U.S. stock markets took a sharp dive on Friday, with the S&P 500 recording its worst single-day performance in over two months. The plunge was triggered by a convergence of negative factors, including President Donald Trump’s newly announced tariffs, disappointing job market data, and a steep decline in Amazon shares. These developments also fueled market speculation that the Federal Reserve will cut interest rates at its September meeting.
President Trump signed an executive order early Friday imposing new tariffs on U.S. imports from several nations, including Canada, Brazil, India, and Taiwan. This surprise move, just hours before the tariff deadline, rattled global trade confidence and added pressure to an already anxious market.
Compounding the market’s decline was a weaker-than-expected U.S. employment report. July's job growth fell short of estimates, while figures for the previous month were revised significantly lower, signaling emerging cracks in the labor market. The disappointing data led to a sharp upward revision in the likelihood of a Fed rate cut in September, with market expectations for at least a 25-basis-point cut surging from 37.7% to 86.5%, as per CME’s FedWatch Tool.
The S&P 500 fell by 101.38 points or 1.60% to 6,238.01, its biggest percentage loss since May 21. The Dow Jones Industrial Average dropped 542.40 points or 1.23% to close at 43,588.58. The Nasdaq Composite was hit hardest, tumbling 472.32 points or 2.24% to finish at 20,650.13, marking its steepest daily drop since April 21.
Among individual stocks, Amazon was the biggest drag across all major indexes. Shares plunged 8.3% after the company’s earnings failed to meet investor expectations for its cloud computing division, Amazon Web Services. The slump also weighed heavily on the consumer discretionary sector, which fell nearly 3.6%—the worst performer among the 11 S&P 500 sectors. Apple also reported earnings, slipping 2.5% after CEO Tim Cook warned that the newly imposed tariffs would add $1.1 billion in costs over the current quarter, despite a strong revenue forecast.
Adding to the market’s unease, President Trump stirred controversy by ordering the firing of Bureau of Labor Statistics Commissioner Erika L. McEntarfer, reportedly due to dissatisfaction with the jobs report. This move drew criticism from analysts, with some comparing it to authoritarian tendencies. Art Hogan of B. Riley Wealth commented, “This is clearly something that happens in dictatorships, not in democracies.”
Further unsettling the economic outlook, the Federal Reserve announced that Governor Adriana Kugler will step down from her role on August 8, allowing President Trump to appoint a new Fed governor. The resignation adds another layer of uncertainty amid Trump's ongoing pressure campaign to influence Fed Chair Jerome Powell’s rate policy.
The weekly performance mirrored Friday's turbulence. The S&P 500 dropped 2.36%, the Dow sank 2.92%, and the Nasdaq slid 2.17%. Meanwhile, the CBOE Volatility Index—commonly known as Wall Street’s “fear gauge”—spiked 3.66 points to 20.38, its highest close since June 20.
Market breadth was overwhelmingly negative, with declining stocks outnumbering advancers by more than 2-to-1 on both the NYSE and Nasdaq. The Nasdaq saw 202 new 52-week lows, compared to just 29 new highs, while the S&P 500 logged eight new highs and 29 new lows. Trading volume across U.S. exchanges reached 19.51 billion shares, well above the recent daily average, reflecting heightened investor activity amid the selloff.
