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Fed Chair Jerome Powell's comments due at 12:30 p.m. ET

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Hewlett Packard ( HPE ) slumps after dour Q2 forecasts

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Nonfarm payrolls increase by 151,000 in February

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Indexes down: Dow 0.78%, S&P 500 1.02%, Nasdaq 1.34%

(Updates with mid-session trading)

By Johann M Cherian and Sukriti Gupta

March 7 (Reuters) - Wall Street's main indexes gave up

early gains and fell on Friday, dragged down by cyclical stocks

after a key U.S. jobs report failed to soothe worries about a

slowing economy, while investors awaited comments from Federal

Reserve chair.

At 11:40 a.m. ET, the Dow Jones Industrial Average

fell 333.31 points, or 0.78%, to 42,245.77, the S&P 500

lost 58.80 points, or 1.02%, to 5,679.72 and the Nasdaq

Composite lost 242.95 points, or 1.34%, to 17,826.31.

Cyclical sectors such as consumer discretionary

fell 2.6%, while banks such as Wells Fargo ( WFC ) and Goldman

Sachs ( GS ) declined, pushing the broader banks index

down 2.8%.

Most megacaps also dropped. Meta and Amazon.com ( AMZN )

fell 3% each.

A Labor Department report showed job growth picked up in

February from the previous month. However, unemployment ticked

up to 4.1%, adding to worries about the economy's resilience.

Following the data, traders revised their expectations of

the first rate cut this year to June from May, according to data

compiled by LSEG.

"There's not an urgency for the Fed to act (on rate cuts,

based on the latest labor data), and to a degree we are still

worried about the potential impact on prices from higher

tariffs," said Steve Wyett, chief investment strategist at BOK

Financial.

Adding to the dour sentiment, Morgan Stanley lowered its

growth forecast for the economy.

Comments from Fed Chair Jerome Powell at 12:30 p.m. ET will

now be in focus, as investors expect to get more clarity on the

central bank's policy from his speech.

Equities witnessed their most volatile week this year, with

Wall Street's fear gauge trading near levels not seen

since mid-December, as traders tried to assess President Donald

Trump's fluctuating trade policy.

In the previous session, the Nasdaq confirmed a 10% drop

from its December all-time high, while the benchmark S&P 500

appeared to have reversed most of its gains since Trump's

election victory.

The indexes, along with the blue-chip Dow are on

track for their biggest weekly drop since September. Equity

funds witnessed the largest weekly outflow in four weeks in the

week ended on March 5.

Trump on Thursday offered a four-week reprieve on tariffs he

imposed on imports from Canada and Mexico that fall under a

free-trade pact, but the U.S. is still in a trade war with

China. Additionally, reciprocal trade barriers and other duties

are expected to take effect in the following weeks.

Hewlett Packard Enterprise ( HPE ) slumped 16.2% after

saying its annual profit forecast would be hit by U.S. tariffs.

Costco fell 7% after the retailer missed Street

estimates on quarterly earnings as merchandise costs increased.

Broadcom ( AVGO ), on the other hand, rose 2.9% after the

chipmaker assuaged investor worries about artificial

intelligence infrastructure demand with a strong second-quarter

forecast.

Declining issues outnumbered advancers by a 1.43-to-1 ratio

on the NYSE and by a 1.86-to-1 ratio on the Nasdaq.

The S&P 500 posted seven new 52-week highs and 10 new lows,

while the Nasdaq Composite recorded 16 new highs and 108 new

lows.