US stocks fell sharply on Friday as investors digested fresh signs of a weakening US economy and reacted to President Donald Trump’s newly escalated tariff measures. It marked a rough start to August and capped a losing week across all major US indexes.
Worst day in months for major indexes
The Dow Jones Industrial Average dropped 542 points, or 1.23%, to close at 43,588.58, its steepest one-day fall since mid-June. The S&P 500 lost 1.6% to end at 6,238.01, while the Nasdaq Composite slid 2.24% to 20,650.13. All three benchmarks notched their worst single-day performances in at least two months.
The sell-off deepened weekly losses. The Dow shed 2.9%, the S&P fell 2.4%, and the Nasdaq dropped 2.2%, marking their poorest weekly returns since April or May.
Jobs report adds to slowdown fears
Much of the market’s anxiety stemmed from a disappointing July jobs report. The US economy added just 73,000 jobs last month, well below the 100,000 forecast. Revisions to previous months compounded the issue, with June’s figure cut to just 14,000 and May’s revised down to 19,000. The three-month hiring average now stands at just 35,000, its weakest level outside pandemic-era distortions since 2010.
Banking stocks were hit hard amid fears of weaker loan demand. JPMorgan dropped more than 2%, while Bank of America and Wells Fargo each fell over 3%. Industrials like GE Aerospace and Caterpillar also declined.
Traders eye rate cuts as Fed re-evaluates
The soft jobs data prompted traders to sharply raise their bets on a September interest rate cut, with CME futures now pricing an 86% chance. That’s a dramatic reversal from earlier in the week, when Fed Chair Jerome Powell signalled patience due to tariff-related inflation risks.
Australian markets brace for weak open
The Australian sharemarket is expected to start the week on the back foot, following Friday’s steep US sell-off. The SPI 200 futures are pointing to a 0.4% drop.
The Australian dollar jumped 0.8% to US64.7¢ on Friday, and was last trading at US64.62¢ ahead of Monday’s open, buoyed by a slump in the greenback as traders priced in more aggressive US rate cuts.
Locally, attention turns to earnings season, with results expected this week from REA Group, AMP, News Corp, Nick Scali, QBE Insurance and Block.
