US STOCKS-Wall Street slips on cooling rate cut hopes

* U.S. job growth surges, wage growth remains tepid
* Rate-sensitive bank stocks gain
* Chip stocks weak after Samsung results
* Indexes down: Dow 0.19%, S&P 0.35%, Nasdaq 0.38%

(Updates to early afternoon)
By Medha Singh and Sruthi Shankar
July 5 (Reuters) - U.S. stocks fell on Friday, slipping from
record levels hit in the previous session, as strong U.S. job
growth in June pushed investors to scale back bets on aggressive
interest rate cuts by the Federal Reserve.
The U.S. Labor Department data showed nonfarm payrolls rose
by 224,000 jobs in June, the most in five months, and solidly
beating economists' expectation of 160,000 additions. Traders lowered their expectations of a 50 basis point rate
cut by the Fed at its policy meeting on July 30-31, although
hopes remained high that the central bank would start easing
monetary policy.
"Markets have expected more than one rate cut this year and
this solid jobs report puts that into question, if the Fed will
cut more than just one time in 2019," said Ryan Nauman, market
strategist at Informa Financial Intelligence's portfolio
analytics arm Zephyr.
The jobs report also pointed to persistent moderate wage
gains and mounting evidence that the economy was losing
momentum, which could still encourage the Fed to cut rates this
month.
The Fed said in its semi-annual report to Congress that the
job market had "continued to strengthen" so far this year, and
described recent weak inflation as "transitory". Shares of banks .SPXBK , which have been under pressure
from falling benchmark debt yields in recent weeks, rose 0.8%
and helped drive a 0.4% gain in the financial sector .SPSY ,
which was the only major S&P sector in the positive territory.
The defensive sectors - real estate .SPLRCR , utilities
.SPLRCU and consumer staples .SPLRCS - fell between 0.6% and
0.8% as a rise in U.S. Treasury yields made the dividend-paying
companies less appealing.
However, Friday's losses were not severe enough to erode
this week's solid gains that took Wall Street's main indexes to
record closing highs on hopes of major central banks embracing
looser monetary policy and a temporary truce in U.S-China trade
dispute.
At 12:46 p.m. ET, the Dow Jones Industrial Average .DJI
was down 52.15 points, or 0.19%, at 26,913.85, the S&P 500
.SPX was down 10.49 points, or 0.35%, at 2,985.33 and the
Nasdaq Composite .IXIC was down 31.04 points, or 0.38%, at
8,139.19.
Trading volumes are likely to be thin at the end of a
holiday-shortened week as markets were shut on Thursday for
Independence Day holiday.
Among decliners were healthcare stocks .SPXHC , which fell
0.7% after a five-day run of gains.
The Philadelphia chip index .SOX fell 0.8% after Samsung
Electronics Co Ltd 005930.KS forecast a steep plunge in its
second-quarter operating profit, as a supply glut and rising
tariffs hit global demand for electronics. Declining issues outnumbered advancers for a 1.96-to-1 ratio
on the NYSE and a 1.40-to-1 ratio on the Nasdaq.
The S&P index recorded 14 new 52-week highs and no new lows,
while the Nasdaq recorded 32 new highs and 33 new lows.