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August 1, 2025
By Alex Financials
📉 1. Market Sell‑off on Weak Jobs + New Tariffs
S&P 500 fell ~1.5%; Nasdaq dropped ~2.1%; Dow declined ~1.1% as markets opened sharply lower.
Investor sentiment has soured following a weak July jobs report (only ~73K new jobs; unemployment rose to ~4.2%) and President Trump’s announcement of sweeping new tariffs to be imposed starting August 7, with rates ranging from 10% up to 41% depending on trading partner.
🏦 2. Labor Data Rattles Bond and Equities Markets
Weak wage and job growth drove a dramatic drop in U.S. Treasury yields—particularly the 2‑year note—to around 3.7%, as bond markets priced in possible Fed rate cuts.
Equity markets responded with broad-based losses amidst growing economic uncertainty.
📉 3. Eastman Chemical ($EMN) Plunges After Q2 Miss
Eastman Chemical stock fell ~21% to $57.10 after reporting Q2 EPS of $1.60 vs. the expected $1.73, and revenue of $2.29B (vs. $2.30B).
CEO cited weak global demand, shifting tariff exposure, and customer pullback. Guidance for Q3 EPS ($1.91). Mizuho cut its price target to $80 but maintained an Outperform rating.
💱 4. Global Trade Tensions Re‑Escalate
The new tariffs represent a massive expansion of U.S. protectionist policy, raising the average effective tariff rate from ~2.5–3% to as high as ~18–20%, with some rates hitting 30–41% (e.g. Canada at ~35%, Switzerland at ~39%).
This volatility has triggered declines not just in U.S. markets, but also across Europe and Asia, intensifying fears of a slowdown in global trade and economic growth.
🧠 5. Fed Holds Rates, But Outlook Remains Murky
At the Fed’s July meeting, rates were held at 4.25–4.50%. Chair Powell flagged the uncertainty created by trade policy and inflation dynamics, noting that the next move is contingent on evolving data. Two dissents signaled internal division on timing of rate cuts.
Markets have since scaled back expectations for a September cut; all eyes now turn to Powell’s upcoming Jackson Hole speech for clues on the path forward.
📊 Key Summary Table
| Theme | Summary |
|---|---|
| Equity performance | Major indices declined sharply on jobs and tariff anxiety |
| Treasury yields | Dropped significantly, pricing in future Fed easing |
| Tariff expansion | Broad new duties from 10% — 41% on dozens of countries |
| Corporate earnings shock | Eastman Chemical’s Q2 miss highlights vulnerability to macro headwinds |
| Fed watch | Rate hold, but dovish sentiment rising; cautious tone on future cuts |
📌 Why It Matters
New tariffs and weak labor data have shattered market composure, exposing fragility beneath recent equity highs. What had been a steady rally (S&P up ~27% from April lows) is now at risk as volatility returns and policy uncertainty escalates.
How the Fed responds and whether trade tensions ease in coming weeks will likely shape the next leg of market action.
