KEY POINTS

  • Nonfarm payroll employment rose by 1.8 million in July, while the unemployment rate fell to 10.2%
  • Trump signed executive orders banning U.S. residents from transacting any business with WeChat, TikTok
  • White House and congressional Democrats still battling over a new stimulus package.

U.S. stocks fell on Friday as traders weighed a strong jobs report against rising tensions with China.

The Dow Jones Industrial Average fell 74.17 points to 27,312.81, the S&P 500 slipped 8.91 points to 3,340.25 and the Nasdaq Composite Index dropped 40.86 points to 11,067.21.

The U.S. Bureau of Labor Statistics said on Friday that nonfarm payroll employment rose by 1.8 million in July, while the unemployment rate fell to 10.2% from 11.1%.

“These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it,” the bureau stated.

Justin Wolfers, an economics professor at University of Michigan, tweeted: “The economy is still in a massive hole, but we're crawling back out. The problem is that the pace of improvement has slowed to a crawl.”

President Donald Trump again ratcheted up tensions with China by signing executive orders banning U.S. residents from transacting any business with WeChat, TikTok or with the apps’ Chinese owners, Tencent and ByteDance, in 45 days.

WeChat “automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information,” Trump’s order said.

TikTok “may also be used for disinformation campaigns that benefit the Chinese Communist Party,” Trump’s order added. “The United States must take aggressive action against the owners of TikTok to protect our national security.”

“The executive orders represent a major escalation on the U.S. side of the confrontation with China over the use of technology and mark the first time the U.S. government has attempted to ban a software application running on millions of mobile phones within the U.S.,” according to analysts at Eurasia Group.

“The executive orders leveled on TikTok and the scrutiny over WeChat has opened up a most unwelcome can of worms,” said Stephen Innes, chief global markets strategist at AxiCorp. This could “be more of a signal than anything else, especially front-running the China trade talks” expected later this month.”

Traders are also concerned about an impasse in negotiations between the White House and congressional Democrats over a new stimulus package.

“We’re still a considerable amount apart in terms of a compromise that could be signed into law,” White House Chief Of Staff Mark Meadows said of the talks.

“We’re very far apart,” House Speaker Nancy Pelosi said.

Trump has threatened to pull out of the talks and settle the matter with an executive order.

Overnight in Asia markets finished lower, as China’s Shanghai Composite index fell 0.96%; Japan’s Nikkei-225 slipped 0.39%; and Hong Kong’s Hang Seng exchange dropped 1.6%.

In Europe markets traded mixed, as Britain’s FTSE-100 slipped 0.19%, while France’s CAC-40 fell 0.25% and Germany’s DAX climbed 0.26%.

Crude oil futures dropped 1.1% at $41.49 per barrel, Brent crude fell 1.09% at $44.60. Gold futures fell 0.27%.

The euro dropped 0.88% at $1.1773 while the pound sterling fell 0.84% at $1.3033.