VOO Slips, TLT Rises as July Jobs Report Disappoints
- July payrolls increased by 73,000, below 104,000 expectations; June total slashed to 14,000 from 147,000.
- VOO shares tumbled as much as 2% in morning trading.
- Concerns grow about the strength of the US labor market, lifting expectations for a September rate cut.
Stocks tumbled and bonds surged Friday after a surprisingly weak jobs report raised concerns about the strength of the U.S. labor market, while boosting hopes the Federal Reserve will cut rates as soon as next month.
The Vanguard S&P 500 ETF (VOO) fell as much as 2% at its lows, while the Invesco QQQ Trust (QQQ) dropped as much as 2.3%. The declines pared year-to-date gains for the popular equity ETFs to 6.5% for VOO and 8.5% for QQQ.
The iShares 20+ Year Treasury Bond ETF (TLT) rose as much as 1.5% in morning trading. Year to date, TLT is up 2.8%.
Non-farm payrolls increased by just 73,000 in July, according to the Bureau of Labor Statistics, well below the 104,000 jobs economists were expecting.
June, May Payrolls Slashed
Sharp downward revisions to prior months’ data spooked investors. June job gains were slashed to a mere 14,000 from an initially reported 147,000, while May’s total was cut to 19,000 from 144,000.
In effect, job growth was barely positive for much of the summer.
The unemployment rate ticked up to 4.2% from 4.1%, in line with forecasts. That marks the 15th-straight month the rate has hovered between 4% and 4.2%, after ranging between 3.4% and 3.6% from mid-2022 to mid-2023.
Analysts pointed to several potential culprits behind the labor market slowdown, including the Trump administration’s aggressive tariffs, cuts to federal government employment under the Department of Government Efficiency (DOGE), and a continued crackdown on immigration.
Trump Rips Powell
President Trump weighed in on the report via Truth Social, taking aim at Federal Reserve Chair Jerome Powell.
“Too Little, Too Late. Jerome ‘Too Late’ Powell is a disaster. DROP THE RATE! The good news is that Tariffs are bringing Billions of Dollars into the USA!” Trump posted.
The Fed kept rates unchanged earlier this week at a range of 4.25% to 4.5%, where they’ve been for all of 2025. Notably, two members of the Fed Board of Governors dissented, the first time that’s happened since 1993.
Bond ETFs rallied on the news, with investors increasingly betting on a September rate cut. The iShares Core U.S. Aggregate Bond ETF (AGG) climbed 0.7% on Friday. Year to date, AGG is up 4.4% and TLT is up 2.8%.
AGG 1-Year Net Fund Flows
Source: etf.com & FactSet
