U.S. stocks tumbled on Friday, with the S&P 500 recording its biggest daily percentage decline in over two months, as hefty tariffs slapped on dozens of countries by President Donald Trump and an unexpectedly weak jobs report raised concerns over a weakening economy. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 1,2% or 542.40 points, to finish at 43,588.58 points.
The S&P 500 declined 1.6%, or 101.38 points, to end at 6,238.01 points, posting its worst day since May 21. Consumer discretionary, tech and financial stocks were the worst performers.
The Consumer Discretionary Select Sector SPDR (XLY) declined 2.4%. The Financials Select Sector SPDR (XLF) and the Technology Select Sector SPDR (XLK) slid 2.2 and 1.9%, respectively. Eight of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq fell 2.2%, or 472.32 points, to close at 20,650.13 points, recording its biggest single-day decline since April 21.
The fear gauge CBOE Volatility Index (VIX) was up 21.89% to 20.38. Decliners outnumbered advancers on the NYSE by a 2.17-to-1 ratio. On the Nasdaq, a 2.69-to-1 ratio favored declining issues. A total of 19.51 billion shares were traded on Friday, higher than the last 20-session average of 18.44 billion.
Trump’s New Tariffs, Weak Jobs Data Dent Investors’ Confidence
Trump signed an executive order hours before the Aug. 1 tariff deadline and slapped hefty duties on several trading partners of the United States, including Brazil, Canada, India and Taiwan, as these countries scrambled to work out fairer trade deals.
Investors grew concerned once again as they believe that hefty tariffs could weigh on an already weakening economy and push inflation further up.
Investors’ confidence took a further hit after fresh data showed that jobs growth unexpectedly slowed in July, while June’s numbers were downwardly revised, suggesting that the labor market is likely shrinking.
Bank stocks took a hit on concerns that a slowing economy could impact loan growth. Shares of JPMorgan Chase & Co. (JPM) fell 2.3%, while Bank of America Corporation (BAC) and Wells Fargo & Company (WFC) declined 3.4% and 3.5%, respectively.
This, however, raised hopes that the Federal Reserve will cut interest rates in its September policy meeting.
The weak jobs data raised market expectations of a 25-basis-point rate cut in September to 86.5%, according to the CME’s FedWatch Tool, up from 37.7% in Thursday’s session.
Amazon Weighs on Broader Market
E-commerce giant Amazon.com, Inc. (AMZN) was the biggest drag on all three major indexes. Amazon topped both earnings and revenue estimates. The company reported second-quarter earnings of $1.68 per share, beating the Zacks Consensus Estimate of $1.33 per share.
The e-commerce giant posted revenues of $167.7 billion for the quarter, surpassing the Zacks Consensus Estimate by 3.32% However, the company’s shares declined 8.3% after it failed to meet the expectations for its Amazon Web Services.
Amazon Web Services revenues grew 18% in the second quarter, but its growth rate lagged Microsoft Corporation’s (MSFT) Azure’s 39% and Alphabet, Inc.’s (GOOGL) Google Cloud’s 32% growth rate. Amazon has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Labor Department reported on Friday that nonfarm payrolls increased by just 73,000 in July, sharply lower than analysts’ expectations of a rise of 100,000. June’s jobs growth was downwardly revised to just 14,000, from 147,000, while May’s numbers totaled just 19,000 after being cut down from the initially reported 125,000.
The unemployment rate jumped to 4.2% in July as household employment declined.
Weekly Roundup
All three indexes ended lower for the week. The Dow lost 2.9% for the week. The S&P 500 was down 2.4% for the week, while the Nasdaq lost 2.2%.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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