The two-year Treasury yield, which is indicative of where investors expect interest rates to land, fell more than 0.1 percentage points after Mr. Powell’s comments, having risen by roughly the same amount before he spoke. That was a big single-day swing for an asset that typically fluctuates by hundredths of a percentage point.
The S&P 500 slumped 0.8 percent from its earlier high, before a slight recovery to leave it about 0.1 percent lower for the day. The index still recorded a gain of 1.6 percent for the week, its best weekly showing since the end of March.
Financial markets were also swayed by news elsewhere, including lawmakers’ challenge to resolve the debt ceiling crisis. Reports that Treasury Secretary Janet L. Yellen recently told bank chiefs that more mergers might be necessary also appeared to spook investors.
Ms. Yellen’s comments echoed remarks she made last week in Japan, where she told Reuters, “This might be an environment in which we’re going to see more mergers.”
Friday’s developments undid some of investors’ expectations about future increases in interest rates after earlier comments from other policymakers.