US stock selloff sparked by tariff onslaught, weak payrolls
ADVERTISEMENT Just hours before the tariff deadline on Friday, President Donald Trump signed an executive order imposing duties on U.S. imports from countries including Canada, Brazil, India and Taiwan, even as countries scrambled to seek ways to strike better deals.
Data showed U.S. job growth slowed more than expected in July while the prior month's report was revised sharply lower, pointing to a sharp moderation in the labor market.
"Everybody's quite shocked at how large the downward revisions were for both May and June. The upside is that the unemployment rate did not spike meaningfully," said Kevin Gordon, senior investment strategist at Charles Schwab.The report perked up bets for a September interest rate cut to 80.0%, according to CME's FedWatch tool.BeiChen Lin, senior investment strategist at Russell Investments, said job growth has been mostly concentrated in previously understaffed sectors like healthcare and social assistance. "The breadth of job creation has steadily declined in recent months."
ADVERTISEMENT
At 11:39 a.m. ET, the Dow Jones Industrial Average fell 573.05 points, or 1.30%, to 43,557.93, the S&P 500 lost 93.99 points, or 1.48%, to 6,245.40 and the Nasdaq Composite lost 412.60 points, or 1.95%, to 20,709.85.
Both the S&P 500 and the Nasdaq were on track for their worst single-day performance since April 21.
ADVERTISEMENT The CBOE Volatility index, also known as Wall Street's fear gauge, jumped to a near six-week high and was last up 19.41 points.Further weighing on markets,
ADVERTISEMENT Amazon dropped 8% after the company's growth in its cloud computing unit failed to impress investors, widely lagging its AI-focused rivals Alphabet and Microsoft that reported on Wednesday.The stock weighed heavily on the consumer discretionary index, which led the sectoral losses by falling 3.5%. Nine of the 11 S&P 500 sector indexes were trading in the red.
ADVERTISEMENT Technology and communication services indexes fell 1.9% and 1.45%, respectively.Apple posted its current-quarter revenue forecast well above Wall Street estimates, but CEO Tim Cook warned U.S. tariffs would add $1.1 billion in costs over the period. The stock edged 2% lower.Most major megacap stocks fell, with Nvidia down 1.6, Tesla lost 0.8%, Meta Platforms down 2.3%, and Alphabet losing 1.6%.Financials shed 2%, with Coinbase Global sinking 15.6% after the crypto exchange reported a drop in adjusted profit for the second quarter.Bucking the trend, Reddit surged 21.9% after it reported quarterly results that exceeded Street expectations, boosted by an AI-focussed advertising strategy and strong user engagement.Meanwhile, Trump said on Friday the Federal Reserve's board should assume control if the central bank's chair, Jerome Powell, continues to refuse to lower interest rates.Powell, despite pressure from Trump to cut rates, has indicated the central bank was in no rush to do so.The day's sharp losses put the S&P 500 and the Nasdaq on track for weekly losses, offsetting the week's earlier momentum on signs of economic resilience, AI boost, and key U.S. trade agreements with top partners such as the European Union.Declining issues outnumbered advancers by a 2.74-to-1 ratio on the NYSE, and by a 3.58-to-1 ratio on the Nasdaq.
The S&P 500 posted seven new 52-week highs and 26 new lows, while the Nasdaq Composite recorded 13 new highs and 183 new lows.
(You can now subscribe to our ETMarkets WhatsApp channel)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
4 minutes ago
- The Hindu
The difficult path for Trump's ‘one big budget bet'
The most debated government downsizing reform that has been implemented in recent history has been the Department of Government Efficiency (DOGE) initiative under the Donald Trump administration in its second term. The initiative aims to reduce U.S. federal spending, deficit, debt and interest burden, streamline government operations, and enhance government efficiency. The initiative was much in the news with the appointment of Elon Musk, to advise and guide the government on the initiative, and his declaration that the overall goal is to achieve a leaner government by cutting the deficit and reducing the number of federal agencies from over 400 to 99. Root cause of deficit and debt The need for a smaller government was felt by the Trump administration due to enormous government spending and deficits. The size of the U.S. government, measured by public expenditure as a percentage of GDP, on average, was 36.49% from 2001 to 2024. Surprisingly, this was the smallest among the seven major advanced economies (MAE). France (56.53%) had the largest government, followed by Italy (49.81%), Germany (46.64%), Canada (41.24%), the United Kingdom (41.09%), and Japan (37.56%). The size of the government in the U.S. has remained the smallest among the MAE for most of the last 25 years. Yet, overall fiscal balance and government debt have been higher in the U.S. when compared to the MAE. In the triennium ending (TE) 2024, the U.S. had a fiscal balance and debt burden of (-)6.0% and 119.5% of GDP, respectively, compared to the figures of (-)4.1% and 108.6%, respectively, for the MAE. The underlying reason is the lower revenue collection in the U.S. The total revenue of the U.S. government as a percentage of GDP on an average was the lowest (30.55%) during the period 2001–2022 compared to France (51.48%), Italy (45.93%), Germany (44.93%), Canada (39.92%), and the U.K. (36.63%). Between 2001 and 2022, the U.S. has clocked the lowest tax-GDP ratio of 19.27% as against 28.59% for Italy, 28.12% for France, 27.99% for Canada, 26.89% for the U.K., 22.70% for Germany, and 32.74% for OECD countries. Initiatives and outcomes The several expenditure reforms the DOGE has implemented are the termination of unused federal government office space leases, cancellation of wasteful contracts, recovery of misallocated funds, federal workforce optimisation involving initiatives such as hiring restrictions, workforce reduction, and offering voluntary buyouts, deregulatory measures aimed at ensuring lawful governance and reducing red tape. There is also Artificial Intelligence-based monitoring of federal employee activity, productivity assessment, and detection of inefficiencies, identifying and consolidating overlapping functions across departments, and cutting down overseas humanitarian and development spending. DOGE follows a transparent communication strategy by publicly sharing updates (on X or DOGE's portal) on the outcomes. The total estimated expenditure savings from contract/lease cancellations and renegotiations, grant cancellations, fraud and improper payment detection and elimination, asset sales, employee reductions and regulatory changes have been $190 billion, which amounts to $1,180 per taxpayer. DOGE has made the distribution of government grants transparent through a payments portal, which allows citizens to see recipient-wise payments of federal grants. DOGE's Workforce Portal provides information on the agency-wise size of the U.S. government civilian workforce. To streamline layoffs, it has implemented the 'Workforce Reshaping Tool', a modernised version of the Pentagon's Automated Reduction in Force (AutoRIF) software, which assists in terminating federal employees based on criteria such as seniority and performance. So far, approximately 2,60,000 federal employees have been laid off, retired early, or accepted buyouts. Several federal regulations were repealed and modified, with a cost savings of $30.1 billion due to reduced regulatory compliance; also, 1.8 million words have been deleted from the rules of several Federal regulations. DOGE publishes a unique unconstitutionality index (UI) measuring the extent of bureaucracy's role in shaping federal policy. As per UI, for every law passed by Congress in 2024, there were about 19 rules created by the bureaucracy. The path ahead However, DOGE's journey has seen an unexpected turn after Elon Musk publicly disagreed with U.S. President Donald Trump over the provision incorporated in the much-debated One Big Beautiful Bill (OBBB) for removing tax credits offered to purchase electric vehicles. The OBBB is a legislative extension of the DOGE reform, as it aims to embed multiple fiscal priorities and DOGE-style government efficiency reforms into a single federal law. Ironically, by opposing OBBB, Mr. Musk contradicted his initiatives as an adviser to DOGE. However, the bigger challenge facing the DOGE initiative is that its extended form, the OBBB, is unlikely to resolve the U.S.'s deficit and debt problem, as the tax cuts proposed in the OBBB far exceed the spending cuts, leading to an addition of $3.2 trillion to the U.S. national debt over the next decade. Currently, the U.S. has the lowest and below-OECD-average corporate tax rates among the MAE, lower effective tax rates on the rich, and tighter secrecy laws that enable tax evasion by wealthy individuals and corporations. Therefore, unless efforts are made to boost government revenues, Mr. Trump's 'One Big Budget Bet' of reducing America's deficit and debt through DOGE-style expenditure reforms is unlikely to pay off. Sthanu R Nair teaches Economics and Public Policy at the Indian Institute of Management Kozhikode, Kerala. Pratik Sinha is a consultant for a multinational firm. He was an Assistant Director, Nehru Yuva Kendra Sangathan, Ministry of Youth Affairs and Sports, Government of India
Time of India
20 minutes ago
- Time of India
Trumputin talks! India pins hopes on Alaska assembly
The much-anticipated August 15 meeting between US President Donald Trump and his Russian counterpart Vladimir Putin in Alaska has raised hopes in New Delhi of a probable deal and subsequent easing of tensions and lifting of certain sanctions from Moscow. India is hoping that a deal between the US and Russia and subsequently a ceasefire between Russia and Ukraine could provide sanctions relief to Russia, easing transactions between New Delhi and Moscow and subsequently lifting of the 25% extra tariff imposed on India that, according to Trump, is "funding" Russian war efforts, according to diplomatic observers. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program The developments could also have a positive spin-off on the India-US ties and Indian traders may be spared of the 25% extra tariff imposed on account of India's imports of Russian oil. On Saturday night, the ministry of external affairs issued a statement endorsing the Trump-Putin summit and suggested that it is ready to support these efforts. "This meeting holds the promise of bringing to an end the ongoing conflict in Ukraine and opening up the prospects for peace. As Prime Minister Narendra Modi has said on several occasions, 'This is not an era of war'," a ministry of external affairs spokesperson said in a statement. Pankaj Saran , currently member of the National Security Advisory Board (NSAB) and former Deputy NSA, told ET, "It is a defining and potentially transformative summit for the world, specially for India. Our ties with both countries are integral to the success of our national development and security goals. India should extend its full support to the summit." Live Events DB Venkatesh Varma , India's former envoy to Russia and currently member of NSAB, told ET, "The Alaska summit could prove to be a turning point at the global level and India has a vital interest in its success." Observers are of the opinion that India's statement has been able to bring out Europe from New Delhi's equation in matters pertaining to Russia-Ukraine war and India-USA ties. The EU has been critical of India's oil purchases from Russia even before the US started criticising India's oil imports. This may have played a part in influencing Washington to impose an additional 25% tariff on India, according to a diplomatic observer. It may be recalled that the NATO chief, who is the former PM of the Netherlands, also threatened tariffs against India for purchasing Russian oil after his meeting with Trump. Critics allege some European powers are trying to sabotage or play spoiler ahead of the summit and Ukraine may be encouraged to launch a strike against Russia over the next five days. Economic Times WhatsApp channel )
Mint
an hour ago
- Mint
Wall Street week ahead: Investors eye inflation, retail sales, Trump-Putin meet
Wall Street in the week ahead will see key economic data and a meeting between US President Donald Trump and Russian President Vladimir Putin. In economic calendar, market participants will closely watch the two inflation reports – the Consumer Price Index and the Producer Price Index, and retail sales data. The investors and Federal Reserve policymakers will keep a close eye on the economic data for any effects of Trump's tariffs on inflation. Friday will see the scheduled meeting between Trump and Putin. Earlier, the US president had expressed hope that a ceasefire between Russia and Ukraine could be near. It could involve "some swapping of territories" between the two warring nations. On August 12 (Tuesday), separate reports on NFIB optimism index for July and Consumer Price Index (CPI) for July will be released. On August 14 (Thursday), separate reports on initial jobless claims for the week ended August 9 and Producer Price Index (PPI) for July will be released. On August 15 (Friday), separate reports on US retail sales for July, Empire State manufacturing survey for August, Import Price Index for July, industrial production for July, and consumer sentiment (prelim) for August will be released. Following companies are due to report second quarter results in the week ahead — AMC Entertainment, Barrick Mining, Oklo, Plug Power, CoreWeave, eToro, Paysafe, Cisco, Alvotech, Alibaba, Applied Materials, Flowers Foods, and So-Young International. US stocks closed higher on Friday with the Nasdaq hitting a record closing high as technology-related shares, including Apple, surged. The Dow Jones Industrial Average rose 206.97 points, or 0.47%, to 44,175.61, the S&P 500 gained 49.45 points, or 0.78%, to 6,389.45 and the Nasdaq Composite gained 207.32 points, or 0.98%, to 21,450.02. For the week, the S&P 500 rose 2.4%, the Dow gained 1.3% and the Nasdaq climbed 3.9%. The yield on the 10-year Treasury rose to 4.28% from 4.25%. The yield on the 2-year Treasury rose to 3.76% from 3.73%.
