Dow Jones and Nasdaq crash on Friday, taking severe hits, the tariffs seem to be the trigger
On 1 August 2025, the Dow Jones Industrial Average and Nasdaq Composite plunged heavily, displaying market jolts and driving fears of recession throughout Wall Street. The heavy sell-off registered a gap-down beginning for August for U.S. stocks and followed with rising economic and political uncertainties.
At the bell, the Dow Jones dropped more than 650 points, about 1.50% and the Nasdaq declined about 2.50% during early trading. The technology titans such as Amazon, Nvidia, and Apple drove the declines, taking the market down with them. The broader S&P 500 also fell sharply in sync, adding to the breadth of the pullback. Throughout trading, the severity of the losses highlighted investors' fears of policy shocks as well as deteriorating macroeconomic data.
The most recent trigger was a blanket new round of global tariffs unveiled by President Donald Trump on Thursday evening. The tariffs apply to imports from more than 90 nations, ranging from 10% to 41%, with significant increases for major U.S. trading partners like Canada (from 25% to 35%). The tariffs, effective from August 7, heightened concerns about retaliation in global trade, increased inflation, and longer supply chain disruptions. Markets have become increasingly concerned about rising protectionism, as these actions could nip global growth and corporate profits.
Trade tensions have weighed significantly on the tech industry, which depends on complex international supply chains. The threat of tariffs reducing profitability for hardware makers and tech exporters helped to drive the disproportionate decline in the Nasdaq Composite.
Adding to the negative mood was a disappointing July U.S. jobs report. Just 73,000 new jobs were created, far less than anticipated and unemployment rose to 4.2%. The figures signaled a slowing labor market and fueled fears of an impending recession. Investors saw the muted job creation as proof that the economy's growth is weakening, perhaps forcing the Federal Reserve to cut rates in the future.
The duo of protectionist U.S. trade policy and economic deceleration has built a "perfect storm" for markets. Until more clarity on the direction of tariffs and the health of the U.S. recovery, volatility will most likely continue to remain elevated. Global investors will be monitoring important upcoming events - tariff implementation timelines, Fed policy meetings, and additional economic data for evidence of stabilization or more serious trouble on the horizon.
