U.S. stocks lost $1.1 trillion on Aug. 1, with Dow falling 500 pts and Nasdaq -2.2%.

U.S. stocks lost $1.1 trillion on Aug. 1, with Dow falling 500 pts and Nasdaq -2.2%.

U.S. stocks experienced a significant drop on Aug. 1, with the Dow Jones Industrial Average (^DJI) falling by more than 500 points, or about 1.2%, and the Nasdaq Composite (^IXIC) declining by around 2.2%. The S&P 500 (^GSPC) also posted a substantial decline, dropping roughly 1.6% to its worst day since May [1].

The market's downturn was fueled by a combination of factors. President Trump's official tariff hikes on virtually every U.S. trading partner and the July jobs report, which showed signs of a labor market slowdown, contributed to the sell-off. The economy added 73,000 jobs in July, significantly lower than the 104,000 expected, with the unemployment rate ticking up to 4.2% [1]. This weak jobs data was compounded by sharp revisions to previous job figures, indicating a slowdown in the labor market over the past three months [1].

The Federal Reserve's preferred inflation gauge also showed signs of increasing price pressures, adding to market concerns. The yield on the benchmark 10-year Treasury (^TNX) dived following the jobs data, as traders ramped up bets on interest rate cuts this year [1].

Investors were also dismayed by the latest round of tariffs, which Trump signed on Aug. 1. The new tariffs, ranging from 10% to 41%, were imposed on 66 countries, including crucial partners like Taiwan and India. The White House confirmed details of trade agreements negotiated before the Aug. 1 deadline for "Liberation Day" tariffs, but Trump pushed the implementation of the hiked levies back by seven days, opening up scope for more talks [1].

The market's response was exacerbated by Amazon's (AMZN) earnings, which failed to meet lofty expectations set by rivals Google (GOOG, GOOGL) and Microsoft (MSFT), sending the stock tumbling. Meanwhile, Apple (AAPL) saw its stock boosted by strong iPhone sales, despite results that beat expectations [1].

The day's events underscored the growing uncertainty in the market, with investors pricing in the impact of tariffs more acutely. The S&P 500, Dow Jones, and Nasdaq all ended deep in the red, with major indexes notching weekly declines of more than 2%. The retreat in stocks came as the July jobs report showed weaker-than-anticipated jobs growth, with the economy adding 73,000 jobs, versus 104,000 expected [2].

The stock market's performance on Aug. 1 was a stark reminder of the ongoing trade tensions and the potential impact on the economy. With the Federal Reserve's preferred inflation gauge showing signs of increasing price pressures, investors are closely watching for signs of a rate cut in September. The weak jobs data and sharp revisions to previous figures also suggest that the labor market is slowing down, adding to recession fears [3].

References:
[1] https://finance.yahoo.com/news/live/stock-market-today-dow-sp-500-nasdaq-tank-as-market-confidence-cracks-under-trump-tariffs-weak-jobs-data-200032947.html
[2] https://finance.yahoo.com/news/tariff-pain-returned-stock-market-213723988.html
[3] https://economictimes.indiatimes.com/news/international/us/stock-market-today-dow-jones-sp-500-nasdaq-tank-top-5-reasons-why-equites-are-losing-ground/articleshow/123046987.cms?from=mdr