The U.S. stock market experienced its worst performance since May last Friday, following a government report indicating a significant slowdown in job creation, compounded by President Donald Trump’s announcement of extensive tariffs on imports from several trading partners.
The S&P 500 fell by 1.6%, marking its biggest drop since May 21 and extending its losing streak to four consecutive days. The index also registered a 2.4% decline for the week, contrasting sharply with the record-setting gains from the previous week.
The Dow Jones Industrial Average decreased by 1.2%, with the Nasdaq Composite down 2.2%.
Canada’s primary stock index, the S&P/TSX Composite Index, also saw losses on Friday, declining by almost 1%.
Wall Street’s concerns about a weakening economy were exacerbated by the latest job growth report, which revealed that U.S. employers added only 73,000 jobs in July—far below economists’ expectations. Additionally, revisions indicated a shocking reduction of 258,000 jobs from May and June payrolls.
Market reactions were further influenced by the new tariff news, as Trump announced new rates affecting multiple countries while postponing the implementation date to August 7, creating more uncertainty within global trade.
“The market has faced a dual setback due to additional tariffs as well as disappointing employment data—not just for this month but also with the downward revisions for previous months,” stated Sam Stovall, chief investment strategist at CFRA. Trump’s decision to dismiss the head of the agency that reports monthly job figures adds to market uncertainty, Stovall noted.
Potential for Rate Cuts
The unexpectedly weak job growth has prompted investors to raise their expectations for an interest rate cut in September, with the market’s odds for a quarter-point cut by the U.S. Federal Reserve jumping to around 87% from just below 40% a day earlier, according to data from CME FedWatch.
Stovall also pointed out that the critical question now is whether Fed policymakers might consider a half-point cut next month or any quarter-point reduction before their next committee meeting.
The yield on the 10-year Treasury dropped from 4.4% to 4.2% shortly after the job report was released, indicating significant movement in the bond market. Similarly, the yield on the two-year Treasury, which closely reflects expectations for Fed actions, declined from 3.9% to 3.7% before the report went public.
In a broader context, businesses, investors, and the Federal Reserve are all navigating a haze of uncertainty stemming from Trump’s tariff policies. His recent actions provide additional time for 66 countries, including the European Union, Taiwan, and the Falkland Islands, delaying the tariffs that were initially set to take effect on Friday.
Numerous companies, including Walmart and Procter & Gamble, have cautioned investors about the challenges presented by these tariffs, noting that they lead to increased costs, eroding profits, and raising prices for consumers. Internet retail giant Amazon saw an 8.3% drop in its stock despite reporting strong earnings, while Apple declined by 2.5% after also surpassing Wall Street’s expectations. Apple anticipates a $1.1 billion impact from tariffs in the current quarter.
Outside North America, global stocks also fell, with Germany’s DAX dropping 2.7% and France’s CAC 40 down by 2.9%. South Korea’s Kospi index plunged by 3.9%.
