By Sinéad Carew and Samuel Indyk
NEW YORK/LONDON (Reuters) -MSCI’s global equities index sold off sharply on Friday and the dollar took a dive after weaker-than-expected U.S. jobs data fueled economic worries and boosted bets for September interest rate cuts while investors also considered U.S. President Donald Trump’s latest tariff announcements and key personnel changes.
U.S. Treasuries were in demand after the Labor Department reported that the U.S. 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 commissioner of the U.S. Bureau of Labor Statistics, Erika L. McEntarfer, nominated by prior President Joe Biden for the role.
Then the dollar index and U.S. Treasury yields lost further ground when the Federal Reserve said Governor Adriana Kugler is resigning early from her term on Aug. 8, causing some investors anxiety at a time when Trump has loudly disagreed with Fed rate policies.
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.
“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 weak guidance from some corporations,” said Luke Tilley, Chief Economist, Wilmington Trust.
MSCI’s gauge of stocks across the globe fell 12.23 points, or 1.32%, to 917.39, suggesting its biggest daily drop since mid-April. The softer jobs data added to losses for the global index, which was already in the red after a host of tariff announcements from Trump the day before.
On Thursday, Trump ordered tariffs ranging from 10% to 41% on U.S. imports from several major trading partners. He increased duties on Canadian goods to 35% from 25% for all products not covered by the U.S.-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.
On the earnings front, market heavyweight Amazon tumbled more than 8% on Friday after its quarterly report showed cloud computing growth that disappointed investors.
On Wall Street, the Dow Jones Industrial Average fell 542.40 points, or 1.23%, to 43,588.58, the S&P 500 fell 101.38 points, or 1.60%, to 6,238.01, for its biggest one-day percentage drop since May 21 and the Nasdaq Composite fell 472.32 points, or 2.24%, to 20,650.13, its steepest one-day drop since April 21.