U.S. markets collapsed on Friday, August 1. The reason for the sell-off was the announcement of Donald Trump's new trade duties, as well as fresh data on US non-farm payrolls, which were more than a quarter worse than expected. As a result, the S&P index had its worst day since April, Bloomberg calculated, and the Cboe volatility index, known as Wall Street's "fear barometer," broke the psychologically important 20-point mark - a position above it usually indicates high tension. Oninvest told you more about what is happening in the markets online.

22:00 CET Trading is closed! The main US index S&P 500 is down 1.6% on the day. The blue-chip index Dow Jones Industrial Average lost 1.23%. "Technology" Nasdaq Composite fell 2.24%, and the index of small-capitalization companies Russell 2000 - by 1.9%. Wall Street's Vix "Fear Index" ended the day at 20.55 points -- nearly 23% higher than it was a day earlier.

21:40 CET A weakening U.S. labor market and a new threat of duties led to a rally in government bonds on Friday, with weekly bond declines the biggest in about four months, MarketWatch reported. Two-year treasuries, for example, saw yields collapse 25 basis points to 3.7%, the lowest level since May 1, according to Dow Jones Market Data. Ten-years fell 14.2 basis points to 4.2% and 30-years fell 8.1 points to 4.8%.

21:00 CET Indices were still in negative territory by the last hour of trading on Friday. The S&P 500 was down 1.7 percent, the Dow Jones was down 1.3 percent and the Nasdaq Composite was down 2.3 percent. The Russell 2000 index of small-capitalization companies was down 1.8%. And the Vix Wall Street Fear Index held at just under 21 points;

20:55 CET Donald Trump ordered to fire U.S. Bureau of Labor Statistics chief Erica McEntarfer after the agency on Friday released statistics for July. According to the data, nonfarm payrolls increased by 73,000 jobs for the month, better than the June figure but below the Dow Jones forecast of 100,000. Meanwhile, data for May and June were revised downward - declining by a combined 258,000 jobs.

20:25 CET Hedging against another collapse is getting more expensive, reports Bloomberg. Contracts protecting against a drop SPDR S&P 500 ETF Trust, the largest exchange-traded fund tracking the broad stock market, by 10 percent over the next 60 days reached the highest value since May 2023, compared with the cost of contracts protecting against a 10 percent rise.

"This is not a panic sell-off. It's a fading euphoria," says Chris Murphy, co-chief derivative strategist at Susquehanna Chris Murphy, "The meme stock stories have exhausted themselves, and the automatic strategies that buy on growth are already heavily loaded - so there's less demand for protection against it. With duties and signs of a slowing economy, it doesn't make much sense to buy growth insurance after such a powerful rally."

Traders are starting to build up downside defenses as August and September approach, which are historically the weakest months for the S&P 500 Index, Bloomberg notes.

20:00 CET "The idea that much of the uncertainty surrounding the duties is behind us is very attractive, but we maintain a cautious attitude," commented Wei Yao, China economist at Societe Generale, as quoted by CNBC. 

JPMorgan Asset Management strategist David Kelly also urges vigilance: "It's worth avoiding complacency. Don't think inflation won't jump because it hasn't jumped so far. It will happen, we will see a rise in inflation".

19:50 CET The market has moved back into risk-off mode, comments Barron's. The non-essentials sector of the S&P 500 Index fell 3.4% and is on track for its worst performance since April 10. The energy sector lost 1.7%. The technology, financials and communications sectors fell about 1.6%. Industrial companies fell an average of 1.3% and the materials sector fell 0.7%.

19:30 CET Three sectors that make up the S&P 500 are rising Friday: consumer staples, utilities and health care, MarketWatch reported, citing FactSet data. Those three sectors are traditionally considered the defensive parts of the market, the publication explained. Two meme stocks - Rocket Cos. and Opendoor Technologies - also held up well, rising 11% to 12%. On the other hand, doughnut seller Krispy Kreme was down 4.6% and action camera maker GoPro was down 7%.

19:10 CET US indices have accelerated their fall again. The S&P 500 is down 1.7%, the Dow Jones is down 1.4% and the Nasdaq is down 2.3%. The Russell 2000 falls just under 2%. Wall Street's VIX "fear index" is now above 21 points.

19:00 CET Truist analyst Keith Lerner is not overly alarmed by Friday's sell-off. "Perspective is key. The market is up about 28% from its low in April, having priced in continued good news - solid growth, disinflation and good reporting. That made it vulnerable to bad headlines," stated Lerner MarketWatch. But fundamentals look mostly balanced, according to Truist. Instead of selling securities, investors should use any downturns to buy "growth stocks" of U.S. giants, the analyst advises.

18:20 CET While the broader market is declining, one technology stock has risen to a five-month high. Shares of online forum Reddit jumped 22.5 percent to $196.68 at the peak. The night before, the company released very good reports: the second quarter was the most profitable in the company's history, and revenue increased 78% year-over-year to $500 million, the fastest sales growth rate since 2022. In addition, Reddit gave a strong outlook for the third quarter.

18:10 CET The major US stock indices slowed down slightly. The S&P 500 was losing around 1.2%, the Nasdaq Composite was losing around 1.7% and the Dow Jones was down just under 1%. The Russell 2000 index of small-capitalization companies was down 1.8%. "Wall Street Fear Index" VIX fell below the psychological mark of 20 points again.

17:45 CET Those who followed markets last year will remember the August 2024 sell-off triggered precisely by the July jobs report, noted Barron's. That data eventually made the case for the U.S. Federal Reserve to cut rates in September, the economy remained resilient, and stock indexes soon hit all-time highs.

Now the situation is similar, notes Barron's. Strong reporting by technology companies pushed the Nasdaq to record levels, so any negative event was capable of seriously shaking up the market, which was already priced "to the max." But there is one important difference: this year Wall Street has to deal with massive duties, the publication reminds.

U.S. Federal Reserve Chairman Jerome Powell warned this week that the impact of trade fees is starting to show up more prominently in inflation data. On the other hand, the jobs report indicated that the labor market is not as strong as previously thought. This could put the Fed in a tight spot if inflation picks up and the economy weakens. Such a scenario would be a bad signal for most stocks - except, perhaps, for companies with better-than-forecast earnings growth amid a surge in AI spending, Barron's warned.

17:30 CET After two hours of trading, the S&P 500 is losing almost 1.6 percent, the Dow Jones - 1.4 percent and the Nasdaq Composite - more than 2 percent. The Russell 2000 index, which tracks small-capitalization companies, falls the hardest: it collapsed 2.3%. The CBOE Volatility Index, known as the "Wall Street Fear Index," again stepped up and crossed the 20 mark. Typically, this indicates a period of heightened volatility and uncertainty.

17:10 CET The probability of the U.S. Federal Reserve cutting rates at its next meeting in September has jumped to 79 percent, according to the CME Group's FedWatch tool FedWatch.  "At this stage, the market will already be calling for an interest rate cut," said Interactive Brokers senior economist Jose Torres. 

17:05 CET "The market's initial reaction [to the duties] was negative even though the August 1 deadline was predetermined," noted Ulrike Hoffmann-Burhardi, head of global equities at UBS. Nevertheless, she anticipates that going forward, the economic impact of the White House's new trade measures will be "manageable," with the effective U.S. duty rate stabilizing at around 15% by the end of the year.

17:00 CETIn addition to weak employment data for July, there were also sharply revised figures for the previous two months and this was a major blow to the perception of labor market strength, said Principal Asset Management's chief global strategist Seema Shah, her quoted by MarketWatch.  "Even more worryingly, the negative impact of import duties is just starting to take effect, and we are likely to see much clearer signs of a slowdown in the labor market in the coming months," she warned in a Friday note. 

Nevertheless, according to the strategist, "it's too early to hit the panic button", as the unemployment rate, which is targeted by the US Fed chairman,  has risen only slightly: from 4.1% to 4.2%.

16:55 CETWeak labor market data sparked a rally in gold, reports MarketWatch. Prices for the precious metal rose sharply on Friday as "an extremely pessimistic economic report clearly benefited supporters of loose monetary policy," said Kitco.com senior analyst Jim Wyckoff. 

Gold futures for December delivery rose 1.6 percent on the Comex exchange to an intraday high of $3408.40.

16:44 CET Consumer staples was the only one of the 11 sectors in the S&P 500 to trade in positive territory, adding 0.7% thanks to gains in shares of companies such as Walmart and Costco, noted MarketWatch. The traditionally defensive health care sector fell only slightly, with it being the worst performing sector in the S&P 500 since the start of the year. 

Homebuilders stocks rose as a sharp drop in Treasury bond yields supported defensive and interest-rate-sensitive securities, o explains MarketWatch. The SPDR S&P Homebuilders ETF rose 0.7%, according to FactSet data.

16:35 CET The pace of decline in the major indices is beginning to slow: by this point, the S&P 500 is losing 1.3%, the Dow Jones - less than 1.2%, the Nasdaq Composite - about 1.7%. Only the index of small-capitalization companies, which are considered more risky assets - Russell 2000 collapsed by 2.3%. 

"The Wall Street Fear Index trimmed gains and retreated back below the 20 mark, suggesting volatility is easing.  

16:30 CET The dollar index, tracked Bloomberg, fell 1 percent after below-expectations jobs data. That marked its worst day since April 21, noted the agency. The Japanese yen, on the other hand, appreciated 2.2% against the U.S. dollar, while the euro rose more than 1%, the publication adds.

"It's now clear that the US labor market is cooling quite sharply," noted Monex currency trader Helen Given. - There is a high probability that Trump's attack on Powell will intensify in the coming days, and this could lead to further dollar weakness." The U.S. president has repeatedly criticized Fed chief Jerome Powell for preferring to take a wait-and-see stance and not cut rates.

16:15 CET Stock indices were pressured by fresh US non-farm payroll employment data, noted CNBC. Job growth slowed to 73,000 in July instead of the expected 100,000, while the unemployment rate rose to 4.2%. Prior to the data release, Barron's warned that the fresh statistics would show how much Trump's duties have affected the labor market. Still, weaker data could prompt the Fed to cut rates sooner, CNBC adds. 

According to CME Group's FedWatch tool, which reflects market expectations for Fed policy, traders now estimate the probability that the regulator will cut rates in September at 77%. As recently as yesterday, they were talking about 39%.

16:00 CET The main U.S. stock index S&P 500 fell 1.5 percent, the blue-chip index  Dow Jones lost 1.4%, while the index of technology stocks Nasdaq Composite fell the most, by 1.9%. The Russell 2000 Russell 2000 Small Capitalization Companies Index was down nearly 1% on Friday.  

Shares of the "Magnificent Seven" technology giants fell: the securities of Microsoft fell by 1%, quotations Amazon collapsed nearly 6.5% after the report, at Meta they fell more than 2%, at Nvidia - 3%. Shares of Tesla> lost 2.2%, Alphabet - 1.7%. Apple remained in plus territory at the opening bell, but then also fell 0.8%.

The CBOE Volatility Index, better known as the Wall Street Fear Index, rose 25 percent and surpassed the psychological mark of 20, now nearing 21.6.

This article was AI-translated and verified by a human editor

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