Market Impact: Tariffs, Jobs Data, and Fed Policy Weigh On Markets and Crypto
The White House announced new tariffs Thursday (originally scheduled for Friday’s midnight deadline), which, combined with a weaker-than-expected jobs report, influenced market sentiment, leading to declines in major indices and cryptocurrency prices.
- The administration imposed targeted increases on several countries; Canada saw levies raised to 35% (excluding auto parts under US-Mexico-Canada agreement) and Brazil faced a 50% increase, though negotiations remain an option.
- A cooler-than-expected U.S. jobs report showed July job growth of 73,000 with no change in the unemployment rate, alongside significant downward revisions to May and June figures (adjusted down by Trading Economics from 144k/147k to just 19k/14k jobs respectively). This data suggested underlying weakness in the labor market.
- Simultaneously, the probability for a Fed interest rate cut at the September meeting surged to 83%, up from 37% a day earlier.
In response to these mixed signals – global trade tensions from the tariffs, signs of a slowing U.S. labor market, and anticipation of Fed easing – financial markets reacted negatively.
Stock indices fell sharply. The S&P 500 dropped 1.5% midday, the tech-heavy Nasdaq declined 2%, and the Dow Jones Industrial Average lost over 570 points.
Cryptocurrency prices also wavered, with Bitcoin shedding around 2.1% to approximately $115,500, according to CoinGecko. Ethereum, XRP, and Solana also experienced losses.
Fed Chair Jerome Powell maintained the central bank’s commitment from earlier that a September cut was not made unconditional, despite Trump administration pressure, though the market odds of a cut increased significantly. Michelle Bowman and Christopher Waller were the dissenting votes at the last FOMC meeting, a rare occurrence since 1993.
Looking ahead, analysts speculate that a confirmed pathway to Fed rate cuts could benefit risk assets like cryptocurrencies as improved liquidity conditions take hold. Matt Mena from 21Shares suggests a Fed cut becoming “all but guaranteed” could propel Bitcoin significantly higher.
