US Stock Market Opens Lower Amid Employment Shock and Mutual Tariff Concerns

Korea Economic Daily

Summary

It was reported that the main indexes of the New York Stock Exchange started lower as the U.S. July employment data fell far short of market expectations.
In addition to weak employment, downward revisions to previous employment figures were announced, further dampening investor sentiment.
Amid increased possibilities of a central bank policy rate cut, a Fed governor emphasized the need for a prompt policy response.

U.S. employment figures for July fell far short of market expectations, leading the New York stock market to start lower on the 1st (local time).

At 10 a.m. (local time) on the 1st, at the New York Stock Exchange, the large-cap benchmark S&P 500 Index is recording 6,251.25, down 1.93% from the previous trading day. The Dow Jones Industrial Average is also down 1.81% at 43,503.00, while the tech-heavy NASDAQ Index is down 2.33% at 22,820.00.

It is assessed that the employment data released that day signaled risks of an economic slowdown, thereby dampening investor sentiment. The U.S. Department of Labor announced that in July, nonfarm payrolls increased by 73,000 compared to the previous month. This figure is significantly below the market expectation (an increase of 100,000) compiled by Dow Jones. The U.S. unemployment rate recorded 4.2%, up 0.1% points from the previous month.

Previously announced employment figures were also sharply revised downward. Nonfarm payrolls for June were reduced from 147,000 to 14,000, and for May from 144,000 to 19,000, for a total decrease of 258,000.

The likelihood of a U.S. central bank rate cut in September has also increased. On this day, Christopher Waller, a Fed governor, issued a statement saying, "When underlying inflation is near the target level and upward inflation risks are limited, policy rate cuts should not be delayed until the labor market continues to deteriorate." He added, "Taking a wait-and-see approach is overly cautious," and warned, "It not only fails to adequately balance economic outlook risks, but policy response might lag behind the situation."

Donghyun Kim, 3code@hankyung.com