Wall Street slid on Friday as solid job growth and a drop in the unemployment rate last month gave more room for the Federal Reserve to stick to jumbo-sized interest rate hikes, while a revenue warning from Advanced Micro Devices hit chipmakers.

The Labor Department's closely watched employment report showed nonfarm payrolls increased by 263,000 jobs last month after rising 315,000 in August.

The report also showed the jobless rate fell to 3.5% in September, lower than expectations of 3.7%. Traders now see a 92% chance of 75 basis-point hike by the Fed, up from 83.4% before data.

Aggressive rise in borrowing costs have stoked fears of slowing economic growth and a hit to corporate profits, but with the labor market remaining tight, the Fed was likely to continue with its monetary tightening plan.

"The markets are worried that the Fed is going to rely on information like this that's really a month old and they're going to overshoot and kill the economy," said Kim Forrest, chief investment officer at Bokeh Capital Partners.

"Investors don't have confidence in a soft landing because the Fed continues to have to ramp higher and higher to begin to slow the economy down."

The Philadelphia Semiconductor SE index shed 4.2%, and was set for its biggest one-day percentage decline in nearly a month as a revenue warning from Advanced Micro Devices Inc signaled the chip slump could be worse than expected.

AMD fell 7.97% as its third-quarter revenue estimates were about a billion dollars less than previously forecast.

Peers Qualcomm Inc, Intel Corp, ON Semiconductors, Lam Research, and Nvidia Corp shed between 2.65% and 4.88%.

"People who had been hoping for some kind of turnaround in the chips are starting to give up that hope," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

The S&P 500 technology sector index fell 3.1%, leading declines among the 11 major sector indexes.

At 10:02 a.m. ET, the Dow Jones Industrial Average was down 488.84 points, or 1.63%, at 29,438.10, the S&P 500 was down 80.05 points, or 2.14%, at 3,664.47, and the Nasdaq Composite was down 309.86 points, or 2.80%, at 10,763.45.

All three main Wall Street indexes are still set to snap a three-week losing streak, heading for their biggest weekly gain in almost a month.

With the benchmark 10-year Treasury yield rising to 3.8875%, most rate-sensitive technology and growth stocks such as Alphabet Inc, Amazon.com, Apple Inc , Microsoft Corp fell between 2.25% and 3.92%.

Declining issues outnumbered advancers for a 7.75-to-1 ratio on the NYSE and for a 4.70-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and 49 new lows, while the Nasdaq recorded 12 new highs and 148 new lows.

(Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru; Additional reporting by Bansari Mayur Kamdar; Editing by Arun Koyyur)