U.S. stock markets plunged on Friday, August 1st, kicking off the month with steep losses amid growing signs of economic slowdown and renewed concerns over tariff adjustments by President Donald Trump’s administration.
Dow Jones Suffers Worst Drop Since Mid-June
The Dow Jones Industrial Average plummeted 542.40 points, or 1.23%, to close at 43,588.58 — its sharpest single-day drop since June 13, 2025. The S&P 500 fell 1.60% to 6,238.01, marking its worst performance since May 21. Meanwhile, the Nasdaq Composite dropped 2.24% to 20,650.13, recording its biggest daily loss since April 21.
July Jobs Report Misses Expectations Sharply
According to the newly released July employment report, the U.S. economy added only 73,000 jobs last month — significantly below the Dow Jones consensus estimate of 100,000. Previous months saw dramatic downward revisions: June’s job growth was slashed to just 14,000 (from 147,000), while May was revised from 125,000 to only 19,000 jobs, signaling prolonged weakness in the labor market.
Financial and Tech Stocks Lead the Declines
Banking shares led the losses amid fears that slower economic growth could dampen credit expansion. JPMorgan Chase dropped more than 2%, while Bank of America and Wells Fargo each fell over 3%. Industrial stocks like GE Aerospace and Caterpillar also slipped nearly 1% and 2%, respectively.
Heavy selling hit big tech stocks as well. Amazon plunged more than 8% after issuing a disappointing operating income forecast for the current quarter, and Apple declined 2.5%.
Fed Rate Cut Expectations Surge
The weak employment data has intensified market bets that the Federal Reserve could cut interest rates sooner than previously expected. Current market pricing reflects an 86% probability of a rate cut in September 2025 — a sharp reversal from July 30, when Fed Chair Jerome Powell signaled the central bank would wait to assess the inflationary impact of new tariffs before taking action.
Trump’s New Tariffs Add to Market Anxiety
Adding to the turmoil, President Trump announced new tariff measures during the week, including a 40% penalty on goods rerouted to bypass existing tariffs. Canada, one of the U.S.’s largest trading partners, will now face a 35% tariff, up from the previous 25%.
Weekly Performance Turns Negative
All three major indices ended the week in the red. The S&P 500 fell 2.4%, its worst week since May 23. The Dow Jones dropped 2.9%, the biggest weekly loss since April 4. The Nasdaq Composite declined 2.2% for the week.
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