Tech stocks drag Wall Street lower after solid jobs data

© Reuters. A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 3, 2022. REUTERS/Andrew Kelly

By Devik Jain and Medha Singh

(Reuters) - Wall Street's main indexes fell on Friday, with technology stocks bearing the brunt of a selloff, after a solid jobs report bolstered the case for the Federal Reserve to press ahead with interest rate hikes.

U.S. employers hired far more workers than expected in July, the 19th straight month of payrolls expansion, with the unemployment rate falling to a pre-pandemic low of 3.5%.

The report added to a recent batch of data that has painted a bright picture of the world's largest economy after a contraction of 1.3% in the first half of the year.

"A strong job numbers report may not be what the market wanted as it could lead the Fed to maintain its hawkish stance and continue to hyper-raise rates," said Jake Dollarhide, chief executive officer at Longbow Asset Management in Tulsa, Oklahoma.

"The strong jobs report along with the prospect of lower inflation - with falling energy prices - could lead many to believe that the Fed is that much closer to a soft-ish ... landing for the economy."

Focus now shifts to inflation data due next week, with U.S. annual consumer prices expected to jump by 8.7% in July after a 9.1% rise in June.

The growth index, home to rate-sensitive technology and related stocks, fell 1.3% as U.S. Treasury yields climbed on rising odds of a 75-basis-point interest rate hike in September.

The jump in Treasuries, however, lifted banks, with JPMorgan Chase & Co (NYSE:JPM) rising 2.5% to provide the biggest support to the S&P 500 and the Dow.

Several policymakers have this week stuck to an aggressive policy tightening stance until they see strong and long-lasting evidence that inflation was trending toward the Fed's 2% goal.

Worries about a surge in borrowing costs, the war in Ukraine, Europe's energy crisis and COVID-19 flare-ups in China have rattled equities this year and prompted analysts to adjust their earnings expectations for corporate America.

However, a largely upbeat second-quarter earnings season has helped the S&P 500 bounce back nearly 13.7% from its mid-June lows after a rough first-half performance.

"With the Fed having to continue its fight towards price stability, the bottoming process most likely is not finished," said Quincy Krosby, chief global strategist at LPL Financial (NASDAQ:LPLA).

"Still, the June low provided an attractive trading bottom, now the market needs to wait for 'the' bottom."

At 11:50 a.m. ET, the Dow Jones Industrial Average was down 147.17 points, or 0.45%, at 32,579.65, the S&P 500 was down 36.02 points, or 0.87%, at 4,115.92, and the Nasdaq Composite was down 168.03 points, or 1.32%, at 12,552.55.

Lyft Inc (NASDAQ:LYFT) rose 4.6% as the ride-hailing firm forecast an adjusted operating profit of $1 billion for 2024 after posting record quarterly earnings.

Declining issues outnumbered advancers for a 2.10-to-1 ratio on the NYSE and for a 1.34-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and 30 new lows, while the Nasdaq recorded 38 new highs and 33 new lows.