NEW YORK (AP) — Stocks slumped in morning trading on Wall Street Friday and Treasury yields fell sharply after the government reported a sharp slowdown in hiring last month.
Markets are also reacting to the latest tariff news. President Donald Trump once again extended the date at which punishing import taxes will take effect for a long list of countries. The tariffs are now expected to take effect Aug. 7 for countries that have yet to make a deal with the U.S.
The S&P 500 fell 1.5% and is on track to close the week with a loss. The Dow Jones Industrial Average fell 599 points, or 1.4% as of 9:44 a.m. Eastern. The Nasdaq composite fell 2%.
Worries on Wall Street about a weakening economy were heavily reinforced by the latest report on job growth in the U.S. Employers added just 73,000 jobs in July. That is sharply lower than economists expected. The Labor Department also reported that revisions shaved a stunning 258,000 jobs off May and June payrolls.
The surprisingly weak hiring numbers led investors to step up their expectations for an interest rate cut in September.
The yield on the 10-year Treasury fell to 4.24% from 4.39% just before the hiring report was released. The yield on the two-year Treasury, which more closely tracks expectations for Federal Reserve actions, plunged to 3.75% from 3.94% just prior to the report’s release.
The market is betting that the Fed may finally have to act to cut interest rates in order help bolster a weak jobs market. It has held rates steady since December. A cut in rates would give the job market and overall economy a boost, but it could also risk fueling inflation, which is hovering stubbornly above the central bank’s 2% target.
Wall Street is now betting that the Fed will cut rates at its September meeting. Traders see a 80% chance of a quarter-point rate cut at that meeting, up from just under 38% a day earlier.
Apple rose 0.3% following an encouraging earnings report.
Stocks in Europe and Asia also fell.
The mighty heft of Amazon is pulling the U.S. stock market higher. The S&P 500 rose 0.6% Friday, erasing some of its slump from the day before and pulling closer to its all-time high set on Tuesday. The index is on track to close a third straight winning week and a sixth straight winning month, which would be its longest monthly winning streak since 2021. The Dow Jones Industrial Average added 65 points, and the Nasdaq composite climbed 1.1%. Amazon led the way after delivering a much bigger profit than analysts expected. Treasury yields eased a bit in the bond market.
President Donald Trump said he has decided to lower his combined tariff rates on imports of Chinese goods to 47% after talks with Chinese leader Xi Jinping on curbing fentanyl trafficking.
The Federal Reserve cut its key interest rate Wednesday for a second time this year as it seeks to shore up economic growth and hiring even as inflation stays elevated. The move comes amid a fraught time for the central bank, with hiring sluggish and yet inflation stuck above the Fed’s 2% target. Compounding its challenges, the central bank is navigating without much of the economic data it typically relies on from the government. The Fed has signaled it may reduce its key rate again in December but the data drought raises the uncertainty around its next moves. Fed Chair Jerome Powell told reporters that there were “strongly differing views” at the central bank's policy meeting about to proceed going forward.
The Federal Reserve will almost certainly cut its key interest rate on Wednesday and could signal it expects another cut in December as the central bank seeks to bolster hiring. A cut Wednesday would be the second this year and could benefit consumers by bringing down borrowing costs for mortgages and auto loans. Since Fed chair Jerome Powell strongly signaled in late August that rate cuts were likely this year, the average 30-year mortgage rate has fallen to about 6.2% from 6.6%. Still, the Fed is navigating an unusual period for the U.S. economy and its future moves are harder to anticipate than is typically the case.
Stocks are rallying toward more records ahead of a week packed with potentially market-moving events. The S&P 500 rose 1% Monday. The Dow Jones Industrial Average added 224 points, and the Nasdaq composite jumped 1.7%. Stocks also climbed in Asia ahead of a meeting on Thursday between the heads of the United States and China. The hope is that the talks could clear rising tensions between the world’s two largest economies. This upcoming week will feature profit reports from some of Wall Street's most influential companies and a meeting by the Federal Reserve on interest rates. Gold fell back toward $4,000 per ounce.
U.S. and Chinese officials say a trade deal between the world’s two largest economies is drawing closer. The sides have reached an initial consensus for President Donald Trump and Chinese leader Xi Jinping to aim to finalize during their high-stakes meeting Thursday in South Korea. Any agreement would be a relief to international markets. Trump's treasury secretary says discussions with China yielded preliminary agreements to stop the precursor chemicals for fentanyl from coming into the United States. Scott Bessent also says Beijing would make “substantial” purchases of soybean and other agricultural products while putting off export controls on rare earth elements needed for advanced technologies.
