By Yasin Ebrahim

Investing.com – The S&P 500 started the second quarter on back foot Friday, as a softer March jobs report didn’t deter investor bets on the Federal Reserve stepping up the pace of monetary policy tightening at upcoming meetings that many fear could spark a recession.

It fell to 0.18%, and the dropped 0.04% or 14 points. The plummeted 0.73%.

The nonfarm payrolls rose 431,000 in February, which was below the consensus expectation of 490,000. However, the unemployment rate dropped to 3.6%, more than anticipated.

The job gains for February were revised higher to 750,000 from 678,000, erasing concerns about the weakness seen in the prior month, and pointing to a labor market that is “showing strong momentum heading into Q2,” Jefferies said in a note.

While unemployment fell to 3.7% earlier than anticipated, wage growth, expected to increase in tight labor markets, was consistent with predictions at 0.4%.

“With a solid jobs report and the Fed’s preferred inflation metric pushing to 6.4% as of March, there is little reason why the market should not expect a 50bps hike at the next May FOMC meeting,” Stifel said in a note.

The markets continue to place bets on aggressive Fed actions. However, there are increasing concerns that the Fed could slow growth too much and lead to a recession.

A new warning sign is that there could be a recession ahead, the yield curve has inverted.  The yield of the Treasury 2-year bond (2.28%) was higher than that on the Treasury 10-year note (2.360%).

The inverted yield curve, which depresses banks’ margins for lending and restricts growth, has caused bank stocks to struggle to reduce losses.

SVB Financial, KeyCorp and Regions Financial were the largest decliners.   

The tech sector was back in the news as many semiconductor stocks tried to get a foothold on Wall Street. The stock of Qualcomm (NASDAQ) dropped more than 7.5% after JPMorgan removed the chipmaker’s name from its Analyst Focus lists.

GameStop’s (NYSE:) trades 2% less after losing its gains. The video retailer stated that it was seeking shareholder support at its next shareholder meeting for the stock split.

The sluggish start to the month for stocks followed a two-week rally that moved the broader market  into “moderately overbought territory on a short-term basis,” Janney Montgomery Scott said.  However, the climb up is expected to continue.

“[T]his current equity weakness is a brief pause before extending the rally that began around March 16th,” it added.