Damian J. Troise, AP Business Writer
NEW YORK (AP) – Stocks have fallen, and Treasury yields fell sharply on Friday, weak reports of employment and the latest turn of events in US trade policy have shook Wall Street.
The S&P 500 fell 1.8%, and has been steadily decreasing since late April. The index is also on track due to weekly losses, indicating a sharp shift from last week’s record profit streak.
The Dow Jones industrial average fell 641 points, or 1.5% as of 1:21pm Eastern. Nasdaq composites fell by 2.3%.
Worried about the weakening of the economy on Wall Street added just 73,000 jobs in July, thanks to the latest report on employment growth for US employers. This is clearly lower than what the economists had expected. The Labor Bureau also reported that the revision had shaved 258,000 stunning jobs from its salaries in May and June.
The market is also responding to the latest tariff news. President Donald Trump has announced tariff rates in dozens of countries, pushing back the scheduled effective date to August 7th, adding more uncertainty to global trade photos.
The surprising weaker employment numbers have led investors to strengthen their expectations for interest rate cuts in September. According to data from CME FedWatch, the market odds of a quarter-point reduction by the Federal Reserve increased from less than 40% a day ago to about 85%.
The Treasury yield in 2010 fell from 4.39% to 4.23% just before the employment report was released. That’s a big move for the bond market. The two-year Treasury yield, which tracks more closely the Fed’s expectations for action, plummeted from 3.94% to 3.71% just before the release of the report.
The Fed has been stable since December. Reducing fees will boost the job market and the economy as a whole, but there is also the risk of inflation stubbornly floating than the central bank’s 2% target.
Thursday’s update on the Fed’s preferred scale of inflation hopes showed prices rose in June, up from 2.4% in May to 2.6%. The Fed continues to be cautious about lowering interest rates due to concerns that tariffs add more fuel to inflation and weigh economic growth.
However, central banks are stabilizing prices and counting “maximum employment” as one of the two orders. Issues regarding any of these goals can drive policy changes.
The Fed was once again stable at its latest meeting this week. Fed Chairman Jerome Powell has been pressured by Trump to lower the benchmark rate, but the decision is not to be made by himself, but to belong to 12 members of the Federal Open Market Committee.
“We’re looking forward to seeing you in the process of exploring the world,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “The Fed, which is thought to be hesitant to lower rates, may see a more clear path to cuts in September, especially if data for next month confirms trends.”
The corporations, investors and the Fed are all operating under a cloud of uncertainty from Trump’s tariff policy. The latest move has given 66 countries, the European Union, Taiwan and the Falkland Islands a further seven days, as Trump said earlier, instead of taking effect on Friday.
Companies are warning investors that some tariffs are already in effect, but other tariffs being changed or extended makes it difficult to predict. Walmart, Procter & Gamble and others have warned about increased import taxes, meals to profits, and increased consumer prices.
Internet retail giant Amazon fell 8.4% despite reporting to drive profit and sales for the most recent quarter. Technology giant Apple fell 2.7% after violating Wall Street’s profit and revenue forecasts as well. Both companies face tougher operating conditions due to tariffs, and Apple is projecting a $1.1 billion hit from the fees this quarter.
Exxon Mobil fell 2.3% after reporting profits fell to the lowest level in four years and sales fell as crude oil prices fell as OPEC+ increased production.
The stocks have fallen all over the world. Germany’s DAX fell 2.7%, while France’s CAC 40 fell 2.9%. Korean Cospi fell 3.9%
Original issue: August 1, 2025 9:40am EDT
