U.S. stocks were lower on Friday after April payrolls data showed employment gains hit a seven-month low, casting doubts about the health of the economy and the likelihood of an interest rate hike by the end of the year.
Nonfarm payrolls increased by 160,000 last month, far below the 202,000 that economists polled by Reuters had forecast on average. The number was lower than the first-quarter average monthly job growth of 200,000.
Mixed economic data and the slowing pace of global growth have weakened investors' appetite for risk.
The U.S. economy grew just 0.5 percent last quarter on an annualized basis and inflation has been below the Fed's 2 percent target for years.
U.S. President Barack Obama said on Friday that Congress needs to take steps to help put the wind back in the U.S. economy.
Dismal April jobs data indicated that the weakness in overall economic activity was spilling over to the labor market.
"For those who had thought a June rate hike was in play, this was a nail in coffin," said Phil Orlando, chief equity market strategist at Federated Investors in New York.
"The Fed is not going to change its policy statement in June at all. This raises question about a September rate hike. I would like to think the economy is in a better place at the end of year."
Traders virtually priced out an interest rate increase at the Fed's June 14-15 meeting, according to CME Group's FedWatch. They see a less than 40 percent chance of a hike in September and November, with a 48 percent chance in December.
At 12:35 p.m. ET (1635 GMT) the Dow Jones industrial average was down 27.32 points, or 0.15 percent, at 17,633.39, the S&P 500 was down 7.35 points, or 0.36 percent, at 2,043.28 and the Nasdaq Composite was down 27.03 points, or 0.57 percent, at 4,690.06.
Seven of the 10 major S&P 500 sectors were lower, with the health index's 1.33 percent fall leading the decliners.
Endo International slumped 40 percent to $15.95 after the drugmaker slashed its 2016 revenue and profit forecasts. The stock dragged other specialty drugmakers, such as Horizon Pharma, Mallinckrodt and Valeant.
An accommodative Federal Reserve and a recovery in oil prices have helped U.S. stocks rebound from sharp losses at the start of the year. However, the rally lost momentum in the past two weeks, weighed by underwhelming quarterly earnings and data.
Oil prices were up less than a percent as investors cashed in on a 20-percent rise over the past month.
First-quarter earnings for S&P 500 companies are mostly beating analysts' expectations, but are still estimated down 5.3 percent from a year ago, according to Thomson Reuters data.
Shares of Yelp were up 19.5 percent at $25.59 after the company's revenue beat expectations.
Square fell 19.6 percent to $10.48 after the mobile payments company reported a bigger-than-expected quarterly loss.
Declining issues outnumbered advancing ones on the NYSE by 1,443 to 1,422. On the Nasdaq, 1,645 issues fell and 1,028 advanced.
The S&P 500 index showed nine new 52-week highs and 12 new lows, while the Nasdaq recorded 18 new highs and 64 new lows.
(Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty)
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Updated Date: May 07, 2016 00:45 AM