Wall Street was jolted by rising economic uncertainty on Friday, and stocks skidded, capping off a turbulent week with a sharp decline.

Friday’s drop followed a report on U.S. hiring in July that was far weaker than expected, startling investors into worrying that the Federal Reserve has been too slow to cut interest rates. Traders were growing uneasy about the state of the economy, as well as prospects for the big technology stocks that had underpinned a market rally for much of the year, but the jobs report intensified the focus on the risks.

The S&P 500 fell 1.8%, while the tech-heavy Nasdaq dropped 2.4%. Small stocks, yields on government bonds, and oil prices, all of which are sensitive to expectations for the economy, dropped too.

Employers in the U.S. added 114,000 jobs in July, on a seasonally adjusted basis, much fewer than economists had expected and a significant drop from the average of 215,000 jobs added over the previous 12 months, the Labor Department said. The unemployment rate rose to 4.3%, the highest level since October 2021.

“That all-important macro data we have been hammering for months is finally starting to turn in an ominous direction,” said Alex McGrath, chief investment officer at NorthEnd Private Wealth.

Investors are reassessing how aggressive the Fed may have to be as it starts to cut interest rates — if weakening economic conditions justify a bigger rate cut than the central bank has indicated so far. The central bank raised rates to a two-decade high as it tried to wrestle inflation under control, but policymakers now have to decide when to cut, and by how much, to forestall a recession.

Markets are now predicting a 0.5% cut when the Fed meets next in September, up from the more usual quarter-point cut investors had been anticipating as of Thursday, according to CME FedWatch.

The two-year Treasury yield, which is also reflective of short-term interest rate expectations, fell 26 basis points, to 3.9%, on Friday. The 10-year U.S. Treasury yield — which underpins many other borrowing costs — fell to 3.8%, after dropping below 4% on Thursday.“That’s the bond market screaming in your face that they’re fearful of a recession,” said Steve Sosnick, chief strategist at Interactive Brokers.

This week had been a rocky one for Wall Street. The Fed’s indication Wednesday that it was moving closer to cutting interest rates in September prompted a rally that day. But stocks sold off Thursday, led lower by chip companies and after other economic data suggested the economy was cooling. That included the results of a factory activity survey that showed U.S. manufacturing activity dropped to an eight-month low in July.

Friday’s decline meant the S&P 500 was down 2.1% for the week, its worst weekly showing since April.The focus on economic weakness hit global markets, too. In Japan, the Nikkei 225 index fell 5.8% on Friday, and in Europe, the regional Stoxx 600 index fell 2.7%. Crude oil prices dropped more than 3%.

This week’s volatility reflects a “sea change in psychology” among investors who have been hoping for conditions that would allow the Fed to cut interest rates, Sosnick said. Lower interest rates are a boon for the economy but if they come because the Fed is worried about growth, that could hurt sentiment.

“This is very much a real case of be careful what you wish for,” Sosnick said. “All the sudden, everybody decided, ‘Uh oh, they’re late.’”

Sentiment could change again, of course. Before the Fed meets in September, it will get another update on the health of the job market and fresh inflation data to consider. With the economy still growing, and the labor market still relatively healthy, past bouts of turbulence in the market have ended just as quickly as they began.

But there are other factors weighing on stocks.

Investors started reconsidering their appetite for big technology stocks last month and bought up shares of smaller companies, which are particularly sensitive to borrowing costs and stand to benefit from interest rate cuts. Also driving this shift is a rethink about the potential for artificial intelligence to continue to drive gains at big companies like Microsoft, Nvidia and Alphabet, after shares of those businesses surged in the past year.

Underwhelming earnings reports from major tech companies were another blow to tech stocks Friday. Amazon’s shares fell about 9%, while Intel’s declined 26%.