US stocks fell sharply amid new tariffs, trade uncertainty, and weak economic data. The Russell 2000 and S&P MidCap 400 led losses, down over 3%, while the Nasdaq held up best (-2.2%). President Trump raised tariffs ahead of an August 1 deadline, despite new trade deals with the EU, South Korea, and Mexico. Earnings were mixed – 82% of S&P 500 companies beat estimates, but tariff concerns weighed on outlooks. The Fed held rates steady for a 5th meeting, though inflation rose 2.8% y/y in June. GDP grew 3% in Q2, boosted by lower imports. July’s jobs report missed expectations, with just 73,000 jobs added, prompting renewed rate cut bets. Treasury yields fell, with the 10-year dropping to 4.22%.
European stocks fell as the STOXX Europe 600 dropped 2.6%, with France’s CAC 40 and Germany’s DAX down over 3%, following disappointment over the limited US-EU trade deal. UK stocks declined less, supported by a weaker pound. Eurozone economic data showed modest growth as GDP rose 0.1% in the second quarter, inflation stayed at 2.0%, and unemployment held at a low 6.2%. Economic sentiment improved in industry, services, and retail. In the UK, housing activity picked up, with prices rising 0.6% in July and mortgage approvals exceeding expectations.
