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Top Wall Street banks still expect the Federal Reserve to raise interest rates in September, but a growing number now believe the central bank is likely to only hike once this year, a Reuters poll found on Friday.

Thirteen of 19 primary dealers, or the banks that deal directly with the Fed, polled said they expect the Fed to raise rates by September but just nine now believe the Fed will hike rates twice in 2015, compared with 15 of 20 in the July Reuters poll.

The median expectation for where the federal funds rate will end the year was 0.5 percent and 1.5 percent for 2016. For a table, click here:

The central bank has kept rates at a near-zero level since December 2008 as part of its effort to spur the recovery from the 2007-2009 financial crisis.

Friday' s jobs report, which showed U.S. nonfarm payrolls increased by 215,000 in July, pointed to an improving economy and bolstered the case for a September hike.

" If we continue to get this type of trend-like data, we will get a hike next month," said Joe LaVorgna, chief U.S. economist at Deutsche Bank.

While most of the primary dealers continued to expect a September hike, some with increased conviction, BNP Paribas and Nomura pushed their rate hike expectations to December from September.

Five of the participants who in July said they expected two rate hikes this year now see only one. Currently less than half those surveyed expect two hikes this year.

In early July, Credit Suisse scaled back its rate hike expectation for 2015 to one from two, citing challenges to its previously held views on quickening labor income growth and a second-half rebound in global manufacturing.

&ldquo While things have turned the turns have not been conclusive enough for us to revert back to the previous call,&rdquo said Dana Saporta, economist at Credit Suisse.

The Fed has long emphasized that it expects to raise interest rates only gradually, unlike the last rate-hike cycle, when policymakers raised borrowing costs slightly at successive meetings.

Federal Reserve officials are still undecided on whether to raise interest rates next month, but they are growing more comfortable with the idea, as an improving labor market makes it harder to justify historically low rates.

 

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Nasdaq -1.62%  5,056.44  /  -83.51 
S& P -0.78%  2,083.56  /  -16.28

 

Wall Street ended sharply lower on Thursday as weak earnings reports from media companies stirred fears that more viewers are ditching cable TV, dragging the sector to its worst two-day loss since the financial crisis.

The selloff was compounded by nervousness ahead of key jobs data on Friday that could provide clues about the timing of the first Federal Reserve interest rate hike in almost a decade.

Viacom (VIAB.O) fell 14.22 percent to its lowest in almost four years after reporting lower-than-expected quarterly revenue due to weakness in its cable TV business. Walt Disney (DIS.N) was off 1.79 percent and down for a second session after it lowered profit guidance for its cable networks unit on Tuesday.

The S& P 500 media index .SPLRCMDIA lost 2.12 percent and notched its biggest two-day fall since November 2008, with Time Warner (TWX.N), Comcast (CMCSA.O) and CBS (CBS.N) all in the red and Twenty-First Century Fox (FOXA.O) down 6.4 percent.

" All the media stocks are down and it seems people just want to get out of the sector at any cost and take any loss," CLSA analyst Vasily Karasyov said.

Viacom' s results and Disney' s warning put the spotlight on a trend of viewers shifting from cable TV to Internet-based services such as Netflix (NFLX.O), which rose 2.21 percent.

The Dow Jones industrial average .DJI fell 0.69 percent to end at 17,419.75 and the S& P 500 .SPX lost 0.78 percent to 2,083.56. The Nasdaq Composite .IXIC dropped 1.62 percent to 5,056.44, its biggest one-day tumble since early July.

Eight of the 10 major S& P sectors were lower, with the health index' s .SPXHC 2.09 percent fall leading the decliners. Allergan (AGN.N) fell 5.1 percent after the Irish drugmaker reported a second-quarter loss.

In other earnings-driven stock moves, Tesla (TSLA.O) fell 8.88 percent and Keurig Green Mountain (GMCR.O) slumped as much as 29.75 percent after reporting disappointing numbers.

Investors were also jittery ahead of the release of U.S. non-farm payroll numbers, which are expected to have risen by 223,000 in July, matching gains in June.

The Fed has said it will raise rates only when it sees a sustained recovery in the economy.

After the bell, Zynga (ZNGA.O) fell 6 percent after it posted a disappointing quarterly report.

With about three-quarters of the S& P 500 companies having reported, second-quarter earnings are estimated to have increased 1.6 percent while revenues are projected to have fallen 3.4 percent.

However, valuations look stretched. The S& P 500 is trading at a 25 percent premium to its historical median price-to-sales ratio, Jack Ablin, chief investment officer at BMO Private Bank said in a note to clients.

In Thursday' s session, declining issues outnumbered advancing ones on the NYSE by a rate of 1.47 to 1. On the Nasdaq, that rate was 2.46 to 1 favoring decliners.

The S& P 500 index posted 18 new 52-week highs and 44 new lows the Nasdaq Composite saw 64 new highs and 169 new lows.

About 7.8 billion shares changed hands on all U.S. exchanges, well above an average 6.77 billion in the past five sessions, according to BATS Global Markets data.