US Stocks Plunge in 2025 After Weak July Jobs Data and Trump’s New Tariffs Shake Markets
- Market Carnage: A Perfect Storm of Bad News
- Labor Market Red Flags Everywhere
- Banking Sector Takes a Beating
- Currency Markets Revolt Against the Dollar
- Fed Officials in Disarray
- Global Ripple Effects
- Q&A: Your Burning Questions Answered
Market Carnage: A Perfect Storm of Bad News
Friday’s trading session felt like a scene from a financial horror movie. The Dow Jones Industrial Average nosedived 1.4% (640 points), while the S&P 500 and Nasdaq Composite fared even worse at -1.6% and -2.1% respectively. According to TradingView data, this marked the sharpest single-day decline since April’s tariff panic. The trigger? A brutal one-two punch: July’s shockingly weak jobs report (just 73K new positions vs. 100K expected) coinciding with the WHITE House unveiling aggressive new trade measures.
Labor Market Red Flags Everywhere
July’s employment data wasn’t just bad—it wasconcerning. Government layoffs led the bloodbath (292,294 cuts), followed by tech (89,251) and retail (80,487). Year-to-date job losses hit 806,383—the highest January-July total since 2020’s pandemic collapse. “We’ve got minimal job growth and stagnant wages. That’s your textbook case for rate cuts,” argued market commentator Jimmy Cramer on CNBC. Even the usually cautious FedWatch Tool now prices a 75.5% chance of September rate cuts, up from 40% pre-report.
Banking Sector Takes a Beating
Financial stocks became ground zero for the selloff. JPMorgan Chase cratered nearly 4%, with Bank of America and Wells Fargo down over 3% each. Investors fear slowing loan growth as economic uncertainty spreads. Industrial giants didn’t escape either—GE Aerospace and Caterpillar both slid ~3% on dimming demand forecasts. Meanwhile, Europe’s Stoxx 600 index sank 1.8%, with tourism stocks (-2.7%) and banks (-2.9%) hit hardest by tariff anxieties.
Currency Markets Revolt Against the Dollar
The Bloomberg Dollar Spot Index suffered its worst day since April 21, plunging 1% as traders fled to the yen (+2.2%) and euro (+1%). “Markets are pricing in Fed capitulation,” noted a BTCC analyst. “That 10-year Treasury yield dipping to 4.25%? That’s the bond market screaming ‘recession risk.’” Year-to-date, the greenback has now lost over 7% of its value despite a brief July rebound.
Fed Officials in Disarray
Just hours before the jobs data dropped, Chair Powell had downplayed September rate cuts. By afternoon, Cleveland Fed’s Beth Hammack admitted the report was “disappointing” and hinted at potential policy shifts. The internal divide widened—Governors Waller and Bowman had already advocated for cuts, while Powell clung to inflation vigilance. “Jay didn’t need to wait this long,” criticized Cramer, referencing the bond market’s violent reaction.
Global Ripple Effects
Europe’s inflation surprise (holding at 2% vs. 1.9% forecast) compounded the chaos. Though Core inflation stalled at 2.3%, service sector inflation dipped from 3.3% to 3.1%—small comforts amid the broader meltdown. As one London trader put it: “Between Trump’s tariffs and these employment numbers, August’s shaping up to be a month for hiding under desks.”
This article does not constitute investment advice.
Q&A: Your Burning Questions Answered
Why did US stocks crash so sharply?
The combination of weak July jobs data (73K new jobs vs. 100K expected) and new Trump-era tariffs created panic about slowing economic growth and potential trade wars.
Which sectors were hit hardest?
Banks (JPMorgan -4%), industrials (GE Aerospace -3%), and tech led the declines as investors anticipated reduced lending and weaker consumer demand.
How likely are Fed rate cuts now?
CME’s FedWatch Tool shows a 75.5% probability of September cuts—nearly double the odds before the jobs report.
What’s the dollar’s 2025 trend?
The Bloomberg Dollar Index has fallen over 7% this year despite a brief July recovery, with Friday marking its worst single-day drop since April.
