U.S. stocks decline on jobs report

U.S. stocks traded sharply lower in the morning session Friday, as investors were digesting the highly-watched jobs data.

By midday, the Dow Jones Industrial Average tumbled 264.13 points, or 1.61 percent, to 16,110.63. The S&P 500 dropped 28.23 points, or 1.45 percent, to 1,922.90. The Nasdaq Composite Index lost 43.57 points, or 0.92 percent, to 4,689.93.

U.S. nonfarm payrolls data came out mixed, which missed on the headline number but beat estimates on the unemployment rate and wage indicators.

The Labor Department reported Friday that total nonfarm payroll employment increased by 173,000 in August, well below market consensus of 223,000. Over the prior 12 months, employment growth had averaged 247,000 per month.

The unemployment rate, however, inched down to 5.1 percent, beating market estimates of 5.2 percent and logging the lowest level in seven years. The number of unemployed persons edged down to 8 million.

Over the year, the unemployment rate and the number of unemployed persons were down by 1.0 percentage point and 1.5 million, respectively.

In August, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to 25.09 U.S. dollars, also higher than market expectations.

The jobs report is the final read on monthly labor conditions before the Federal Reserve makes a decision on interest rates at its next policy meeting in about two weeks.

"A below-consensus headline with a big upward revision adds up to economic data good enough to justify a rate hike in two weeks if economic data were all that mattered," chief economist at FTN Financial Chris Low said in a note.

"We think the FOMC will elect to raise rates, but they can still talk themselves out of it if they try," he added.

U.S. stock markets are closed Monday for the Labor Day holiday. Endit