By Neha Shaikh
U.S. markets saw a sharp downturn on Friday, with the S&P 500 and Nasdaq leading the losses, after a surprisingly soft jobs report stoked fresh worries about a slowing economy. The pullback was worsened by disappointing guidance from Amazon, weighing heavily on tech sentiment.
As of 2:39 p.m. ET, the Dow Jones Industrial Average was down 508 points (1.5%), while the S&P 500 slid 1.5% and the Nasdaq Composite fell even further, shedding 2.1%.
Labor Market Data Misses the Mark
The Labor Department’s July employment report showed only 73,000 jobs added last month, far below forecasts of 106,000. Adding to the negative surprise, June’s job creation figure was revised down drastically—from 147,000 to just 14,000. The unemployment rate also ticked up to 4.2% from 4.1%.
Analysts at CIBC Economics didn’t hold back: “Ouch, that was not good.” The firm highlighted the major downward revisions over the past two months, noting that prior gains—especially in government hiring—have now been mostly erased. Manufacturing, in particular, is showing more weakness than earlier data suggested.
The disappointing numbers are likely to shift the Fed’s outlook. With inflation still above its target, the labor market weakening might push the central bank toward easing—possibly sooner than expected.
Trump Responds with Controversial Firing
Amid the fallout, former President Donald Trump made headlines by firing Erika McEntarfer, head of the Bureau of Labor Statistics. Without providing evidence, Trump accused her of manipulating employment data ahead of last year’s election.
Posting on Truth Social, Trump wrote: “We need accurate Jobs Numbers… She will be replaced with someone much more competent and qualified.”
The political drama unfolds just days after the Federal Reserve held interest rates steady for a fifth consecutive meeting, with Fed Chair Jerome Powell facing pressure from Trump to implement cuts.
New Tariffs Add to Market Pressure
Further compounding market uncertainty, Trump signed a new executive order imposing higher tariffs on a wide range of countries. Nations with trade surpluses—such as Brazil and Canada—will face levies as high as 50%, while countries like Japan, South Korea, and the EU will see new 15% tariffs. The tariffs are set to kick in at 12:01 a.m. on August 7.
Mexico has received a 90-day extension to strike a deal, following negotiations between Trump and Mexican President Claudia Sheinbaum.
Amazon Drags Tech Down
Amazon’s stock took a dive after the company projected weaker operating income for the current quarter. While Amazon Web Services (AWS) reported a 17.5% year-over-year revenue increase to $30.9 billion, investors had been expecting stronger growth. Concerns are now mounting over AWS losing ground in the cloud space.
Apple Strong, but AI Strategy Raises Eyebrows
Apple posted stronger-than-expected third-quarter results, driven by a rebound in iPhone sales in China and record-breaking services revenue. However, shares still followed the broader market’s decline.
Despite the solid results, some analysts remain cautious about Apple’s slow movement in artificial intelligence. A recent Wedbush note suggested that Apple needs to pursue external partnerships or acquisitions—even naming Perplexity AI as a potential target—to stay competitive in the AI race.
Other Movers:
- Coinbase stock slid due to lower-than-expected trading volumes and a drop in adjusted Q2 earnings.
- Reddit shares soared on a bullish revenue forecast, boosted by its new AI-powered ad tools.
- Exxon Mobil and Chevron dipped slightly despite increased production helping to offset weaker crude prices.
- Colgate-Palmolive gave back early gains, even after reporting a strong quarter.
- Kimberly-Clark, on the other hand, saw a lift thanks to steady demand for essentials like Huggies and Kleenex.
Markets are now facing multiple headwinds—from faltering job growth and inflation risks to rising geopolitical tensions and tech sector instability. As the Fed gears up for its next meeting, all eyes will be on how policymakers balance these conflicting signals in a rapidly shifting economic landscape.
