Why Are The Dow, Nasdaq, & S&P 500 Crashing? Trump’s Tariffs, Jobs Report Trigger US Market Meltdown

US Stocks took a steep dive on Friday, driven by a double blow of new US trade tariffs and a dismal jobs report that raised fresh concerns about the health of the economy.

The Dow Jones Industrial Average dropped 542 points, or 1.2%, by market close. The S&P 500 declined 1.6%, marking its sharpest single-day fall since May 21 and its fourth consecutive loss. The index ended the week down 2.4%, a stark reversal from the previous week’s record-setting rally. The Nasdaq Composite fared even worse, slumping 2.2%.

How Tariff Announcement, Job Data Shook US Stock Markets

Markets were hit by President Donald Trump’s latest tariff announcement, which affected over 90 countries. The tariffs, ranging from 10% to 41%, were introduced via executive orders on Thursday and are set to take effect on August 7. 

Also Read: Trump Tariffs: Here Are The Top 10 Countries With Highest New US Duties

“The market has been felled by a one-two punch of additional tariffs, as well as the weaker-than-expected employment data – not only for this month, but for the downward revisions to the prior months,” said Sam Stovall, chief investment strategist at CFRA.

Investors were equally rattled by July’s employment data, which revealed that U.S. employers added only 73,000 jobs, well below the Dow Jones estimate of 100,000. The Labor Department also revised May and June payrolls downward by a staggering 258,000 jobs, intensifying concerns about a slowing labor market.

Federal Reserve To Cut Interest Rates

In response, the Federal Reserve is now widely expected to cut interest rates. According to CME FedWatch data, market odds for a quarter-point rate cut in September surged to 87%, up from under 40% just a day earlier. The possibility of an even more aggressive half-point cut is also under discussion, said Stovall.

Bond markets reflected this shift swiftly. The 10-year Treasury yield fell sharply to 4.21% from 4.39% prior to the jobs report, while the two-year yield, which closely tracks Fed policy expectations, dropped to 3.68% from 3.94%.

Donald Trump Fires Labor Official Dr. Erika McEntarfer

The job report also sparked political controversy. On Friday, President Trump fired Dr. Erika McEntarfer, the Commissioner of the Bureau of Labor Statistics (BLS), accusing her of manipulating employment figures to aid Vice President Kamala Harris’s 2024 election campaign.

“I was just informed that our Country’s ‘Jobs Numbers’ are being produced by a Biden Appointee, Dr. Erika McEntarfer, the Commissioner of Labor Statistics, who faked the Jobs Numbers before the Election to try and boost Kamala’s chances of Victory,” Trump wrote on Truth Social.

He added, “this is the same Bureau of Labor Statistics that overstated the Jobs Growth in March 2024 by approximately 818,000 and, then again, right before the 2024 Presidential Election, in August and September, by 112,000. These were Records — No one can be that wrong? We need accurate Jobs Numbers.”

In another post, Trump reiterated his frustration with McEntarfer and the Fed, stating, “McEntarfer said there were only 73,000 Jobs added (a shock!) but, more importantly, that a major mistake was made by them, 258,000 Jobs downward, in the prior two months. Similar things happened in the first part of the year, always to the negative.”

He added a jab at Fed Chair Jerome Powell, saying, “Jerome ‘Too Late’ Powell should also be put ‘out to pasture.’”

Also Read: Trump Dismisses BLS Head After Poor Employment Numbers, Cites Biden-Era Appointee