The stock market suffered its worst week in many months, after a series of dizzying policy shifts on tariffs from the White House amid simmering concerns about the health of the economy.
The S&P 500 seesawed throughout the day on Friday, marking a volatile end to a turbulent week, as investors parsed the latest employment data and comments from the Federal Reserve chair, Jerome H. Powell, about the direction of interest rates.
Even though the index ended the day with a gain, the S&P 500 notched its third consecutive week of losses with a drop of 3.1 percent, its sharpest weekly decline since early September.
There has been a sharp mood shift since the index hit a record high less than a month ago, as investors have become worried about the trajectory for economic growth, made worse by tariffs on imports from the country’s largest trading partners. Surveys have also showed mounting concern among consumers.
On Friday, investors appeared to take solace from Mr. Powell’s comments after he struck a positive tone, saying “despite elevated levels of uncertainty, the U.S. economy continues to be in a good place.” He reiterated the Fed’s commitment to keep rates steady as it works to bring down inflation. Another positive sign on Friday came from the labor market. With 151,000 jobs added in February, the data showed a pace of hiring moderate enough to temper fears about resurgent inflation, yet robust enough to avoid exacerbating worries about a slowing economy.
Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors, said the jobs data would probably ease “overly sour expectations” about the economy. “After confidence on the economy has taken a turn,” she said, “market participants were looking to either confirm or reverse that sentiment.”
It had already been a bruising week for investors after 25 percent tariffs came into force on Mexico and Canada on Tuesday, and an additional 10 percent tariff on China. Concessions were made on Thursday, suspending the tariffs on many goods from Canada and Mexico, but it failed to stoke a rally.
There were other signs of strain. The U.S. dollar suffered its worst week in more than two years, sliding more than 3 percent against a basket of currencies of the United States’ major trading partners. Both the Mexican peso and Canadian dollar strengthened against the U.S. dollar, after two weeks of losses.
And other areas of the markets that had initially benefited after Mr. Trump’s election have also come under pressure. Tesla, the electric car company run by Elon Musk, has halved its value since December. Bitcoin is down roughly 20 percent over the same period.
“I think the markets are essentially taking President Trump a bit more seriously on tariffs,” said Jim Caron, chief investment officer of the portfolio solutions group at the Morgan Stanley Investment Institute. He said that despite the recent sell-off, major stock indexes remained close to record highs and the economy remained in good shape.
Much of the sell-off has been driven by big technology companies, which, because of their size, have a big effect on broad indexes. Since the S&P 500 peaked on Feb. 19, the index has fallen just over 6 percent. A separate measure that gives all of the stocks an equal weight in the index had fallen 4.4 percent over the same period.
What isn’t clear is whether investors are selling because they see the tide turning for tech companies or because of broader concerns. Tech giants, buoyed by opportunities in artificial intelligence, had enjoyed a sharp rise until this year when it appeared more competition may be entering the A.I. market.
The threat of competition created some selling pressure, but investors may also be pulling back because they are worried about the broader trajectory of the market.
All 11 sectors of the S&P 500 except health care stocks ended the week in the red, with financials and consumer discretionary stocks joining tech among the worst performing.
The Russell 2000 index of smaller companies more exposed to the ebb and flow of the economy has fallen even further than the S&P 500. The index fell 3.8 percent this week and is now almost 15 percent below its recent peak reached in November.
“In the last couple of weeks, and maybe for the next couple of weeks, we have gone through a very challenging news cycle,” Mr. Caron said. “We need to get through that and assess how much damage there is to markets.”
