Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed Friday’s trading session deep in the red following an alarming jobs report and new tariff rates issued through an executive order from President Trump.
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Trump’s new tariffs range between 10% and 41% and will go into effect on Aug. 7. Switzerland was hit particularly hard with a tariff of 39%, up from its initial rate of 31%. India and Japan received rates of 25% and 15%, respectively.
Trump said he would immediately fire Bureau of Labor Statistics Commissioner Dr. Erika McEntarfer after July’s nonfarm payrolls rise of 73,000 came in well below the expectation for 104,000 additions. He also accused the Biden-appointed McEntarfer of faking “the Jobs Numbers before the Election to try and boost Kamala’s chances of Victory.”
What’s more, June and May’s nonfarm payrolls were revised lower by a combined 258,000 jobs, adding to concerns that the labor market could be cracking.
The Fed has a dual mandate to keep inflation at bay and maximize employment. Following today’s nonfarm payrolls data, the odds of a 25-bps interest rate deduction surged to 89.6% compared to 37.7% yesterday and 61.9% a week ago, according to CME’s FedWatch tool. Lower rates can support the labor market by lowering the cost to borrow for companies, stimulating corporate growth and hiring in the process.
The Fed voted 9-2 to hold rates between 4.25% and 4.50% earlier this week, much to the ire of Trump. “Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, NOW,” said Trump in a Truth Social post on Friday. “IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!”
While consumer sentiment rose for a second consecutive month, “sentiment remains broadly negative,” said Surveys of Consumers Director Joanne Hsu. July’s Consumer Sentiment Index came in at 61.7, below the estimate for 62.0. In addition, year-ahead inflation expectations declined for a second straight month and were 4.5% in July following a 5.0% print in June. Long-term inflation expectations fell to 3.4% from 4.0% in June.
The S&P 500 (SPX) closed with a 1.60% loss while the Nasdaq 100 (NDX) fell by 1.96%.
