US Markets Tumble as Jobs Data Sparks Fed Rate Cut Bets

Investor confidence shaken by revised employment figures and geopolitical unease

Major US stock indices suffered significant losses to open August, as investors fled riskier assets. Weakening labor market signals, a decline in mega-cap stocks, and escalating geopolitical concerns contributed to the downturn.

Jobs Report Delivers Shockwave

The S&P 500 dropped 1.60% to 6,238.01 points. The Dow Jones fell 1.23% to 43,588.58 points, while the tech-heavy NASDAQ Composite experienced a sharper decline of 2.24%, closing at 20,650.13 points.

US employment growth in July fell short of expectations. The economy added 73,000 jobs, significantly below the 104,000 anticipated by analysts, according to the Bureau of Labor Statistics.

Trump Vows to Fire Statistics Chief After Data Revisions

The true impact emerged from substantial downward revisions to May and June job creation figures. This prompted President Donald Trump to declare his intention to dismiss the head of the nation’s labor statistics office.

May’s job creation was revised down from 144,000 to 19,000. June’s data saw a similar contraction, falling from 147,000 to 14,000. This dramatic shift has altered the monetary policy landscape, with markets now pricing in two Federal Reserve interest rate cuts by year-end, possibly beginning in September.

“What appeared to be a robust job market showed weaknesses this morning. A Fed that still seemed hesitant to lower rates can see a clearer path to a cut in September, especially if next month’s data confirms the trend,” noted Ellen Zentner of Morgan Stanley Wealth Management.

—Ellen Zentner, Morgan Stanley Wealth Management

Markets Reeling from Trend Reversal

The steep decline marks a stark reversal for US markets, which had recently achieved successive records, buoyed by robust economic growth, cooling inflation, and a surge in artificial intelligence-related stocks. For example, the Nasdaq Composite reached an all-time high of 16,000 points earlier this year, driven by tech sector performance, before this sharp correction.

New Tariffs Intensify Global Trade Tensions

On the trade front, new customs rates announced by Donald Trump further pressured global markets. These measures follow earlier tariff introductions four months ago.

The latest tariff escalations include a minimum of 10% on many goods, with rates of 15% or higher for countries running trade surpluses with the US. The new wave targets 68 nations, with specific tariffs of 35% for Canada and 39% for Switzerland.

Tech Giants Face Sell-Off

Among major technology companies, Nvidia saw a 2.33% dip, Alphabet lost 1.51%, Microsoft shed 0.47%, Meta (formerly Facebook) declined 1.76%, Apple fell 2.50%, and Amazon plunged 8.27%. Amazon’s sharp drop followed its release of weaker-than-expected future guidance, despite exceeding profit and revenue expectations for the quarter.