

for strong weekly gains on Friday after data showed the U.S.

economy unexpectedly shed jobs last month, tempering speculation

of the Federal Reserve raising borrowing costs in September.

A Labor Department report showed nonfarm payrolls fell

23,000 in July, far below the 80,000 job additions that

economists polled by Reuters had expected.

"For the Fed, the report could keep policymakers on track to

hike (rates); however, there may be somewhat less urgency, in

our view, with the timing likely dependent on incoming inflation

and employment data over the months ahead," said Brian Therien,

senior analyst at Edward Jones.

Money market data showed traders pared back expectations for

an increase in borrowing costs in September, with odds of a hike

now at about 20%, from 55% before the report, according to data

compiled by LSEG.

Under new Chair Kevin Warsh, the U.S. central bank has

offered investors little forward guidance on monetary policy,

sharpening the focus on economic data and commentary from

policymakers.

Payrolls, however, have a tendency to be softer in July, and

economists view the labor market as being in "slow hire, slow

fire" mode.

At 11:36 a.m. ET, the Dow Jones Industrial Average

rose 91.87 points, or 0.17%, to 53,976.97, the S&P 500

gained 48.02 points, or 0.62%, to 7,757.98, and the Nasdaq

Composite was up 343.47 points, or 1.30%, to 26,691.82.

All three main indexes were headed for their best weekly

showing since April, as robust earnings from several sectors

have propelled U.S. stocks higher lately.

A strong show from AI-related companies has quelled some

concerns about elevated AI spending not yielding conclusive

results, pushing the Dow and the S&P 500 to fresh record highs,

while helping the Nasdaq recover from a pullback that briefly

pushed it nearly 10% below its previous peak.

On Friday, eight of the 11 S&P sectors were trading higher,

with consumer discretionary leading gains while energy

lagged.

Elon Musk's SpaceX surged 10.6% a day after the

expiry of the first of several share lockup restrictions

following its record public offering in June.

Collaboration software maker Atlassian ( TEAM ) jumped 30.2%

while chip company Microchip Tech ( MCHP ) advanced 13.8% after

both forecast quarterly revenue above estimates.

The S&P 500 software and services index rose 1.5%

as software stocks found sure footing. Cybersecurity company

Cloudflare ( NET ) also gained 7.3% after raising its full-year

revenue forecast above estimates.

Chip stocks, which have seen immense volatility in

the last few months, were 2.3% higher. Heavyweight Nvidia ( NVDA )

climbed 2.6%.

Within the space, memory-linked companies were again under

pressure after Thursday's weakness. Sandisk ( SNDK ), Western

Digital ( WDC ), Micron Technology ( MU ) and U.S.-listed shares

of SK Hynix were all lower.

Of the more than 400 companies on the S&P 500 that have

reported earnings so far this quarter, more than 85% have beaten

analysts' expectations, above the 68% beat rate seen in a

typical quarter since 1994, according to LSEG I/B/E/S data.

Among other movers, vacation rental company Airbnb ( ABNB )

rose 15.4% after beating second-quarter revenue estimates, while

Trade Desk ( TTD ) dropped 21.7% after the ad-tech firm forecast

third-quarter revenue below expectations.