The U.S. stock market experienced significant losses on Friday, with the S&P 500 dropping 1.6%, marking its largest decline since May 21. This decline followed a report of sluggish job growth and the implementation of extensive tariffs on imports by President Donald Trump. It was the fourth consecutive day of losses for the S&P 500, which also posted a weekly loss of 2.4%, a stark contrast to the previous week’s record gains.
The Dow Jones Industrial Average fell by 1.2%, while the Nasdaq Composite saw a 2.2% decrease. Similarly, Canada’s main stock index, the S&P/TSX Composite Index, also fell nearly one percent on Friday.
Concerns about a weakening economy were amplified by the disappointing job growth report in the U.S., where only 73,000 jobs were added in July, well below expectations. Additionally, revisions to May and June payrolls reduced the total number of jobs by 258,000.
The market also reacted to the news of new tariffs imposed by Trump on numerous countries, adding more uncertainty to global trade. This combination of tariffs and weak job data led to a significant impact on market sentiment, according to Sam Stovall, the chief investment strategist at CFRA.
Following the poor hiring figures, investors increased their expectations for a possible interest rate cut by the U.S. Federal Reserve in September. The odds of a quarter-point cut rose to around 87%, up from under 40% just a day earlier, as indicated by data from CME FedWatch.
The bond market also saw significant movements, with the 10-year Treasury yield dropping from 4.4% to 4.2%, and the two-year Treasury yield falling from 3.9% to 3.7% after the job report release.
The ongoing trade uncertainties caused by Trump’s tariff policies have created a cloud of uncertainty for businesses, investors, and the Fed. This uncertainty is further compounded by the delayed implementation of tariffs on various countries, giving them an additional seven days to prepare.
Major companies like Amazon and Apple experienced stock declines due to concerns over tariffs impacting their operations. Exxon Mobil also reported a decline in profits and sales, attributed to lower oil prices caused by increased production from OPEC and its allies.
Global markets mirrored the downturn, with Germany’s DAX falling 2.7%, France’s CAC 40 dropping 2.9%, and South Korea’s Kospi tumbling 3.9%. The overall sentiment in the market remains cautious amid the ongoing economic uncertainties.