The S&P 500 closed sharply lower Friday after a much weaker-than-expected jobs report triggered fears about an economic slowdown just as Amazon-led weakness in tech also hit investor sentiment.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average traded 542 points, or 1.7%, lower, the S&P 500 index slumped 1.7%, and the NASDAQ Composite fell 2.2%.
Payrolls data disappoints; Trump fires top labor statistics official over weak jobs report
On the economic data slate, investors have been parsing through the latest gauge of the American labor market on Friday, as the Labor Department has unveiled its all-important monthly jobs report for July.
The U.S. economy added 73,000 roles last month, below the 106,000 expected, while the June figure was revised to the addition of just 14,000 jobs, from the original 147,000 reported.
The unemployment rate rose to 4.2% from 4.1% in June.
"Ouch, that was not good," said analysts at CIBC (TSX:CM) Economics. "There were massive net negative revisions over the prior two months (-258K) that wiped out a big chunk of job growth, including the bump in state and local government hiring from last month. The manufacturing sector is now showing much more weakness than the prior data revealed."
"Today’s report shows a different picture of the job market than Jay Powell spoke about earlier this week and raising the probability of an earlier Fed move. That being said, it depends on how sticky inflation proves in the next few reports and further weakness in the job market. After all, the unemployment is still at reasonable level and one report, however bad, won’t be enough to fully convert all the hawks."
Following the weak jobs report, President Trump reportedly ordered the firing the Commissioner of Labor Statistics Erika McEntarfer claiming without evidence that she had faked employment figures leading up to last year’s election.
“We need accurate Jobs Numbers,” Trump wrote on Truth Social. “I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified.”
Treasury yields fell on the weak jobs report as rate-cut bets jumped and were further boosted following Federal Reserve Governor Adriana Kugler’s resignation. Kugler resignation, effective Aug. 8, paves the way for Trump to appoint a new member to the Fed board they may lean more dovish than Kugler.
On Wednesday, the central bank chose to leave borrowing costs unchanged for a fifth straight meeting, with Chair Jerome Powell standing firm even as he faced intense pressure from U.S. President Donald Trump to quickly cut rates to help boost the economy.
While the decision was widely anticipated, what the Fed chooses to do at its next gathering in September is unclear. The labor market has shown signs of creaking, but the Fed is simultaneously grappling with inflation that is hovering above its long-term 2% target, and some early indicators appear to be suggesting that the costs of Trump’s tariffs are starting to feed into the prices of certain trade-exposed items.
Treasury yields slump
More Trump tariffs
Trump signed an executive order on Thursday lifting tariffs to as much as 50% on dozens of countries, as after weeks of negotiation and delays, the deadline for his "reciprocal" tariffs arrived.
Major industrialized economies such as the European Union, Japan and South Korea will face duties of 15%, while other countries who run a trade surplus with the U.S. will be hit with tariffs of 10%.
Even higher tariffs are set to be slapped on other nations, including 50% levies on Brazil. Trump increased tariffs on Canada to 35% for goods that do not comply with the U.S.-Mexico-Canada Agreement, which was signed during Trump’s first term.
The levies are now set to activate at 12:01 am on August 7.
Meanwhile, Trump and Mexican counterpart Claudia Sheinbaum said Mexico was granted another 90-day reprieve to forge an agreement.
Amazon slips on weak AWS performance
In the corporate sector, Amazon (NASDAQ:AMZN) shares slumped after the e-commerce giant provided weak operating income guidance for the current quarter.
Amazon Web Services, its crucial cloud computing division, delivered sales of $30.9 billion, up 17.5% from a year earlier. While slightly above consensus expectations for 17% growth, this still disappointed given the high expectations and amid concerns that AWS may have lost more market share than expected.
By contrast, Apple (NASDAQ:AAPL) shares gave up gains following the broader market lower despite the iPhone maker reporting third-quarter results that beat Wall Street estimates, driven by better-than-expected iPhone sales as China demand rebounded and services revenue hit an all-time high.
Wall Street was mostly on Apple following its better-than-expected results, but the tech giant’s slow foray into AI remains in an issue.
"It’s clear to us the innovations around AI are not going to come from Apple Park...it has to be external partnerships and significant M&A looking ahead. In our view Apple needs to acquire Perplexity to truly catalyze its AI strategy among other options," Wedbush said in a recent note.
Elsewhere, Coinbase Global (NASDAQ:COIN) stock slumped after the crypto exchange reported a drop in second-quarter adjusted profit due to a slowdown in trading.
Reddit (NYSE:RDDT) stock soared after the social media company forecast third-quarter revenue above expectations, betting on growing digital advertising driven by its artificial intelligence-powered marketing tools.
Both Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) fell even as higher oil and gas production at the energy majors helped them overcome lower crude prices.
Colgate-Palmolive (NYSE:CL) stock gave up gains as the consumer products giant reported better-than-expected second quarter results, while Kimberly-Clark (NASDAQ:KMB) gained after its second-quarter organic sales were boosted by steady demand for products such as Huggies diapers and Kleenex tissues.
source https://www.investing.com/news/stock-market-news/stock-market-today-sp-500-slumps-as-soft-jobs-data-stoke-economic-jitters-4164753
