Wall Street experienced its most significant decline since May, reacting sharply to a confluence of unsettling economic data: a notable slowdown in job creation and the imposition of sweeping new tariffs by President Donald Trump. This dual blow fueled widespread investor concern, highlighting growing anxieties about the health of the global economy and its immediate future.

The S&P 500, a key barometer of the stock market’s health, plummeted 1.6%, marking its steepest one-day fall since May 21st and extending its losing streak to a fourth consecutive session. For the week, the index recorded a substantial 2.4% loss, signaling a dramatic reversal from the record-setting gains observed in the preceding week, underscoring increasing market volatility.

A critical catalyst for the market’s downturn was the latest U.S. job growth report, which starkly reinforced worries about a weakening economy. Employers added a mere 73,000 jobs in July, significantly below economists’ expectations. Furthermore, revisions to May and June payrolls stripped a stunning 258,000 jobs from previous estimates, painting a grimmer picture of the labor market’s underlying strength.

Adding to the economic headwinds were President Trump’s recent announcements regarding new tariff rates on dozens of countries, with the effective date pushed back to August 7th. These ongoing trade tensions continue to inject considerable uncertainty into the global trade picture, making it challenging for businesses and investors to plan and forecast future operations and earnings.

Market strategists quickly characterized the situation as a “one-two punch” to the financial markets. According to Sam Stovall, chief investment strategist at CFRA, the combination of additional tariffs and the unexpectedly weak employment data – compounded by downward revisions for prior months – has profoundly impacted investor sentiment and outlook.

The surprisingly weak hiring numbers significantly amplified investor expectations for an interest rate cut by the Federal Reserve in September. Data from CME FedWatch showed the market’s odds of a quarter-point rate cut soaring to approximately 87% from under 40% just a day prior, reflecting a strong belief that the central bank will intervene to stimulate the economy. This sentiment was echoed in the bond market, where the yield on the 10-year Treasury notably fell.

Despite mounting pressure for a rate reduction, the Federal Reserve has maintained steady rates since December. While a cut could provide a much-needed boost to the job market and overall economy, the Fed remains cautious, mindful of inflation hovering stubbornly above its 2% target. Concerns persist that increased tariffs could further fuel inflation while simultaneously weighing down economic growth, creating a complex dilemma for policymakers.

Businesses across various sectors have already begun warning investors about the detrimental effects of the tariff policy, with some import taxes already in effect and others subject to change or extension. Giants like Walmart, Procter & Gamble, and Apple have explicitly cautioned about rising costs, eroded profits, and reduced earnings forecasts due to these trade barriers, directly impacting their corporate performance.

The market’s anxieties were broadly reflected in individual stock performances, with major technology and energy companies feeling the pinch. Internet retail giant fell 8.3% despite strong quarterly reports, while another technology behemoth dropped 2.5%, also despite beating forecasts, highlighting tariff-related operational challenges. Exxon Mobil’s stock fell after reporting its lowest profit in four years amidst slumping oil prices and increased OPEC+ production, contributing to the widespread economic slowdown. This downturn wasn’t confined to the U.S.; stock markets across the world, including Germany and France, also experienced significant declines, underscoring the global nature of these economic concerns.