The stock market had its worst day since May after the government reported a sharp slowdown in hiring and President Donald Trump imposed sweeping tariffs on imports from a number of U.S. trading partners. The S&P 500 fell 1.6% Friday, and the Dow Jones Industrial Average dropped 1.2%. The Nasdaq composite lost 2.2%. The surprisingly weak hiring numbers led investors to step up their expectations for an interest rate cut in September and sent Treasury yields sharply lower in the bond market. The new set of tariffs are set to go into effect Aug. 7.

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

Stocks slumped and Treasury yields fell sharply Friday after a weak report on hiring and the latest gyrations in U.S. trade policy shook Wall Street.

The S&P 500 fell 1.5% and is on track for its biggest decline since late May. The index is also on track for a weekly loss, marking a sharp shift from last week’s record-setting streak of gains.

The Dow Jones Industrial Average fell 486 points, or 1.1% as of 2:44 p.m. Eastern. The Nasdaq composite fell 2%.

Worries on Wall Street about a weakening economy were heavily reinforced by the latest report on job growth in the U.S. Employers added just 73,000 jobs in July. That is sharply lower than economists expected. The Labor Department also reported that revisions shaved a stunning 258,000 jobs off May and June payrolls.

Markets are also reacting to the latest tariff news. President Donald Trump announced tariff rates on dozens of countries and pushed back the scheduled effective date to Aug. 7, adding more uncertainty to the global trade picture.

The surprisingly weak hiring numbers led investors to step up their expectations for an interest rate cut in September. The market’s odds of a quarter-point cut by the Federal Reserve rose to around 85% from just under 40% a day earlier, according to data from CME FedWatch.

The yield on the 10-year Treasury fell to 4.22% from 4.39% just before the hiring report was released. That's a big move for the bond market. The yield on the two-year Treasury, which more closely tracks expectations for Fed actions, plunged to 3.71% from 3.94% just prior to the report's release.

The Fed has held rates steady since December. A cut in rates would give the job market and overall economy a boost, but it could also risk fueling inflation, which is hovering stubbornly above the central bank’s 2% target.

An update on Thursday for the Fed's preferred measure of inflation showed that prices ticked higher in June, rising to 2.6% from 2.4% in May. The Fed has remained cautious about cutting interest rates because of worries that tariffs will add more fuel to inflation and weigh down economic growth.

The central bank, though, also counts “maximum employment” as one of its two mandates along with keeping prices stable. Issues with either of those goals could prompt a shift in policy.

The Fed held rates steady again at its most recent meeting this week. Fed Chair Jerome Powell has been pressured by Trump to cut the benchmark rate, though that decision isn’t his to make alone, but belongs to the 12 members of the Federal Open Market Committee.

“What had looked like a Teflon labor market showed some scratches this morning, as tariffs continue to work their way through the economy,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “A Fed that still appeared hesitant to lower rates may see a clearer path to a September cut, especially if data over the next month confirms the trend."

Businesses, investors and the Fed are all operating under a cloud of uncertainty from Trump’s tariff policy. The latest moves give 66 countries, the European Union, Taiwan and the Falkland Islands another seven days, instead of taking effect on Friday, as Trump stated earlier.

Companies have been warning investors that the policy, with some tariffs already in effect while others change or get extended, has made it difficult to make forecasts. Walmart, Procter & Gamble and many others have warned about import taxes raising costs, eating into profits and raising prices for consumers.

Internet retail giant Amazon fell 8.2%, despite reporting encouraging profit and sales for its most recent quarter. Technology behemoth Apple fell 1.7% after also beating Wall Street’s profit and revenue forecasts. Both companies face tougher operating conditions because of tariffs, with Apple forecasting a $1.1 billion hit from the fees in the current quarter.

Exxon Mobil fell 1.9% after reporting that profit dropped to the lowest level in four years and sales fell as oil prices slumped as OPEC+ ramped up production.

Stocks fell across the world. Germany’s DAX fell 2.7% and France's CAC 40 fell 2.9%. South Korea’s Kospi tumbled 3.9%