Wall Street pared gains in early afternoon trading on Friday as investors feared the weaker-than-expected August employment report will not be enough to dissuade the Federal Reserve from raising interest rates as soon as this month. US nonfarm payrolls rose by 151,000 jobs in August after an upwardly revised 275,000 increase in July, with job cuts in manufacturing and construction, the Labor Department said. Economists polled by Reuters had forecast payrolls rising 180,000 last month.
"This mixed jobs report puts the Fed in a tricky situation," said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California. "It's not all around strong enough to assure a September interest rate hike. But it's solid enough to engender a heated policy discussion, especially given the unintended consequences and collateral damage of a prolonged period of ultra low interest rates."
Traders saw a 27 percent probability of a Fed rate hike this month, higher than the 24 percent chance on Thursday, according to CME Group's FedWatch program. At 12:48 pm ET (1648 GMT), the Dow Jones industrial average was up 43.01 points, or 0.23 percent, at 18,462.31, the S&P 500 was up 5.17 points, or 0.24 percent, at 2,176.03 and the Nasdaq Composite was up 11.39 points, or 0.22 percent, at 5,238.60. Nine of the 10 major S&P sectors were higher, with the energy index's 0.99 percent rise leading the advancers.
Lululemon Athletica shares were down 8.6 percent at $70.04 after the Canadian yoga wear retailer reported quarterly comparable-sales growth below expectations. Broadcom fell 2.37 percent to $172.90 after the chipmaker's revenue in its largest segment stalled in the latest quarter. The stock was the biggest drag on the S&P and the Nasdaq.