* Payrolls data weaker than expected
* Gap shares fall on weak August same-store sales
* Prana Biotech jumps on orphan drug designation
* Indexes: Dow off 0.07 pct, S&P off 0.02 pct, Nasdaq up 0.08 pct (Adds jobs data, quote; updates prices)
By Chuck Mikolajczak
NEW YORK, Sept 5 (Reuters) - U.S. stocks were little changed on Friday, and the benchmark S&P 500 was on pace for its first weekly drop in five, following a weak payrolls report that reassured investors the Federal Reserve wouldn’t speed up plans to hike interest rates.
Stock index futures pared losses after the release of the employment report, which showed nonfarm payrolls rose 142,000 in August, the smallest increase in eight months, while the unemployment rate slipped to 6.1 percent as people dropped out of the labor force.
The soft jobs report doused worries that the Fed might consider moving up plans for an interest rate hike at its next meeting in mid-September after a recent flurry of economic data pointed to a strengthening economy.
“It’s a little bit of a surprise coming in this low, and the market is probably taking that as a fairly good sign that the Fed remains to the sidelines here for a little bit longer,” said Sean Lynch, managing director of global equity and research strategy, Wells Fargo Private Bank in Omaha, Nebraska.
“That was the risk, if it was a blowout to the upside, people might have moved up their forecast on when the Fed starts to raise rates.”
The benchmark index has fallen for three straight sessions since closing at a record high of 2,003.37 a week ago. Both the Dow Industrials and S&P 500 scaled fresh intraday highs Thursday, before being weighed down by weak energy shares.
The Dow Jones industrial average fell 12.75 points, or 0.07 percent, to 17,056.83, the S&P 500 lost 0.34 points, or 0.02 percent, to 1,997.31 and the Nasdaq Composite added 3.45 points, or 0.08 percent, to 4,565.74.
Michael Kors shares lost 4.9 percent to $76.07 as the worst performer on the S&P 500. The company announced an 11.6 million share secondary offering on behalf of one of its founding shareholders, which will result in the resignation of two board members.
Retailers lost ground, weighed by a 4.2 percent drop in Gap Inc to $44.62, after the company posted worse-than-expected August same-store-sales. The S&P retail index shed 0.4 percent.
U.S.-listed shares of Prana Biotechnology surged 23 percent to $2.64 after the company said it received an orphan drug designation for its Huntington Disease treatment. (Editing by Bernadette Baum)