Stocks experienced a significant pullback last week, as investors grappled with tough talk from the Federal Reserve Chair, Jerome Powell, and indications that policymakers still have work to do to manage inflation and the labor market. Despite this, there were some positive indicators of economic growth, including the ADP's tally of private sector employment, which increased by 242,000 jobs in February, and the official payrolls report, which showed a higher-than-expected increase of 311,000 nonfarm jobs in February. While the unemployment rate rose unexpectedly, this was due to a surge in new low-paying jobs in the leisure and hospitality and retail trade sectors.

The S&P 500 Index fell on Friday to its lowest intraday level since January 5, but some investors found solace in the fact that stocks in the major "money center" banks, such as Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, held up better than expected, partly because stricter banking regulations required them to previously mark down the value of some securities. Small-caps underperformed large-caps, while value stocks fell more than their growth counterparts, pushing the Russell 1000 Value Index into negative territory for the year-to-date period.

While financials led the declines within the S&P 500, markets were buoyed by speculation that the Federal Reserve might dial back its interest rate hikes to prevent further stresses in the financial system. This caused the two-year yield to plummet from 4.9% to just above 4.6%, and futures markets began pricing in a quarter-point hike at the next Fed meeting instead of a half-point hike, according to CME Group data. By the end of the day, futures were also pricing in a roughly 23% chance that the federal funds rate would end the year at its current level or even lower.

In Europe, shares fell along with global markets amid worries about stress in the banking system and the potential effects of a prolonged period of elevated interest rates. However, investors were also encouraged by some positive economic indicators, including an increase in private sector employment in the US.

Overall, while stocks experienced a significant pullback last week, some investors found solace in positive economic indicators and speculation that the Federal Reserve might dial back its interest rate hikes. While there are still concerns about stress in the banking system and the labor market, some investors remain cautiously optimistic that the economy will continue to grow.