Closing Recap (Week Ending August 1st)

U.S. stocks fell sharply on Friday to start the new month, as a much weaker-than-expected July jobs report, combined with renewed tariff threats from President Trump, spooked investors. The negative data and trade headlines sent the dollar and Treasury yields lower while boosting gold prices, as markets aggressively priced in multiple Federal Reserve rate cuts. 

Key Takeaways 

• Stocks Slump on Jobs & Tariff News: The S&P 500 (-1.60%) and Nasdaq (-2.24%) saw their worst day in months as a surprisingly weak July jobs report (+73k vs 110k est.) and significant downward revisions to prior months fueled recession fears. 
• Trump Renews Fed & Tariff Pressure: President Trump continued his public attacks on Fed Chair Powell and floated new tariff ideas, adding to market uncertainty. 
• Rate Cut Bets Surge: Following the jobs data, the probability of a September Fed rate cut jumped to 75% (from 45%), with markets now fully pricing two cuts by year-end and a 44% chance of a third. 
• Bitcoin Pulls Back: Bitcoin started August with renewed selling, slipping 2.48% on Friday to around $115,346 after a powerful July rally, though the weak jobs data could support risk assets if it prompts Fed easing. 
• Dollar & Yields Tumble, Gold Soars: The US dollar saw its biggest daily loss against the euro and yen since April, and Treasury yields fell sharply. Gold rallied, hitting a one-week high on safe-haven demand and rate cut hopes. 
• Oil Prices Fall: Crude oil futures settled lower as weak jobs data raised demand concerns. 
• Sentiment Shifts to Neutral: The Fear & Greed Index dropped from “Greed” (73) last week to “Neutral” (49). 
• Week Ahead Focus – Key Risk Events: The Bank of England rate decision (date not specified, typically Thu) will be the main event in a relatively quiet week, with the US ISM Services PMI (Tue) also in focus. 

Looking Ahead

Looking ahead, the market faces a relatively quiet week for top-tier economic data, putting the focus squarely on central bank policy and trade developments. The main event will be the Bank of England’s rate decision. The BoE faces a tough balancing act between resurgent inflation and a slowing economy, with a split vote on the committee highly likely. A 25bps rate cut is expected, but the vote distribution and forward guidance will be key for the pound’s direction. 

In the U.S., the most significant data point will be the ISM Services PMI for July (Tuesday). Investors will closely watch this forward-looking indicator for clues on price pressures and employment trends in the dominant services sector, especially after the weak manufacturing ISM print. With the August 1st tariff deadline having passed, markets will remain highly sensitive to any further developments in trade negotiations between the US and its partners, particularly Canada and China. A fresh tariff-related volatility episode cannot be ruled out, especially as markets begin to digest the potential impact of the new, higher tariff levels on global growth and domestic inflation. The Canadian jobs report on Friday will also be important, especially in the context of its ongoing trade dispute with the U.S.

Market Overview

The positive momentum that carried U.S. stocks through July came to an abrupt halt on the first day of August. Markets, which had rallied on strong mega-cap earnings from Microsoft and Meta earlier in the week, were hit by a double-whammy of negative catalysts on Friday. President Trump renewed his public attacks on Federal Reserve Chair Jerome Powell and floated new tariff ideas, souring sentiment before the market opened. 

Index	Last Closing Level	Friday’s Change	Friday’s Change (%)
DJ Industrials	43589	-542.4	-0.0123
S&P 500	6238	-101.38	-0.016
Nasdaq	20650	-472.32	-0.0224
Russell 2000	2168	-43.21	-0.0197

This was followed by a much weaker-than-expected July Nonfarm Payrolls report, which showed only 73k jobs were added versus a 110k consensus. Crucially, payrolls for May and June were revised down by a massive amount, painting a much weaker picture of the labor market and fueling recessionary concerns. 

The data triggered a significant repricing in financial markets. The probability of a September Fed rate cut surged from 45% to 75%, with traders now fully pricing in two rate cuts by the end of 2025 and seeing a material chance of a third. This sent the U.S. dollar tumbling for its biggest daily loss against the euro and yen since April, while Treasury yields also fell sharply. Gold prices rallied on the combination of safe-haven demand and increased rate cut expectations. In the crypto space, Bitcoin began August with renewed selling pressure, dropping 2.48% to trade around $115,346. After a strong July rally that saw it hit new record highs, the pullback has traders divided on its next move, though the prospect of Fed easing could ultimately prove supportive for risk assets like BTC.

Economic Data Calendar (Week of August 4th) 

TUE (Aug 6): 

• US ISM Services PMI (Jul): Key forward-looking indicator for the US services sector; price and employment sub-indices will be watched closely. 

THU (Aug 8): 

• Bank of England (BoE) Rate Decision, Minutes & Monetary Policy Report: Expected to deliver a 25bps rate cut, but the decision is likely to be split. The vote count and forward guidance will be critical. 

FRI (Aug 9): 

• Canadian Employment Report (Jul): Key labor market data for Canada; another strong print could lessen the need for an immediate BoC rate cut. 

Commodities, Currencies, and Treasuries 

Gold prices rallied strongly on Friday, with the December contract gaining 1.53% to settle near $3,400/oz. The move was fueled by a flight to safety following renewed tariff threats and a sharp increase in Federal Reserve rate cut expectations after the weak U.S. jobs report. Oil prices trended lower, with September WTI crude futures settling down 2.79% at $67.33/bbl, as weak jobs data raised demand concerns and markets anticipated an OPEC+ production hike. 

Asset	Last Level	Friday’s Change	Unit / % Change
WTI Crude	67.33	-1.93	USD/bbl
Brent Crude	69.67	-2.03	USD/bbl
Gold (Dec Fut.)	3399.8	51.2	USD/oz
EUR/USD	1.16	0.016	Rate
USD/JPY	147.34	-3.33	Rate
10-Year Note Yield	0.0422	-0.0014	Yield (%)
Bitcoin (approx)	~115,346	(Implied -2.48%)	USD

Bitcoin started August on the back foot, slipping 2.48% to $29,115.35 after a powerful rally in July.The U.S. dollar dropped sharply, with the dollar index falling over 1% for its biggest daily loss since April as rate cut bets surged. The euro rose 1.16% against the dollar, while the yen also strengthened significantly. Treasury yields tumbled, with the 10-year yield falling 14 bps to 4.22%.