The major averages reversed course falling on Friday to cap their third straight weekly decline, after a solid August jobs report failed to ease fears that the Federal Reserve would keep aggressively hiking interest rates to fight inflation. The Dow Jones Industrial Average erased a 370-point gain and finished the session down 337 points, or 1.1%. The S&P 500 fell 42 points or 1.07%, its lowest close since July. The Nasdaq Composite declined 154 points or 1.3% to 11,630, recording its first six-day losing streak since 2019.

All of the major averages were lower to end the week, making it their third negative week in a row after slumping in the final days of August. The Dow and S&P lost roughly 3% and 3.3%, respectively, while the Nasdaq fell 4.2%.

Stocks had been weighed down throughout this week by hawkish comments from Federal Reserve officials signaling that interest rate hikes aren't going away anytime soon. That's put traders on watch for a retest of the June lows, especially knowing September is historically a poor month for the market. Some have suggested that if the S&P 500 fails to hold the 3,900 level, those summer lows could come back into play.

Some investors were briefly comforted on Friday by the highly anticipated jobs report, which showed the economy added 315,000 jobs for the month, just under the Dow Jones estimate for 318,000. Stocks rallied in the first part of the day.

The unemployment rate rose to 3.7%, two-tenths of a percentage point higher than expectations. The August report is particularly important because it's one of the last major economic reports the Fed will weigh before it raises rates at its September meeting. This data point could help the central bank determine whether a 75-basis-point hike.

The last major economic report of note is August CPI on Sept. 13 and is more likely to determine how aggressive the Fed needs to be in the near term.

Major averages slide to cap their third week of losses in a row

There's been a lot of selling pressure over the past five sessions before the market moved higher Friday, initially, on what investors are calling a "Goldilocks" August jobs report: not too hot, not too cold, just as expected.

Kilburg also pointed to the thin trading volume heading into a holiday weekend in the U.S. as reason for the days dramatic volatility, and reiterated his view that the bottom is in.

September selling may have gotten a head start

Friday's afternoon rollover is probably giving veteran traders deja vu to past Septembers, as this has historically been the worst month for stocks.

However, there are some signs that investors may already have gotten most of their seasonal selling out of the way. Morgan Stanley Investment Management's Andrew Slimmon said that high beta stocks, typically a gauge of risk appetite, have sharply underperformed the S&P 500 during the recent losing streak after outperforming the market at a historically high level during the summer rally.

He pointed to the Invesco S&P 500 High Beta ETF (SPHD), which has dropped nearly 12% since mid-August after dramatically outperforming the market over the prior two months.