Global market news: Following Trump’s tariff worries, the US stock market and the US Treasury yields fell sharply on Friday. The frontline indices on Wall Street had a Black Friday as the tech-heavy Nasdaq index crashed 2.24%, the S&P 500 index nosedived 1.60%, and the Dow Jones index lost 1.23%. Selling intensified across segments as small-cap stocks also came under heavy selling pressure.
The Small Cap 2000 index crashed 2.08% during the bloodbath on Wall Street. The pan-European STOXX 600 index ended down 1.89%, its most significant drop since April 9, 2025.
The dollar index, which measures the greenback against major currencies, including the yen and the euro, fell 1.37% to 98.66. The euro was up 1.52% at $1.1589. Against the Japanese yen, the dollar weakened 2.26% to 147.32.
The US President Donald Trump signed an order on Thursday night imposing steep tariffs on 66 countries, the European Union, Taiwan, and the Falkland Islands, to go into effect Aug. 7, after he initially threatened them for April but postponed twice after that until August 1, 2025. The US stock market was also reacting to government reports of a dramatic slowdown in hiring as businesses, investors, and the US Fed operate under a cloud of uncertainty from months of Trump tariff policy news.
What is dragging the US stock market?
Highlighting the reason for the bloodbath in the US stock market, Luke Tilley, Chief Economist at Wilmington Trust, said, “The market is reacting to the possibility of the economy flipping into recession. The weak jobs data is piling on to weak earnings reports and guidance from some corporations.”
“The way (the market) is going to interpret (the departures) is in a very dollar-negative way,” Juan Perez, senior director of trading, Monex USA, referring to both the Kugler and McEntarfer news.
“No matter what the economic picture in the United States, the one thing that holds the US dollar strong in the eyes of the world is the authority and the independence of the Federal Reserve. Whenever anything comes to put that into compromise, potentially, then that’s when the US dollar spirals down.”
MSCI’s global equities index sold off sharply on Friday, and the dollar took a dive after weaker-than-expected US jobs data fueled economic worries and boosted bets for September US Fed rate cuts. Investors also considered US President Donald Trump’s latest tariff announcements and key personnel changes.
US Treasuries were in demand after the Labour Department reported that the US economy added 73,000 nonfarm payrolls last month, below economists’ expectations for 110,000. June’s job growth was revised sharply lower to 14,000 from 147,000.
After the report, Trump said he ordered his team to fire the US Bureau of Labour Statistics commissioner, Erika L. McEntarfer, who former President Joe Biden had nominated for the role.
The dollar index and US Treasury yields lost ground when the Federal Reserve announced that Governor Adriana Kugler would resign early from her term on 8 August. This caused some investors anxiety at a time when Trump had loudly disagreed with Fed rate policies.
Trump’s tariff news
On Thursday, Donald Trump ordered tariffs ranging from 10% to 41% on US imports from several major trading partners. He increased duties on Canadian goods to 35% from 25% for all products not covered by the US-Mexico-Canada trade agreement. He set a 25% rate for India’s U.S.-bound exports, 20% for Taiwan’s, 19% for Thailand’s and 15% for South Korea’s.
Mexico, however, got a 90-day reprieve from higher tariffs to allow for deal talks.
Late on Friday, traders were betting on an 87.5% probability for a September rate cut compared with 37.7% on Thursday, according to CME Group’s FedWatch tool.