Wall Street opened August to heavy losses as a dismal US jobs report and a sweeping new round of tariff hikes by the Trump administration triggered a sharp, broad-based sell-off across global equities.
At mid-session, the Dow Jones Industrial Average was down over 580 points, or 1.3%. The S&P 500 dropped 1.5%, while the Nasdaq Composite slid 1.9%, with tech and bank stocks leading the declines. High-growth names like Amazon fell more than 7% on weak profit guidance, while Nvidia, Meta, Alphabet and Tesla all traded deep in the red.
Investor sentiment soured after July’s nonfarm payrolls came in at just 73,000, missing estimates by a wide margin. Revisions to prior months painted an even grimmer picture—June's job gains were slashed to 14,000 from 147,000, while May’s tally was cut to just 19,000.
Markets swiftly repriced expectations for a Fed policy shift. CME FedWatch now reflects a 75.5% probability of a rate cut in September, up from 40% on Thursday. Prediction platform Kalshi shows a similar swing, with rising bets on a 25bps or even deeper cut.
Despite the economic miss, the White House offered a defiant defence. Press Secretary Karoline Leavitt said inflation had cooled and the private sector was growing under President Trump’s America First agenda. She repeated calls for the Fed to “cut rates so our economy can continue to boom,” even as new import duties took effect at midnight.
The fresh tariffs—ranging from 10% to 41%—target a broad swathe of countries and goods, with Canada seeing duties raised from 25% to 35%. Analysts fear the twin shocks of economic weakness and aggressive protectionism could steer the US toward recession.
Banking stocks were hit hard on fears of a credit pullback, with JPMorgan, Bank of America, Citigroup, and Goldman Sachs each down 3.5–4%. GE Aerospace and Caterpillar fell around 3% amid industrial growth concerns.
Europe reels from tariff escalation
European markets mirrored the turmoil, suffering their worst session since April. The Stoxx 600 index closed down 1.8%, led by losses in banks (-2.9%) and travel (-2.7%). Industrial and consumer cyclical sectors also slumped.
Swiss luxury and pharma stocks were particularly hard-hit after the White House imposed a 39% tariff on Swiss goods. Richemont, Swatch, and Watches of Switzerland were seen as most exposed. Pharma majors including Novo Nordisk, AstraZeneca, and Novartis all fell 3–4% after Trump sent letters demanding lower US drug prices.
Even a 35% jump in British Airways-owner IAG’s Q2 profit couldn’t lift the stock, which ended nearly 2% lower amid macroeconomic headwinds.
Currency and sentiment reactions
The euro rose nearly 1% against the dollar as rate-cut bets surged post-jobs report. Back home, the University of Michigan’s sentiment index rose slightly to 61.7, while inflation expectations eased to multi-month lows. The ISM manufacturing index, however, dipped to 48, adding to signs of a slowdown.
More than 25 S&P 500 stocks hit fresh 52-week lows, including Chipotle, Lululemon, Dow Inc., and UnitedHealth. Only a handful, like Altria and Northrop Grumman, managed to post gains.
With global equities under pressure and macro signals flashing red, all eyes now turn to Federal Reserve Chair Jerome Powell and the central bank’s September decision.
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