Why Is the Stock Market Down Today? (August 1, 2025)

The stock market is trading lower today as a mix of weak economic data, aggressive new tariffs, and stretched valuations shake investor confidence.

1. Weaker-than-expected Jobs Report

The July jobs report significantly underperformed expectations—only 73,000 new jobs added, far below forecasts. Additionally, there were sharp downward revisions totaling 258,000 jobs for May and June. The unemployment rate ticked up to 4.2%. These developments raised concerns about a slowing economy and pushed traders to price in possible Federal Reserve interest rate cuts as early as September. Read full coverage at The Wall Street Journal and More from Investors.com

2. New Tariff Announcements

President Trump announced sweeping new tariffs taking effect around August 7. These include:

39% tariffs on Swiss imports
35% tariffs on non‑compliant Canadian goods
25% tariffs on Indian goods

This sharp escalation in trade protectionism has increased fears of rising input costs, supply chain disruptions, and a global growth slowdown. Full breakdown via Investopedia

3. Valuation and Sentiment Concerns

Forward price-to-earnings ratios have climbed above 22.5×, with some market strategists—such as Kevin Muir of The Macro Tourist—noting that positive earnings news may already be fully priced in. With August historically a weak seasonal month, sentiment has shifted more defensively. Analysis via MarketWatch

Other Factors Pressuring the Market

Tariffs Are Now Active
Executive orders were implemented today, introducing widespread duties on imports. These moves are intended to correct trade imbalances but are adding inflationary pressure and margin uncertainty. More background here
Labor Market Slump
The latest report signals a slowing job market, and the significant revisions downward to previous months confirm the trend. Investors are watching closely to see if consumer demand begins to weaken.
Reduced Risk Appetite
Lower Treasury yields, a declining U.S. dollar, and easing equity volatility all point to a rotation away from risk-on assets. Traders appear to be selling strength, not buying dips.

Summary Table

Market Driver	Why It Matters
Weak Jobs Growth	Indicates potential economic slowdown and increases rate cut odds
Escalating Tariffs	Raises risks to corporate margins and global trade stability
High Valuations	Limited room for upside surprises or disappointments
Seasonal Patterns	August has historically been a volatile and weaker month

What to Watch Next

Upcoming economic reports: ISM Manufacturing PMI, Services PMI, and University of Michigan Consumer Sentiment
Forward earnings guidance: Especially from consumer and industrial companies that may be impacted by tariffs
Federal Reserve positioning: Watch for speeches or commentary hinting at September rate action

Volatility, policy shifts, and valuation extremes demand more than passive investing. This is when active risk management and asymmetric positioning matter most.