US STOCKS-Wall St slips as strong jobs data tempers bets of aggressive rate cut

* U.S. job growth surges, wage growth remains tepid
* Traders scale back bets on 50bps rate cut in July
* Rate-sensitive bank stocks rise
* Chip stocks weak after Samsung results
* Indexes down: Dow 0.45%, S&P 0.54%, Nasdaq 0.54%

(Updates to open)
By Medha Singh
July 5 (Reuters) - U.S. stocks fell on Friday, retreating
from record closing highs, after a strong rebound in U.S. job
growth in June dashed hopes of an aggressive interest rate cut
by the Federal Reserve this month.
Nonfarm payrolls rose by 224,000 jobs last month, the most
in five months, the Labor Department data showed. Economists
polled by Reuters had forecast payrolls rising 160,000 in June.
The closely watched employment report led investors to scale
back bets of a 50 basis point rate cut by the central bank at
its policy meeting on July 30-31. However, moderating wage growth and mounting evidence that
the economy was slowing sharply could still encourage the Fed to
cut interest rates by a quarter point.
"It is still more likely than not that the Fed will cut
rates but the odds have decreased somewhat," said Scott Brown,
chief economist at Raymond James in St. Petersburg, Florida.
"The 50 basis point cut should be priced out completely at
this point."
Wall Street's main indexes have rallied to record levels on
hopes of a looser monetary policy from the Fed and other major
central banks in the wake of a slowdown in global growth.
Shares of banks .SPXBK , which tend to benefit from higher
interest rates, rose 0.76% and helped drive a 0.24% gain in the
financial sector .SPSY , which was the only major index in the
positive territory.
The defensive sectors - real estate .SPLRCR , utilities
.SPLRCU and consumer staples .SPLRCS - shed more than 1%
each as a rise in U.S. Treasury yields made the dividend paying
companies less appealing.
At 9:39 a.m. ET the Dow Jones Industrial Average .DJI was
down 120.80 points, or 0.45%, at 26,845.20, the S&P 500 .SPX
was down 16.27 points, or 0.54%, at 2,979.55 and the Nasdaq
Composite .IXIC was down 44.01 points, or 0.54%, at 8,126.22.
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.
The Philadelphia chip index .SOX slipped 1% 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. Qualcomm Inc QCOM.O slipped 1.5%, while Intel Corp
INTC.O and Advanced Micro Devices Inc AMD.O also fell.
Declining issues outnumbered advancers for a 3.32-to-1 ratio
on the NYSE and for a 2.02-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and no new
low, while the Nasdaq recorded seven new highs and 11 new lows.