Stocks wobble after a surprisingly strong jobs report raises prospects of an interest rate hike

NEW YORK (AP) — Stocks are mostly lower in the early going on Wall Street and Treasury yields are higher after a surprisingly strong report on the job market appeared to increase chances that the U.S. central bank could raise interest rates later this month. The S&P 500 fell 0.1% early Friday. The Dow Jones Industrial Average fell 71 points, or 0.1%, and the Nasdaq composite edged up 0.1%. The government reported that U.S. employers added 162,000 jobs to their payrolls last month, far more than expected. That could give the Federal Reserve leeway to raise its benchmark short-term rate to fight inflation.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

U.S. futures are mixed ahead of the crucial August jobs report that could influence the U.S. Federal Reserve and it's next call on interest rates.

Futures for the S&P 500 climbed 0.1% on Friday, while those for the Dow Jones Industrial Average slipped 0.1%. Nasdaq futures rose 0.5%.

The U.S. Labor Department is expected to report that the American job market bounced back last month from a dismal July. But the job outlook is still clouded by a shortage of workers – the result of President Donald Trump’s immigration crackdown and the retirement of baby boomers – and by businesses’ stepped-up use of technology to do tasks that human beings once did.

The new data that will be released before the market opens likely showed that U.S. employers – companies, government agencies and nonprofits – collectively added a net 65,000 jobs last month after they slashed a surprising 23,000 positions in July, according to a survey by the data firm FactSet.

In energy trading, benchmark U.S. crude declined 0.9% to $90.49 a barrel. Brent crude fell 0.7% to $94.84 a barrel, but both are up sharply this week, rising 8% to 9%. U.S. gasoline prices will be higher this weekend than they have ever been at this time of year, according to AAA.

Diesel hit an all-time high for any time of the year on Friday, soaring to an average of $5.85 a gallon as the six-month war with Iran disrupts the world’s flow of fuel. Because diesel is used for many freight and delivery networks, higher diesel prices mean higher transportation costs for a long list of everyday goods, a price shock that can impact prices for consumers.

The war, which has intensified over the past week, is the main cause behind the recent surge in energy prices as the Strait of Hormuz remains effectively closed.

Iran fired at Kuwait on Thursday in retaliation for U.S. bombardments earlier in the week.

Shares of Lululemon Athletica slid more than 20% before the market open as the retailer lowered its fiscal full-year outlook again and a key sales figure dropped 9% in the second quarter.

Wall Street is also looking closely at interest rates, with some investors are taking the recent remarks by Federal Reserve governor Christopher Waller as a sign that perhaps the Fed isn’t as likely to raise its short-term interest rates at its next policy meeting in two weeks as previously expected.

Waller said that, if new data next week shows inflation is cooling, he “would be inclined” to keep the Fed’s benchmark interest rate unchanged. Should the data show hotter inflation, he would consider a rate hike.

Market players are also closely watching what Japan’s central bank might do on interest rates when its policy board meets later this month. Some analysts expect the Bank of Japan to raise its benchmark rate, and the question is by how much. Some reports say Japan is facing pressures to raise the interest rate so that the yen will move higher.

In European trading, France's CAC 40 slipped 0.2% to 8,270.82, while the German DAX rose 0.2% to 26,066.18. Britain's FTSE 100 edged down slightly to 10,830.20. Asian markets were mostly higher.

In currency trading, the U.S. dollar edged up to 156.33 Japanese yen from 155.84 yen. The euro cost $1.1625, down from $1.1631.

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AP Business Writer Alex Veiga contributed to this report.

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