Disappointing jobs data and new tariffs shake US markets<\/p>\n
United States (US) stock markets<\/a> fell on Friday night as investors<\/a> reacted to a weak July jobs report and a fresh round of tariffs announced by President Trump. For the week, the\u00a0US 500 (S&P 500)<\/a> fell 2.36%, its largest weekly decline since late March. The\u00a0US Tech 100 (Nasdaq 100)<\/a> dropped 2.19%, and\u00a0Wall Street (Dow Jones)<\/a> shed 1313 points, or 2.92%.<\/p>\n Participation rate decline tempers rising unemployment<\/p>\n The July employment report showed the US economy added only 73,000 jobs, below the 105,000 expected. The unemployment rate increased to 4.2% from 4.1%, as anticipated. The shock came from a significant downward revision to the previous two months, which reduced total jobs by 258,000 and lowered the three-month average payroll gain from 150,000 to just 35,000.<\/p>\n Furthermore, the rise in the unemployment rate to 4.2% was tempered by a decline in the participation rate to 62.2%. If the participation rate was still at 62.8%, as it was in November 2023, the unemployment rate would currently sit around 4.9%.<\/p>\n Political tensions heighten concerns<\/p>\n The grim jobs report marked the first clear evidence of sharp slowing in the hard data \u2013 likely due to uncertainty and slowing growth caused by President Trump’s tariffs. This was the impact feared back in April when markets moved sharply lower on concerns of a sharp economic slowdown..<\/p>\n The situation on Friday was further exacerbated when Trump dismissed the head of the Bureau of Labor Statistics, claiming the data was ‘rigged’, raising red flags about politicisation and the potential erosion of data integrity. Trump also criticised Federal Reserve (Fed)<\/a> Chair Jerome Powell, warning him to ‘start cutting rates<\/a>‘ or face consequences.<\/p>\n Rising rate cut expectations<\/p>\n Market reactions to Friday night\u2019s events were swift and decisive.\u00a0Equities<\/a>\u00a0and the\u00a0US dollar<\/a> tumbled, along with\u00a0yields<\/a>, which caused the odds of a 25\u00a0basis point (bp)<\/a>\u00a0Fed interest rate cut in September to rise to 95%, just a day after falling to 50% following the\u00a0hawkish<\/a>\u00a0Federal Open Market Committee (FOMC)<\/a>\u00a0meeting.<\/p>\n Looking back, in 2024, the Fed kept rates on hold at its July meeting but delivered a 50 bp cut in September after a weaker-than-expected August jobs report. If upcoming labour market data surprises to the downside, there is a reasonable chance of history repeating itself in 2025.<\/p>\n Upcoming earnings and economic indicators<\/p>\n Looking ahead, aside from tariff headlines and digesting the implications of Friday night\u2019s jobs report, second-quarter (Q2) 2025 earnings season continues this week with reports scheduled from Palantir<\/a>, Pfizer<\/a>, Caterpillar<\/a>, Super Micro Computer<\/a>, Rivian<\/a>, Snap<\/a>, McDonald’s<\/a>, Disney<\/a>, Airbnb<\/a>, Uber<\/a>, Dash<\/a>, Lyft<\/a>, and Under Armour<\/a>.<\/p>\n