* May nonfarm payrolls up by 138,000 vs 185,000 expected
* Unemployment rate falls to 4.3 pct from 4.4 pct in April
* Average hourly earnings rise 0.2 percent
* Indexes up: Dow 0.31 pct, S&P 0.26 pct, Nasdaq 0.71 pct (Updates to early afternoon)
By Tanya Agrawal
June 2 (Reuters) - U.S. stocks were trading at record levels on Friday as gains in industrial and technology stocks more than offset the impact of weak jobs data.
Nonfarm payrolls increased by 138,000 last month, below the 185,000 expected by economists. Data for both March and April was revised to show 66,000 fewer jobs were created than previously reported.
Average hourly earnings rose 0.2 percent in May, following a similar gain in April, but unemployment rate fell to a 16-year low of 4.3 percent in the previous month.
While last month's job gains could still be sufficient for the Federal Reserve to raise interest rates this month, the modest increase could raise concerns about the economy's health after GDP growth slowed in the first quarter.
The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population. Job gains are slowing as the labor market nears full employment.
Odds of a rate hike at the Fed's June 13-14 meeting stood at 93.5 percent, according to the CME Group's FedWatch tool.
"I do believe that the June rate hike is already priced in so it probably doesn't change what the Fed wants to do," said Neil Massa, senior equity trader at Manulife Asset Management in Boston.
"I think what it would change, if anything, was the possibility of them accelerating the rate hikes. After this I think it makes them more likely to stay the course than to accelerate."
At 12:39 p.m. ET (1639 GMT), the Dow Jones Industrial Average was up 66.32 points, or 0.31 percent, at 21,210.5. The index hit a record of 21,221.33.
The S&P 500 was up 6.55 points, or 0.269541 percent, at 2,436.61. It hit an all-time high of 2,437.62.
The Nasdaq Composite was up 44.10 points, or 0.71 percent, at 6,290.93, easing slightly from its record high of 6,294.15.
Eight of the 11 major S&P sectors were higher, with the industrial sector's 0.89 percent rise leading the gainers, followed by technology's 0.71 percent gain.
The financial and energy sectors were the main losers.
Shares of banks, which benefit from higher interest rates, fell as much as 0.9 percent, before paring some losses to trade down 0.2 percent. Bank of America, JPMorgan, and Goldman Sachs fell between 0.2 percent and 0.5 percent.
Brent oil tumbled below $50, heading for a second straight week of losses, on worries that President Donald Trump's decision to abandon a climate pact could spark more crude drilling in the United States, worsening a global glut.
Broadcom rose as much as 8.2 percent to hit an all-time high of $253.75, after the chipmaker's quarterly results beat analysts' expectations.
Lululemon Athletica jumped 12.4 percent to $54.72 after the athletic apparel maker's quarterly profit beat estimates.
Advancing issues outnumbered decliners on the NYSE by 1,803 to 1,025. On the Nasdaq, 2,001 issues rose and 793 fell.
The S&P 500 index showed 28 new 52-week highs and 11 new lows, while the Nasdaq recorded 82 new highs and 70 new lows. (Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty and Anil D'Silva)