Wall Street falls the most since May after employers slash hiring and
tariffs roll out
[August 02, 2025] By
DAMIAN J. TROISE and ALEX VEIGA
The U.S. stock market had its worst day since May on Friday after the
government reported a sharp slowdown in hiring and President Donald
Trump imposed sweeping tariffs on imports from a number of U.S. trading
partners.
The S&P 500 fell 1.6%, its biggest decline since May 21 and its fourth
straight loss. The index also posted a 2.4% loss for the week, marking a
sharp shift from last week’s record-setting streak of gains.
The Dow Jones Industrial Average fell 1.2%, while the Nasdaq composite
fell 2.2%.
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.
Markets also reacted to the latest tariff news. President Donald Trump
announced tariff rates on dozens of countries and pushed back the
scheduled effective date to Aug. 7, adding more uncertainty to the
global trade picture.
“The market has been felled by a one-two punch of additional tariffs, as
well as the weaker-than-expected employment data -— not only for this
month, but for the downward revisions to the prior months,” said Sam
Stovall, chief investment strategist at CFRA.
Trump’s decision to order the immediate firing of the head of the
government agency that produces the monthly jobs figures will only fuel
the market’s uncertainty, Stovall added.
The surprisingly weak hiring numbers led investors to step up their
expectations for an interest rate cut in September. The market’s odds of
a quarter-point cut by the Federal Reserve rose to around 87% from just
under 40% a day earlier, according to data from CME FedWatch.
The question now: Will the Fed’s policymakers consider a half-point cut
next month, or even a quarter-point cut sometime before their next
committee meeting, Stovall said.
The yield on the 10-year Treasury fell to 4.21% from 4.39% just before
the hiring report was released. That’s a big move for the bond market.
The yield on the two-year Treasury, which more closely tracks
expectations for Fed actions, plunged to 3.68% from 3.94% just prior to
the report’s release.
The Fed 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.
An update on Thursday for the Fed’s preferred measure of inflation
showed that prices ticked higher in June, rising to 2.6% from 2.4% in
May. The Fed has remained cautious about cutting interest rates because
of worries that tariffs will add more fuel to inflation and weigh down
economic growth.
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Traders work on the floor of the New York Stock Exchange, Friday,
Aug. 1, 2025, in New York. (AP Photo/Yuki Iwamura)
 The central bank, though, also
counts “maximum employment” as one of its two mandates along with
keeping prices stable. Issues with either of those goals could
prompt a shift in policy.
The Fed held rates steady again at its most recent meeting this
week. Fed Chair Jerome Powell has been pressured by Trump to cut the
benchmark rate, though that decision isn’t his to make alone, but
belongs to the 12 members of the Federal Open Market Committee.
“What had looked like a Teflon labor market showed some scratches
this morning, as tariffs continue to work their way through the
economy,” said Ellen Zentner, chief economic strategist for Morgan
Stanley Wealth Management. “A Fed that still appeared hesitant to
lower rates may see a clearer path to a September cut, especially if
data over the next month confirms the trend.”
Businesses, investors and the Fed are all operating under a cloud of
uncertainty from Trump’s tariff policy. The latest moves give 66
countries, the European Union, Taiwan and the Falkland Islands
another seven days, instead of taking effect on Friday, as Trump
stated earlier.
Companies have been warning investors that the policy, with some
tariffs already in effect while others change or get extended, has
made it difficult to make forecasts. Walmart, Procter & Gamble and
many others have warned about import taxes raising costs, eating
into profits and raising prices for consumers.
Internet retail giant Amazon fell 8.3%, despite reporting
encouraging profit and sales for its most recent quarter. Technology
behemoth Apple fell 2.5% after also beating Wall Street’s profit and
revenue forecasts. Both companies face tougher operating conditions
because of tariffs, with Apple forecasting a $1.1 billion hit from
the fees in the current quarter.
Exxon Mobil fell 1.8% after reporting that profit dropped to the
lowest level in four years and sales fell as oil prices slumped as
OPEC+ ramped up production.
All told, the S&P 500 fell 101.38 points to 6,238.01. The Dow
dropped 542.40 points to 43,588.58, and the Nasdaq gave up 472.32
points to finish at 20,650.13.
Stocks fell across the world. Germany’s DAX fell 2.7% and France’s
CAC 40 fell 2.9%. South Korea’s Kospi tumbled 3.9%
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