Introduction
The U.S. stock market began August on a downward spiral, amidst weak employment data and the implementation of universal tariffs by U.S. President Donald J. Trump.
Stock Market Performance
The Dow Jones Industrial Average dropped 1.23% to 43,588.58 points, the S&P 500 fell 1.60% to 6,238.01 points, and the Nasdaq Composite index declined 2.24% to 20,650.13 points.
- The Dow Jones experienced five consecutive days of losses.
- The S&P 500 had four consecutive days of declines.
- The Nasdaq faced two successive days of drops.
Weekly performance showed the Dow Jones down 2.92%, the S&P 500 off by 2.36%, and the Nasdaq losing 2.17%.
Weak Job Market Data
Market sentiment turned negative following the July employment report, which indicated that non-agricultural payrolls increased by only 73,000 in July. Moreover, previous months’ figures were revised significantly downward, showing June with 14,000 job creations and May with 19,000 positions. This suggested that the labor market had been weakening for some time.
The payroll data increased the likelihood of the Fed acting sooner than expected to cut rates and stimulate the economy. However, investors were more concerned about the vulnerable state of economic performance.
Trade Tensions Escalate
The White House released details of its new tariff offensive before the August 1 deadline. The average tariff rate rose from 13.3% to 15.2%, a substantial increase compared to the 2.3% in 2024. Canada’s tariff increased to 35%, while India, Taiwan, South Africa, and Vietnam face rates between 20% and 30%.
Global Stock Market Impact
The Mexican stock market also fell for the third consecutive day, as investors absorbed weak U.S. employment data and a new environment of higher tariffs worldwide.
- The S&P/BMV IPC, Mexico’s primary stock index, decreased by 0.87% to 56,900.07 points.
- The FTSE-BIVA, managed by the Mexican Institutional Securities Exchange, fell 0.90% to 1,144.52 points.
At these levels, Mexican stock markets operated at their lowest in three weeks, closing the week in red.
Both local markets fell in tandem with their U.S. counterparts following the July employment report, which showed a mere 73,000 job growth. Furthermore, the two preceding reports were drastically revised downward, indicating a slowdown in the labor market over the past three months.
Investors also evaluated the renewed trade landscape in the U.S. after President Trump imposed new and elevated tariffs on numerous countries, including crucial partners like Taiwan and India.
Key Questions and Answers
- Q: What caused the recent decline in the U.S. stock market? A: Weak employment data and the implementation of universal tariffs by U.S. President Donald J. Trump led to the recent decline in the U.S. stock market.
- Q: How did the job market data impact the stocks? A: The July employment report showed only 73,000 job growth, and previous months’ figures were revised downward, indicating a weakening labor market.
- Q: What are the new tariff rates announced by the U.S.? A: The average tariff rate rose from 13.3% to 15.2%, with Canada’s tariff increasing to 35%. India, Taiwan, South Africa, and Vietnam face rates between 20% and 30%.
- Q: How did global stock markets react to these developments? A: The Mexican stock market fell for the third consecutive day, mirroring the downward trend in U.S. stocks due to weak employment data and higher tariffs worldwide.
