Wall Street kicked off August with a massive sell-off after weak job numbers and fresh tariffs from President Donald Trump rattled investor confidence. According to data from CNBC, the Dow Jones Industrial Average fell by 640 points, dropping 1.4%. The S&P 500 lost 1.6%, while the Nasdaq Composite slumped 2.1%. Traders immediately dumped risk as the disappointing labor data erased hopes for a stable economy, with the dollar sliding hard alongside falling stocks. The labor report showed only 73,000 jobs added in July, a sharp miss from the 100,000 estimate economists had expected. Previous months were also revised down, tightening the noose around market sentiment. Also, the numbers confirmed that job cuts are growing fast. Companies announced 62,075 job cuts in July, a 140% increase year-on-year. That’s more than double the average for July over the last four years. So far in 2025, employers have announced 806,383 job losses, the highest total between January and July since the pandemic year of 2020. Government layoffs are leading the spike with 292,294 cuts, followed by 89,251 in tech and 80,487 in retail. Bank shares plunge as investors brace for slower lending The employment numbers hit bank stocks hard. Investors fear a slowing economy will choke credit growth. JPMorgan Chase tumbled nearly 4%, while Bank of America and Wells Fargo each sank more than 3%. Manufacturing and industrial names weren’t spared either. GE Aerospace and Caterpillar both dropped around 3%, dragged down by expectations of weaker demand in the months ahead. Over in Europe, inflation surprised to the upside. Eurostat reported headline inflation held at 2% in July, slightly above the 1.9% estimate. Core inflation remained stuck at 2.3% for the third straight month, and services inflation eased from 3.3% in June to 3.1% in July. The bond market barely reacted. Germany’s 10-year yield rose by a basis point, and France’s ticked up less than that. But it was the White House’s tariff update that added global pressure. The administration introduced new trade measures against several countries, sparking a broader sell-off. Europe’s Stoxx 600 index closed 1.8% down, its worst session since April. Travel stocks fell 2.7%, and banks across Europe dropped 2.9%. Even with existing trade deals in place between the U.K. and the EU, the uncertainty surrounding Trump’s tariff moves still rattled investors. Currency traders piled out of the dollar fast. The Bloomberg Dollar Spot Index dropped 1%, marking its worst day since April 21. The yen jumped 2.2% and the euro climbed more than 1%. The dollar has now fallen over 7% this year, after briefly gaining ground in early July. Traders expect Fed to fold after jobs miss Before the data hit, Federal Reserve Chair Jerome Powell told reporters there was no clear case for a rate cut in September. But the numbers forced markets to flip the script. CME Group’s FedWatch tool showed the odds of a rate cut jumping to 75.5%, up from 40% just a day earlier. And then Beth Hammack, President of the Cleveland Fed, told Bloomberg TV, “We could see some weakening on the labor side. And if we see that, it would be something that we might want to respond to.” She added that the Fed shouldn’t overreact to one data point but admitted the report was “disappointing.” Powell had defended his decision to hold rates, saying it was important to monitor the effects of Trump’s tariffs and stay focused on inflation. He acknowledged that risks to jobs exist but maintained that the labor market was still “solid.” Even before Friday’s data, Fed Governors Christopher Waller and Michelle Bowman opposed holding rates steady. They cited labor market concerns as the reason they pushed for a cut, and with Friday’s numbers now public, their arguments appear to have gained traction. Jimmy Cramer had a lot to say about all this. “We have very little job growth, and we have wages that are not going up. That is when you cut,” he said on Squawk on the Street . “I’ve been a big backer of Jay Powell, but this is a number that says, ‘Jay, you didn’t need to wait.’” Cramer pointed to falling bond yields as proof that markets are already reacting. The 10-year Treasury yield dropped to just above 4.25%, the lowest level in nearly a month. “They’re going the president’s way,” he said. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
