Stock market today: Dow drops 600 on weak jobs data as a global sell-off whips back to Wall Street

NEW YORK (AP) — Stocks tumbled Friday on worries the U.S. economy could be cracking under the weight of high interest rates meant to whip inflation. The S&P 500 fell 1.8% Friday for its first back-to-back loss of at least 1% since April. The Dow Jones Industrial Average lost 1.5%, and the Nasdaq composite fell 2.4%. A report showing hiring by U.S. employers slowed last month by much more than expected sent fear through markets. Intel sank to its worst day in 50 years after reporting weaker-than-expected profits and suspending its dividend. Treasury yields tumbled as expectations built for how deeply the Federal Reserve will cut rates in September.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — Stocks are tumbling Friday on worries the U.S. economy could be cracking under the weight of high interest rates meant to whip inflation.

The S&P 500 was sinking by 2.1% in afternoon trading. The Dow Jones Industrial Average was down 775 points, or 1.9%, with a little more than an hour remaining in trading, and the Nasdaq composite was 2.6% lower as a sell-off for stocks whipped all the way around the world back to Wall Street.

A report showing hiring by U.S. employers slowed last month by much more than economists expected sent fear through markets, with both stocks and bond yields dropping sharply. It followed a batch of weaker-than-expected reports on the economy from a day earlier, including a worsening for U.S. manufacturing activity, which has been one of the areas hurt most by high rates.

It was just a couple days ago that U.S. stock indexes jumped to their best day in months after Federal Reserve Chair Jerome Powell gave the clearest indication yet that inflation has slowed enough for cuts to rates to begin in September.

Now, worries are rising the Fed may have kept its main interest rate at a two-decade high for too long. A rate cut would make it easier for U.S. households and companies to borrow money and boost the economy, but it could take months to a year for the full effects to filter through.

“The Fed is seizing defeat from the jaws of victory,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Economic momentum has slowed so much that a rate cut in September will be too little and too late. They’ll have to do something bigger than” the traditional cut of a quarter of a percentage point ”to avert a recession.”

Traders are now betting on a nearly three-in-four chance that the Fed will cut its main interest rate by half a percentage point in September, according to data from CME Group. That's even though Powell said Wednesday that such a deep reduction is “not something we're thinking about right now.”

Of course, the U.S. economy is still growing, and a recession is far from a certainty. The Fed has been clear about the tightrope it's walking since it started hiking rates sharply in March 2022: Being too aggressive would choke the economy, but going too soft would give inflation more oxygen and hurt everyone.

While refusing to claim victory on either the jobs or the inflation fronts on Wednesday, before the discouraging economic reports hit, Powell said Fed officials “have a lot of room to respond if we were to see weakness” in the job market after hiking its main rate so high.

“Certainly today’s job data feeds the weakening economy narrative, but I believe the market is overreacting at this point and pricing too much in on rate cuts at this stage,” said Nate Thooft, senior portfolio manager at Manulife Investment Management. “Yes, the economy is weakening, but I am not convinced there is enough evidence that the data so far is a death knell for the economy.”

U.S. stocks had already appeared to be headed for losses Friday before the disappointing jobs report thudded onto Wall Street.

Several big technology companies turned in underwhelming profit reports, which continued a mostly dispiriting run that began last week with results from Tesla and Alphabet.

Amazon fell 9.2% after reporting weaker revenue for the latest quarter than expected. The retail and tech giant also gave a forecast for operating profit for the summer that fell short of analysts’ expectations.

Intel dropped even more, 26.7% and on pace for its worst day in 50 years, after the chip company’s profit for the latest quarter fell well short of forecasts. It also suspended its dividend payment and said it expects to lose money in the third quarter, when analysts were expecting a profit.

Apple was holding steadier, up 2.2%, after reporting better profit and revenue than expected.

Apple and a handful of other Big Tech stocks known as the “ Magnificent Seven ” have been the main reasons the S&P 500 has set dozens of records this year, in part on a frenzy around artificial-intelligence technology. But their momentum turned last month on worries investors had taken their prices too high and expectations for future growth are too difficult to meet.

Friday's losses for tech stocks dragged the Nasdaq composite down by more than 10% from its record set in the middle of last month.

Helpfully for Wall Street, other areas of the stock market beaten down by high interest rates had been rebounding last month when tech stocks were regressing, particularly smaller companies. But they tumbled too Friday on worries that a fragile economy could undercut their profits.

The Russell 2000 index of smaller stocks dropped 3.6%, more than the rest of the market.

In the bond market, Treasury yields fell sharply as traders raised their expectations for how deeply the Federal Reserve would have to cut interest rates. The yield on the 10-year Treasury fell to 3.79% from 3.98% late Thursday and from 4.70% in April.

In stock markets abroad, Japan’s Nikkei 225 dropped 5.8%. It's been struggling since the Bank of Japan raised its benchmark interest rate on Wednesday. The hike pushed the value of the Japanese yen higher against the U.S. dollar, potentially hurting profits for exporters and deflating a boom in tourism.

Chinese stocks fell week as investors registered disappointment with the government’s latest efforts to spur growth through various piecemeal measures, instead of hoped-for infusions of broader stimulus, while stock indexes dropped by more than 1% across much of Europe.

Commodity prices have also had a rough ride this week. Oil prices surged after the killings of leaders of Hamas and Hezbollah that fueled fears that a widening conflict in the Middle East could disrupt the flow of crude.

But prices fell back Thursday and Friday on worries that a weakening economy will burn less fuel. A barrel of benchmark U.S. crude tumbled back below $74 Friday after coming into the week above $77.

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

A trio of traders work on the floor of the New York Stock Exchange, Friday, Aug. 2, 2024. (AP Photo/Richard Drew)

Traders gather at the post of specialist Stephen Naughton, right,on the floor of the New York Stock Exchange, Friday, Aug. 2, 2024. (AP Photo/Richard Drew)

Trader John Romolo works on the floor of the New York Stock Exchange, Friday, Aug. 2, 2024. (AP Photo/Richard Drew)

Specialist James Denaro works at his post on the floor of the New York Stock Exchange, Friday, Aug. 2, 2024. (AP Photo/Richard Drew)

FILE - People pass the New York Stock Exchange on July 31, 2024 in New York. World shares have tumbled on Friday, August 2, 2024, with Japan's Nikkei 225 index slumping 5.8% as investors panicked over signs of weakness in the U.S. economy.(AP Photo/Peter Morgan, File)

A person walks in front of an electronic stock board showing Japan's Nikkei 225 index Friday, Aug. 2, 2024, in Tokyo. Shares in Europe and Asia tumbled Friday, with Japan’s Nikkei 225 index slumping 5.8% as investors panicked over signs of weakness in the U.S. economy. (Kyodo News via AP)

A person walks in front of an electronic stock board showing Japan's Nikkei 225 index Friday, Aug. 2, 2024, in Tokyo. Shares in Europe and Asia tumbled Friday, with Japan’s Nikkei 225 index slumping 5.8% as investors panicked over signs of weakness in the U.S. economy. (Kyodo News via AP)

A currency trader passes by the screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 2, 2024. (AP Photo/Ahn Young-joon)

Currency traders watch monitors near the screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 2, 2024. (AP Photo/Ahn Young-joon)

An electronic stock board shows that Nikkei stock average dropped over 1,900 Japanese yen from previous day, in Tokyo Friday, Aug. 2, 2024. (Kyodo News via AP)

A currency trader watches monitors near the screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 2, 2024. (AP Photo/Ahn Young-joon)

People pass by an electronic stock board in Tokyo Friday, Aug. 2, 2024. (Kyodo News via AP)

NEW YORK (AP) — Negotiators on Monday reached a deal to end the strike that stalled service on the Long Island Rail Road, the busiest commuter rail system in North America.

Gov. Kathy Hochul said in a statement on X that the deal “delivers raises for workers while protecting riders and taxpayers” and that service would start back up beginning Tuesday at noon.

The Metropolitan Transportation Authority and leaders of the five labor unions had been bargaining for a new contract for years before the unions went on strike at 12:01 a.m. Saturday. Roughly 250,000 commuters use the rail system that connects New York City to its eastern suburbs every weekday.

Locomotive engineers, machinists, signalmen and other workers picketed at train stations through the weekend.

The MTA, which runs the railroad, offered free but limited shuttle buses during the morning and evening rush hours starting Monday, leaving most commuters to navigate the gauntlet of car, bus and subway routes. New York Gov. Kathy Hochul had urged LIRR riders to work from home, if possible.

Union officials and the MTA negotiated Sunday afternoon into the early morning hours Monday after prodding from the National Mediation Board, which is the federal agency that governs labor relations for railroads and airlines.

The five unions, representing about half the train system’s workforce, had demanded raises they said were needed to help workers keep up with inflation and rising living costs. The MTA argued that the unions’ initial demands would lead to fare increases.

The two sides have been negotiating a new contract since 2023, but talks have stalled over salaries and healthcare premiums.

The Trump administration got involved in September after the unions asked for the appointment of a panel of experts. The move temporarily averted a strike, but the two sides still couldn’t reach a deal after months passed.

The LIRR serves hundreds of thousands of commuters who live along a 118-mile-long (190-kilometer-long) land mass that includes Brooklyn and Queens in New York City and the Hamptons, a summertime playground for the rich and famous near its eastern tip.

Most of its riders live outside New York City in two Long Island counties populated by nearly 3 million people.

Before this latest walkout, LIRR workers last went on strike in 1994.

Ridership has been lighter than expected on the free but limited shuttle buses the MTA provided from a handful of locations on Long Island to New York City subway stations.

Officials had implored the roughly 250,000 riders who normally use the train system each weekday to work from home rather than commute into the city, if possible.

During the morning commute, more than 2,000 people took advantage of the shuttle service, the agency said. It had prepared for about 13,000 riders.

The first impacts of the walkout were felt over the weekend as baseball fans had to find other ways to get to Citi Field in Queens to see the New York Mets take on their crosstown rivals the New York Yankees.

This story has been corrected to show that the body in charge of the LIRR is the Metropolitan Transportation Authority, not the Metropolitan Transportation Agency.

McCormack reported from Concord, New Hampshire. Associated Press writers Ted Shaffrey and Joseph Frederick in New York contributed.

Signs for free Long Island Rail Road shuttle buses hang at the Howard Beach–JFK Airport station as Long Island Rail Road workers enter the third day of their strike, Monday, May 18, 2026, in New York. (AP Photo/Heather Khalifa)

Long Island Rail Road workers walk on the picket line outside of Penn Station on the third day of their strike, Monday, May 18, 2026, in New York. (AP Photo/Heather Khalifa)

A pedestrian walks along an empty track at Mineola train station as Long Island Rail Road workers strike, Monday, May 18, 2026, in Mineola, N.Y. (AP Photo/Heather Khalifa)

Tracks are empty at Mineola train station as Long Island Rail Road workers enter the third day of their strike, Monday, May 18, 2026, in Mineola, N.Y. (AP Photo/Heather Khalifa)

People exit and board buses at the Mineola train station as Long Island Rail Road workers enter the third day of their strike, Monday, May 18, 2026, in Mineola, N.Y. (AP Photo/Heather Khalifa)

Commuters sit on a shuttle bus as Long Island Rail Road workers strike, Monday, May 18, 2026, in Mineola, N.Y. (AP Photo/Heather Khalifa)

Visitors look out at the trains at the West Side Yard from the Vessel on the first day of a Long Island Rail Road workers' strike, Saturday, May 16, 2026, in New York. (AP Photo/Heather Khalifa)

Tracks are empty at Mineola train station as Long Island Rail Road workers enter the third day of their strike, Monday, May 18, 2026, in Mineola, N.Y. (AP Photo/Heather Khalifa)