US Stocks Plunge on Jobs Data, Trump Tariffs, and Fed Rate Cut Bets

Market Selloff and Key Drivers

• 📉 Stocks experienced a broad flight from risk assets, with major indices like the S&P 500, Dow Jones, and Nasdaq seeing significant drops.
• ⚠️ The selloff was fueled by a combination of weakening job market data, escalating tariffs from President Trump, and broader geopolitical concerns.
• 💡 Traders are now increasing bets on Federal Reserve interest rate cuts, particularly in September, due to the economic indicators.

Economic Data and Fed Expectations

• 📊 Job growth cooled sharply in July, with payrolls increasing by only 73,000 and prior months revised down significantly, averaging a low 35,000 over three months.
• 📉 This data led to a dramatic drop in short-term Treasury yields, with the two-year yield falling 28 basis points, the largest drop since March 2023.
• 💰 Money markets are now pricing in a high probability of Fed rate cuts in 2025, with a strong chance of a reduction in September.

Tariffs and Trade Uncertainty

• ✈️ President Trump's continued attacks on trade and the imposition of new tariffs were a significant factor in market sentiment.
• 📈 The average U.S. tariff rate has risen sharply, reaching approximately 15%, a level not seen since the 1930s.
• ❓ Uncertainty remains regarding the specifics of ongoing trade negotiations with major partners like China and Canada, with potential for further impacts.

Corporate Performance and Sector Highlights

• 📦 Amazon's stock fell sharply (8.3%) after projecting weaker-than-expected operating income and trailing cloud rivals in sales growth.
• 🍎 Apple shares declined despite reporting its fastest quarterly revenue growth in over three years, driven by strong iPhone performance.
• 🚀 Coinbase experienced a significant drop (16.7%) following lower-than-estimated second-quarter revenue amid reduced digital asset market volatility.
• 💡 Notable gainers included Monolithic Power Systems (up 10.5%) and First Solar (up 5.3%), driven by strong earnings and boosted forecasts.
• 📈 Reddit saw a significant post-close surge (70.5%) after reporting its most profitable quarter and projecting strong third-quarter sales, indicating success in its ad business monetization.

Other Market Movements

• 💰 Cryptocurrencies also saw declines, with Bitcoin down another 2% during the trading day.
• 🥇 Gold prices climbed amidst geopolitical tensions and statements from President Trump.