Stock market today: Dow Jones, S&P 500, Nasdaq tank - top 5 reasons why equites are losing ground

Economic Times

2 days ago

The U.S. stock market saw a sharp sell-off on Thursday as a disappointing July jobs report and President Donald Trump's sweeping new tariffs triggered fears of an economic slowdown. With only 73,000 jobs added last month and unemployment rising to 4.2%, investors were already on edge. But Trump's unexpected move to slap 10% to 41% tariffs on imports from 66 countries sent shockwaves through Wall Street. The Dow Jones, S&P 500, and Nasdaq all plunged, bond yields dropped, and recession warnings grew louder—fueling expectations that the Federal Reserve may step in with a rate cut as early as September.
Synopsis U.S. stock market tumbled hard after a weak July jobs report and President Trump's new tariffs on 66 countries reignited fears of a global trade war. The Dow Jones, S&P 500, and Nasdaq plunged as job growth slowed to just 73,000, and unemployment rose to 4.2%. With sharp revisions in previous job data and fresh tariff shocks, investor confidence took a hit. Bond yields dropped, and recession fears are growing louder. Major stocks like Amazon and Apple slipped, while Wall Street now bets the Federal Reserve could cut rates in September to stabilize the slowing economy. U.S. stock market took a sharp nosedive on August 1, 2025, after the July jobs report came in much weaker than expected and President Donald Trump shocked global markets with sweeping new tariffs on 66 countries. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all ended deep in the red, with investor sentiment rattled by signs of a slowing economy and renewed global trade tensions.
ADVERTISEMENT The combination of disappointing employment data, a possible Federal Reserve rate cut, and an aggressive new trade policy rollout has triggered panic among investors and analysts. With the economy already on shaky ground, fears of a potential recession in 2025 are growing louder across Wall Street. The U.S. stock market is facing a rough start to August 2025 as the S&P 500, Dow Jones, and Nasdaq all plunged sharply in early trading. The S&P 500 crash today has sparked a wave of recession fears, following a weak jobs report and the latest round of global tariffs announced by President Donald Trump.
Investors are reacting to a combination of disappointing labor market data, escalating trade tensions, and underwhelming corporate earnings—creating a perfect storm for equities.
All three major indexes opened sharply lower: Dow Jones Industrial Average dropped over 570 points , down approximately 1.3%
dropped over , down approximately S&P 500 fell by 1.5% , wiping out gains from the previous month
fell by , wiping out gains from the previous month Nasdaq Composite led the decline, tumbling over 2.3% This marks one of the steepest single-day selloffs in recent months, as market confidence continues to erode.
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ALSO READ: U.S. stock market plunges today as Dow, S&P 500, and Nasdaq sink deep in red — a stormy start to August on Wall Street as weak jobs report and Trump tariff turmoil spark economic recession panicThe tech-heavy Nasdaq is under particular pressure today, driven by weak earnings results from some of the market's biggest names.
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Amazon missed earnings expectations and issued cautious guidance
missed earnings expectations and issued cautious guidance Apple warned it could face over $1 billion in tariff-related costs
warned it could face over Tesla, Nvidia, and Meta also saw steep declines amid revenue concerns and global headwinds These companies have been the backbone of the market's rally earlier this year, and their decline is raising fresh doubts about the strength of corporate America.
With equity markets in retreat, investors are moving into safe-haven assets like U.S. Treasury bonds. As a result, bond yields are falling, and the VIX volatility index—often referred to as Wall Street's fear gauge—has spiked to a six-week high.
ADVERTISEMENT This shift signals a rising level of investor anxiety, as Wall Street braces for more economic headwinds in the months ahead. The heart of Thursday's market sell-off stemmed from a highly anticipated but disappointing U.S. jobs report. According to the Labor Department, only 73,000 jobs were added in July—well below economists' expectations of around 110,000. To make matters worse, figures for May and June were revised downward by a combined 258,000 jobs, intensifying concerns that the labor market is cooling faster than anticipated.
ADVERTISEMENT Meanwhile, the unemployment rate rose to 4.2%, up from 4.0% the month before. This marks the third straight monthly rise in joblessness, adding to fears that the U.S. economy might be slowing more rapidly than the Federal Reserve had hoped. These numbers come just months before the U.S. heads into the fall election season, raising the stakes for policymakers trying to balance inflation, growth, and public sentiment. As Wall Street was digesting the weak jobs data, President Trump issued a surprise executive order expanding America's protectionist stance on trade. The administration announced a new round of import tariffs ranging from 10% to 41% on products from 66 countries, including key trading partners such as Germany, Canada, Mexico, South Korea, and Vietnam. Dubbed the 'Fair Trade Restoration Act,' this policy follows Trump's previous April tariff package but goes much further. It's being viewed as a strategic move to protect American manufacturing and reduce the trade deficit, but economists warn it could spark global retaliation and squeeze already fragile supply chains. The tariffs are set to go into effect August 7, though businesses and international leaders are already pushing back, urging Washington to reconsider or offer exemptions. Market strategists are also pointing to broader concerns about stretched valuations in U.S. stocks. The S&P 500's price-to-earnings (P/E) ratio has climbed above 22, nearing levels not seen since early 2022. Kevin Muir, a well-known market strategist, has warned that the market is 'vulnerable to a significant pullback,' especially during the typically weaker August–September trading window. He estimates the S&P 500 could drop another 200–300 points if recession fears intensify.
The CBOE Volatility Index (VIX), widely seen as Wall Street's 'fear gauge,' spiked 28%, signaling elevated concern among traders and hedge funds. The sell-off was widespread, affecting nearly every sector. But technology and energy stocks were hit the hardest, with uncertainty over global demand and the new tariffs weighing on outlooks. Big Tech, often seen as a safe haven during economic turbulence, didn't escape the damage. Amazon stock tumbled 7% after reporting softer-than-expected cloud computing revenue and issuing cautious forward guidance. Apple shares dropped 3.6%, dragged down by concerns over potential tariffs on iPhones and other U.S.-branded electronics assembled overseas. Other major companies like ExxonMobil, Tesla, and Microsoft also ended the day lower, reflecting the broad fear that escalating trade disputes and softening domestic demand could hurt corporate earnings in the second half of 2025.The biggest red flag came from the July jobs report, which showed only 73,000 jobs were added, far below the expected 110,000+. This major miss signals that hiring is slowing, and the overall economy could be losing steam heading into the second half of 2025.The U.S. unemployment rate rose to 4.2%, up from 4.0% last month. This marks the third consecutive increase and is causing serious concern that the labor market is cooling faster than expected, shaking investor confidence in the broader economic outlook.In a surprise move, President Trump announced a new wave of tariffs, imposing 10% to 41% import duties on goods from 66 countries. The aggressive trade action triggered renewed fears of a global trade war, potentially increasing supply chain costs and stifling international trade.10-year Treasury yields dropped to 4.25%, their lowest in months, as investors fled to safety. This sharp fall in yields suggests growing concerns about the health of the economy, and it has significantly increased the odds of a Federal Reserve rate cut as early as September.Major tech giants like Amazon and Apple suffered steep losses, dragging the Nasdaq down. Amazon fell nearly 7% after weak cloud guidance, while Apple was hit by tariff exposure. These declines fueled a broader tech sell-off, souring sentiment across the board. In a clear sign that investors expect intervention from the central bank, U.S. Treasury yields plummeted. The 10-year Treasury yield fell to 4.25%, while the 2-year note dipped to 3.75%. Bond traders are now pricing in a 67–79% chance that the Federal Reserve will deliver an interest rate cut at its next meeting on September 17, 2025. Fed Chair Jerome Powell has previously indicated that the central bank remains 'data dependent,' and Thursday's combination of weak labor data and global market uncertainty could tip the scales toward a more accommodative stance. Markets are also watching closely for any additional remarks from Fed officials ahead of the annual Jackson Hole Symposium later this month. The shockwaves were not limited to the U.S. Global markets also saw sharp declines: Germany's DAX fell 1.9%
fell 1.9% Japan's Nikkei 225 closed down 2.2%
closed down 2.2% South Korea's KOSPI dropped 2.5%
dropped 2.5% Canada's TSX Composite slid 1.4% Economists warn that Trump's latest move could trigger counter-tariffs, destabilizing trade routes and increasing costs for consumers worldwide. The World Trade Organization (WTO) has called an emergency session to evaluate the impact of the U.S. measures. With soft labor numbers, trade uncertainty, and slowing corporate earnings growth, many Wall Street firms are now raising their probability of a U.S. recession by early 2026. Goldman Sachs increased its recession risk forecast from 35% to 50%, citing fragile consumer sentiment and waning business investment. Morgan Stanley analysts warned that if tariffs remain in place through Q4, GDP growth could slow to 0.7% or even turn negative. Retail investors are being urged to remain cautious and diversify holdings, as volatility is likely to remain elevated through the fall. Following the dismal jobs data, investors are betting that the Federal Reserve will be forced to pivot back to rate cuts. Traders are now pricing in a strong chance of a rate cut as soon as September, as the central bank seeks to cushion the economy. While rate cuts could eventually support markets, they may also confirm investors' fears that the U.S. economy is already slipping toward a recession. Here's what market watchers are keeping a close eye on in the coming days: Tariff rollout and global response : Will key countries retaliate or comply?
: Will key countries retaliate or comply? Fed commentary and policy outlook : Any shift in tone could move markets fast
: Any shift in tone could move markets fast Next wave of earnings : Tech, retail, and industrial sectors are due to report
: Tech, retail, and industrial sectors are due to report Consumer confidence and inflation data: Key indicators of economic momentum The S&P 500 crash today is not just a reaction to one headline—it's the result of multiple pressure points converging at once: a weak jobs report, aggressive tariff policy, disappointing tech earnings, and high market valuations.
It underscores just how fragile investor sentiment has become, and why Wall Street's stormy start to August may only be the beginning of broader market volatility. Here are some critical events and timelines investors should monitor: Date Event August 7, 2025 Trump's new tariffs take effect August 22–24 Jackson Hole Economic Symposium September 17 Federal Reserve policy meeting (potential rate decision) October 4 Next U.S. jobs report (September data) The stock market's reaction to both the weak July employment report and the broad new tariffs suggests investors are growing increasingly concerned that the U.S. economy could be headed for a downturn. While not yet in a full-blown recession, the warning signs—rising unemployment, slowing job growth, trade disruptions, and falling bond yields—are becoming harder to ignore. For now, all eyes remain on the Federal Reserve, the White House, and the next few economic data points. If conditions continue to deteriorate, expect further volatility in the markets and possibly more aggressive action from policymakers to stabilize the economy.
Q1. Why did the U.S. stock market crash today? Because of weak July jobs data and new Trump tariffs on imports.
Q2. Will the Federal Reserve cut interest rates next month? Yes, markets now expect a rate cut in September due to slowing growth.
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