By 2pm, the exchange had recovered from morning loses and was only slightly done for the day.
After a 4.6 percent drop on Thursday, the exchange is down more than 10 percent for the week.
Stock markets across Europe experience drops on Friday morning, with the Franfurt exchange down 4 percent in opening trading, while the Milan stock market dipped 3.5 percent and shares in London were down 2.9 percent.
The dip in European markets comes following large losses in Asian exchanges overnight, as well as a decline in stock exchanges in New York on Thursday which were the worst in nearly two years.
Since the start of the year, the Stockholm stock market has lost roughly 20 percent of its value.
According to a new forecast from the SEB bank, concerns about a weaker global economy as well as intensfying problems in the eurozone will likely force the European Central Bank to tone down the need for interest rate hikes in the coming months.
However, SEB's morning analyst report projects that the Riksbank will raise interest rates in September, and perhaps one more time during the year.
Håkan Frisén, head of economic research at SEB, cited a number of factors for the current stock market slump.
“You have a worsening crisis in Spain and Italy as well as differing views on what to do next to deal with the eurozone crisis,” he told The Local.
“We've had more bad news about the long-term sovereign debt crisis in Italy and policy makers aren't prepared to address the problem.”
Other concerns weighing on global markets include disappointing figures in the United States' housing and labour markets in recent months, as well as increasing concerns about the strength of the US economic recovery.
He added that the Stockholm market had been “under-performing” other stock markets for “a long time”.
“Swedish companies have more exposure to the global economy,” he said.
“And Sweden's strong currency keeps pressure on profits.”
According to Frisén, Sweden's "strong domestic foundation" has kept the krona strong.
"But if the crisis continues and gets worse, a somewhat weaker currency could help Swedish companies," he said.