For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.

Updates with mid-session trading

By Johann M Cherian and Sukriti Gupta

March 7 (Reuters) - Wall Street's main indexes gave up early gains and fell on Friday, dragged down by cyclical stocks after a key U.S. jobs report failed to soothe worries about a slowing economy, while investors awaited comments from Federal Reserve chair.

At 11:40 a.m. ET, the Dow Jones Industrial Average .DJI fell 333.31 points, or 0.78%, to 42,245.77, the S&P 500 .SPX lost 58.80 points, or 1.02%, to 5,679.72 and the Nasdaq Composite .IXIC lost 242.95 points, or 1.34%, to 17,826.31.

Cyclical sectors such as consumer discretionary .SPLRCD fell 2.6%, while banks such as Wells Fargo WFC.N and Goldman Sachs GS.N declined, pushing the broader banks index .SPXBK down 2.8%.

Most megacaps also dropped. Meta META.O and Amazon.com AMZN.O fell 3% each.

A Labor Department report showed job growth picked up in February from the previous month. However, unemployment ticked up to 4.1%, adding to worries about the economy's resilience.

Following the data, traders revised their expectations of the first rate cut this year to June from May, according to data compiled by LSEG.

"There's not an urgency for the Fed to act (on rate cuts, based on the latest labor data), and to a degree we are still worried about the potential impact on prices from higher tariffs," said Steve Wyett, chief investment strategist at BOK Financial.

Adding to the dour sentiment, Morgan Stanley lowered its growth forecast for the economy.

Comments from Fed Chair Jerome Powell at 12:30 p.m. ET will now be in focus, as investors expect to get more clarity on the central bank's policy from his speech.

Equities witnessed their most volatile week this year, with Wall Street's fear gauge .VIX trading near levels not seen since mid-December, as traders tried to assess President Donald Trump's fluctuating trade policy.

In the previous session, the Nasdaq confirmed a 10% drop from its December all-time high, while the benchmark S&P 500 .SPX appeared to have reversed most of its gains since Trump's election victory.

The indexes, along with the blue-chip Dow .DJI are on track for their biggest weekly drop since September. Equity funds witnessed the largest weekly outflow in four weeks in the week ended on March 5.

Trump on Thursday offered a four-week reprieve on tariffs he imposed on imports from Canada and Mexico that fall under a free-trade pact, but the U.S. is still in a trade war with China. Additionally, reciprocal trade barriers and other duties are expected to take effect in the following weeks.

Hewlett Packard Enterprise HPE.N slumped 16.2% after saying its annual profit forecast would be hit by U.S. tariffs.

Costco COST.O fell 7% after the retailer missed Street estimates on quarterly earnings as merchandise costs increased.

Broadcom AVGO.O, on the other hand, rose 2.9% after the chipmaker assuaged investor worries about artificial intelligence infrastructure demand with a strong second-quarter forecast.

Declining issues outnumbered advancers by a 1.43-to-1 ratio on the NYSE and by a 1.86-to-1 ratio on the Nasdaq.

The S&P 500 posted seven new 52-week highs and 10 new lows, while the Nasdaq Composite recorded 16 new highs and 108 new lows.

(Reporting by Johann M Cherian and Sukriti Gupta in Bengaluru; Editing by Shinjini Ganguli)

((johann.mcherian@thomsonreuters.com;))