US stocks opened under pressure on Friday as investors digested signs of a softening labor market and escalating tariff tensions.
The benchmark S&P 500 index was down 1.22%. The Dow Jones Industrial Average slumped 1.14% while the Nasdaq 100 fell the most with a 1.55% decline.
The latest monthly jobs report painted a concerning picture of economic momentum, adding weight to expectations that the Federal Reserve may need to cut interest rates sooner than previously anticipated.
Nonfarm payrolls increased by just 73,000 in July, well below the 100,000 forecast by economists surveyed by Dow Jones.
More striking were the sharp downward revisions to prior months. June’s job gains were revised down to only 14,000 from 147,000, while May’s total was slashed to 19,000 from 125,000.
These adjustments point to a labor market that has been weakening for several months, despite prior assumptions of resilience.
In response to the jobs data, traders raised the odds of a rate cut at the Federal Reserve’s September meeting to 63%, according to CME Fed futures.
That’s a notable reversal from midweek sentiment, when Fed Chair Jerome Powell said the central bank needed to wait and assess the inflationary impact of tariffs before acting on rates.
Tariff changes rattle market confidence
Investor sentiment was further dampened by the White House’s announcement of revised tariff rates that took effect at the start of August.
The updated duties, ranging from 10% to 41%, are aimed at cracking down on transshipped goods, which will now face an additional 40% levy.
One of the most surprising developments was the increase in tariffs on goods imported from Canada.
The rate rose to 35% from 25%, raising concerns about US trade relations with one of its largest partners.
The move adds to ongoing global trade tensions and may create further headwinds for businesses that rely on international supply chains.
The combination of weak economic data and higher trade barriers created a cautious tone across markets as August trading began.
Corporate results highlight diverging fortunes
In corporate news, tech stocks were in focus with notable divergences in performance.
Shares of Amazon fell more than 6% after the company issued a lighter-than-expected operating income forecast for the current quarter.
Amazon projected operating income between $15.5 billion and $20.5 billion, compared to the StreetAccount consensus estimate of $19.48 billion.
Meanwhile, Apple shares rose 0.4% after the iPhone maker posted better-than-expected earnings and revenue.
iPhone sales grew 13% year over year, while total revenue rose 10%, Apple’s fastest quarterly revenue growth since December 2021.
CEO Tim Cook also noted plans to significantly increase artificial intelligence investments and remained open to mergers and acquisitions to accelerate its strategy.
Moderna also declined sharply, with shares down over 6% after the vaccine manufacturer lowered the high end of its full-year revenue guidance by $300 million.
Despite beating second-quarter earnings estimates, the reduced forecast weighed on the stock.
In contrast, Reddit surged 15% after the social media platform beat earnings expectations.
Reddit reported earnings of 45 cents per share on $500 million in revenue, well ahead of analyst projections.
Despite a strong July, where the S&P 500 gained 2.2%, and the Nasdaq advanced 3.7%, the new month has opened on a cautious note as economic and geopolitical risks resurface.
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