US stock indices are already under pressure following Amazon's significant decline after its earnings release. Just before Friday afternoon's London close, indices suffered further losses due to weak employment data and subsequently released ISM survey data.

The key question for equity investors is whether rising rate cut expectations can offset concerns about economic growth. Apart from Amazon, tech company earnings have performed reasonably well.

Given elevated tariff levels, other economic indicators beyond employment data aren't particularly poor. While valuation concerns may draw attention, considering the market's recent strong performance and resilience to negative news, will dip buyers re-enter the market? Next week offers little data to guide market sentiment beyond the ISM Services PMI. However, more earnings reports await release, and if results continue to exceed expectations, the bull market could persist for some time. It may be premature to conclude that the S&P 500's bullish trend has ended.

**Weak Employment Data Raises September Rate Cut Probability**

Markets are watching whether September rate cut probability will change significantly following this data release. The answer is yes—following today's data, this probability rose to 75%. This stems mainly from overall weak employment data this month, particularly substantial downward revisions to previous months' figures. The report serves as an undeniable wake-up call.

July nonfarm payrolls added just 73,000 jobs—well below the expected 104,000—but the significant downward revisions to previous months' data are truly concerning. June data was revised down from 147,000 to 14,000. May's figure was drastically cut from 144,000 to just 19,000. This means 258,000 jobs "disappeared into thin air." This isn't a minor fluctuation—it represents a complete downturn.

All eyes now turn to the Federal Reserve. Despite inflation remaining elevated, the Fed has a dual mandate that includes employment—and this data clearly points to weakness. Doves are stirring. Fed Governors Waller and Bowman have already supported rate cuts this week, warning that the central bank may be behind the curve. Following today's data release, more officials may share this view. If the next employment report on September 5 also disappoints, rate cuts become almost inevitable, and even if tariffs temporarily push inflation higher, the probability of continued cuts in October and December rises accordingly.

The conclusion is that the US labor market is rapidly losing momentum. Unless data surprises positively soon, the Fed may have no choice but to cut rates, and more than once. Against this backdrop, bond yields should remain under pressure, providing support for highly valued tech stocks.

**Is Labor Market Weakness Stemming from Tariffs?**

It's difficult not to connect America's poor data with tariff impacts. Indeed, this appears to be the case, especially since employment slowdown began in early Q2, when retaliatory tariff policies were announced. Companies anticipating high tariffs squeezing profit margins may choose to delay hiring to control costs. Therefore, the US labor market is rapidly losing vitality due to tariff concerns. Unless data surprises positively soon, the Fed may be forced into earlier rate cuts. In this context, the dollar's recovery will be long and bumpy, but the impact on stocks...

**S&P 500 Outlook: Technical Analysis and Key Levels to Watch**

From a technical perspective, despite the sharp decline in nonfarm payroll data, the S&P 500 outlook remains bullish. More bearish price action would be needed to turn tactically bearish on US markets. As of Friday's writing, the S&P 500 is testing support above the 6,210 level, which previously triggered a rebound. The index has indeed broken below the important support levels of 6,285 and 6,335. These levels may now serve as near-term resistance. A relatively quick recovery above these levels would be bullish. Meanwhile, if selling continues, the next key support lies in the 6,100-6,148 range, representing the previous historical high that was finally broken in June. Therefore, despite two days of sharp declines, the technical bias remains bullish.