(Updates close with weekly performance, volume, share moves)

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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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Indexes: Dow down 0.5%, S&P 500 down 0.3%, Nasdaq down

0.03%

By Caroline Valetkevitch

NEW YORK, Sept 5 (Reuters) - U.S. stocks ended slightly

lower on Friday as investors weighed economic worries against

optimism over interest rate cuts by the Federal Reserve after

data showed U.S. job growth weakened sharply in August.

Bank shares were among those taking the biggest hit, with the

S&P 500 bank index ending 2.4% lower.

However, Broadcom ( AVGO ) shares rose 9.4%, helping to

offset market losses, a day after the chipmaker

unveiled a $10 billion

artificial intelligence chip order from a new customer and

forecast

fourth-quarter revenue above estimates.

The U.S. economy created 22,000 jobs last month instead of

an estimated 75,000, confirming softening labor market

conditions, according to the Labor Department report.

The three major U.S. stock indexes initially rose and broke

records following the data, as traders of futures tied to the

Fed's policy rate boosted bets that the U.S. central bank will

trim rates in quick succession, starting this month, with a

50-basis-point easing now on the table.

The major indexes ended well off their lows of the session.

"It's going to take more than one bad data set for us to

dislodge this market at this point," said Pete Mulmat, CEO of IG

North America, parent company of tastytrade, in Chicago.

With so much focus on the rate outlook, U.S. stock

investors will pay close attention to inflation data

in the coming week

. The monthly U.S. consumer price index is due on Thursday.

The Dow Jones Industrial Average fell 220.43 points,

or 0.48%, to 45,400.86, the S&P 500 lost 20.58 points, or

0.32%, to 6,481.50 and the Nasdaq Composite dropped 7.31

points, or 0.03%, to 21,700.39.

For the week, the Dow fell 0.3%, the S&P 500 gained 0.3%

and the Nasdaq rose 1.1%.

"The payroll report today confirms a softening labor market

and justifies a rate cut at the Fed meeting later this month,"

said Bill Merz, head of capital markets research and portfolio

construction at U.S. Bank Asset Management in Minneapolis.

"The labor market is going to remain a very important

indicator for how this economic picture plays out, but so far

consumer spending has really surprised many people despite

softening in the labor market."

BofA Global Research also adjusted its outlook following the

report, forecasting one quarter-point cut each in September and

December.

The U.S. rate futures market has priced in a 7% chance that

the Fed will cut by 50 bps when it meets on September 16-17, and

a 93% probability of the more standard 25 bp cut, according to

LSEG calculations.

The rate-cut expectations helped the real estate sector

end 1% higher, and the Philadelphia Housing Index

jump 2.1%.

Shares of Kenvue ( KVUE ) fell 9.3% after the Wall Street

Journal reported, citing people familiar with the matter without

including evidence, that U.S. Health Secretary Robert F. Kennedy

Jr. plans to announce that use of Kenvue's ( KVUE ) pain medication

Tylenol in pregnant women is potentially linked to autism.

Among other decliners, Lululemon Athletica ( LULU ) dropped

18.6% after the yogawear-maker slashed its annual profit

forecast the second time in a row.

Advancing issues outnumbered decliners by a 1.87-to-1 ratio

on the NYSE. There were 508 new highs and 64 new lows on the

NYSE.

On the Nasdaq, 2,704 stocks rose and 1,899 fell as

advancing issues outnumbered decliners by a 1.42-to-1 ratio.

Volume on U.S. exchanges was 16.95 billion shares, compared

with the 16.05 billion average for the full session over the

last 20 trading days.