US stocks end down on Trump tariffs, weak jobs. Near-term yields fall on rate cut bets
U.S. stocks closed lower after disappointing jobs growth and President Donald Trump's order imposing sweeping new tariffs on countries across the world.
The economy added 73,000 jobs in July, less than forecasts for 100,000, according to a Dow Jones survey of economists. The unemployment rate edged up to 4.2%, as expected. June and May totals were revised sharply lower, down by a combined 258,000 from previously announced levels.
"The increase in nonfarm payrolls in July was softer than anticipated but the real story was the revisions that wiped out nearly all the job gains in May and June," said Nancy Vanden Houten, lead economist at Oxford Economics.
The much weaker-than-expected report is likely to trigger a Federal Reserve rate cut, economists said. The CME FedWatch tool that tracks the market's odds the Fed will change interest rates at upcoming meetings shows an 83% chance of a rate cut in September. Near-term Treasury yields fell in anticipation of a rate cut.
"This payroll report kicks the door wide open for a September rate cut," said Jeff Schulze, head of economic and market strategy at ClearBridge Investments. "Although the effects of tariff pass-through still lie ahead, the Fed will not want to wait too long to begin its cutting cycle."
It also gave Trump another reason to criticize Federal Reserve Chair Jerome Powell. In a social media post, he said “Jerome “Too Late” Powell has done it again!!! He is TOO LATE, and actually, TOO ANGRY, TOO STUPID, & TOO POLITICAL, to have the job of Fed Chair."
Trump has called on Powell for months to either lower rates or resign his job. Powell has done neither.
However, Fed Governor Adriana Kugle said this afternoon she will resign from her post to return to Georgetown University as a professor in the fall instead of finishing her term in January 2026. This opens a spot for Trump to name a replacement.
Trump also turned his ire over the weak jobs report, calling for the firing of Erika McEntarfer, commissioner at the U.S. Bureau of Labor Statistics, which compiles the data.
Meanwhile, Trump signed an executive order confirming “reciprocal” tariffs on dozens of countries, with updated duties ranging from 10% to 41%, beginning in seven days. He also said goods that switch means of transport, or are transshipped, to avoid tariffs will face another 40% tax.
Starting Aug. 1, Canada will face a 35% tariff, excluding goods compliant with the Canada-U.S.-Mexico Agreement on trade. That's up from 25% previously.
Countries that are not listed in the latest order will face an additional duty of 10%, the statement said.
Trump also sent letters to 17 pharmaceutical companies, including U.S. firms, demanding lower prices.
Earlier, Trump said he's giving Mexico another 90 days to come to a longer term agreement with the United States to avoid higher tariffs.
The new order raises worries that higher prices will filter down to consumers and slow the economy but "this is unlikely to be the final word, as it still seems likely that some other countries will reach their own deals with the U.S., while there is a chance that the U.S. courts will eventually strike down these tariffs," said Stephen Brown, deputy chief North America economist at Capital Economics.
The blue-chip Dow closed down 1.23%, or 542.40 points, to 43,588.58; the broad S&P 500 slipped 1.6%, or 101.38 points, to 6,238.01, and the tech-heavy Nasdaq declined 2.24%, or 472.32 points to 20,650.13. The benchmark 10-year Treasury yield dropped to 4.204%.
Corporate news
Earnings also continue to be key in determining stock market direction. Of the 297 companies in the S&P 500 that have reported earnings through the morning of July 31, 80.8% have topped analyst expectations, according to LSEG Data and Analytics, compared with the 76% beat rate over the past four quarters.
Amazon and Apple -- two so-called "Magnificent Seven" mega cap tech stocks -- reported results in a split decision.
Amazon topped Wall Street estimates with its second-quarter results, but its cloud computing growth was disappointing. Amazon stock dropped 8.27%.
In contrast, Apple exceeded second-quarter expectations, including the largest revenue jump since 2021. Sales were helped by strong 13%-plus growth in iPhone sales due to tariff-related buying and popular devices. It projected tariff costs could reach $1.1 billion in the current quarter. Apple shares were down 2.5%.
Among non-Magnificent Seven stocks,
- Coinbase beat second-quarter adjusted earnings per share estimates, but revenues fell short. Shares tumbled 16.7%.
- Social media company Reddit's second-quarter results topped Wall Street forecasts. Its revenue grew 78% to $500 million, its fastest revenue growth in three years, according to the company. It also provided upbeat third-quarter guidance. Shares rallied 17.47%.
- Cloudflare topped forecasts with its second-quarter results and raised its full-year profit and revenue guidance. Shares fell 3.65%.
- First Solar reported second-quarter results above analysts’ expectations and raised its 2025 revenue guidance. Shares jumped 5.29%.
- Stryker's second-quarter results were better than expected. The medical device maker also raised its earnings outlook for the year, with forecasts for a smaller tariff hit. Shares lost 3.8%.
- Moderna beat estimates with its second-quarter results but lowered the high end of its full-year revenue outlook. Shares stumbled 6.61%.
- Exxon's second-quarter results topped estimates as the oil giant pumped 4.6 million barrels per day, the highest output for the second quarter since Exxon and Mobil merged more than 25 years ago. Shares slipped 1.79%.
- Chevron's adjusted second-quarter earnings per share beat forecasts, as did revenues. Shares dipped.
Cryptocurrency
Bitcoin had a record month, peaking at an all-time high of about $123,000 on July 14. Crypto assets were boosted in July by new U.S. Congressional legislation, including the GENIUS Act which formalizes stablecoins in the U.S. and moves digital assets more mainstream, economists said.
Microstrategy reported a surprise profit in the second quarter and topped analysts' forecasts with help from its Bitcoin holdings. It also filed to sell preferred equity to raise money for more Bitcoin purchases.
Bitcoin was last down 2.14% at $113,318.60.
(This story was updated with new information.)
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.