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Stocks are tumbling Friday on\u00a0worries<\/a>\u00a0the U.S.\u00a0economy<\/a> could be cracking under the weight of high interest rates meant to\u00a0whip inflation<\/a>.<\/p>\n The S&P 500 was sinking by 2.5% in midday trading, potentially on pace for its worst day since 2022, and on track for its first\u00a0back-to-back loss<\/a>\u00a0of more than 1% since April. The Dow<\/a> Jones Industrial Average was down 954 points, or 2.4%, as of 11:30 a.m. Eastern time, and the Nasdaq<\/a> composite was 2.9% lower as a sell-off for stocks whipped all the way around the world back to Wall Street.<\/p>\n A report showing hiring by U.S. employers slowed last month by much more than economists expected sent fear through markets, with both stocks and bond yields dropping sharply. It followed a batch of weaker-than-expected reports on the economy from a day earlier, including a worsening for U.S. manufacturing activity, which has been one of the areas hurt most by high rates.<\/p>\n It was just\u00a0a couple days ago<\/a>\u00a0that U.S. stock indexes jumped to their best day in months after Fed Chair Jerome Powell gave the clearest indication yet that inflation has slowed enough for cuts to rates to begin in September.<\/p>\n Now, worries are rising the Fed may have kept its main interest rate at a two-decade high for too long. A rate cut would make it easier for U.S. households and companies to borrow money and boost the economy, but it could take months to a year for the full effects to filter through.<\/p>\n \u201cThe Fed is seizing defeat from the jaws of victory,\u201d said Brian Jacobsen, chief economist at Annex Wealth Management. \u201cEconomic momentum has slowed so much that a rate cut in September will be too little and too late. They\u2019ll have to do something bigger than\u201d the traditional cut of a quarter of a percentage point \u201dto avert a recession.\u201d<\/p>\n Traders are now betting on a better than three-in-four chance that the Fed will cut its main interest rate by half a percentage point in September, according to data from CME Group<\/a>. That\u2019s even though Powell said Wednesday that such a deep reduction is \u201cnot something we\u2019re thinking about right now.\u201d<\/p>\n U.S. stocks had already appeared to be headed for losses before the disappointing jobs report thudded onto Wall Street.<\/p>\n Several big technology companies turned in underwhelming profit reports, which continued a mostly dispiriting run that began last week with results from\u00a0Tesla<\/a>\u00a0and\u00a0Alphabet<\/a>.<\/p>\n Amazon<\/a> fell 9.9% after reporting\u00a0weaker revenue for the latest quarter than expected<\/a>. The retail and tech giant also gave a forecast for operating profit for the summer that fell short of analysts\u2019 expectations.<\/p>\n Intel<\/a> dropped even more, 26.5%, after the chip company\u2019s profit for the latest quarter\u00a0fell well short of forecasts<\/a>. It also suspended its dividend payment and said it expects to lose money in the third quarter, when analysts were expecting a profit.<\/p>\n Apple<\/a> was holding steadier, up 2%, after reporting\u00a0better profit and revenue than expected<\/a>.<\/p>\n Apple and a handful of other Big Tech stocks known as the \u201c\u00a0Magnificent Seven<\/a>\u00a0\u201d have been the main reasons the S&P 500 has set dozens of records this year, in part on a\u00a0frenzy around artificial-intelligence<\/a>\u00a0technology. But their momentum turned last month on worries investors had taken their prices too high and expectations for future growth are too difficult to meet.<\/p>\n Friday\u2019s losses for tech stocks dragged the Nasdaq composite down by more than 10% from its record set in the middle of last month.<\/p>\n Helpfully for Wall Street, other areas of the stock market beaten down by high interest rates had been rebounding at the same time tech stocks were regressing, particularly smaller companies. But they tumbled too Friday on worries that a fragile economy could undercut their profits.<\/p>\n The Russell 2000 index of smaller stocks dropped 4.2%, more than the rest of the market.<\/p>\n In the bond market, Treasury yields fell sharply as traders raised their expectations for how deeply the Federal Reserve would have to cut interest rates. The yield on the 10-year Treasury fell to 3.81% from 3.98% late Thursday and from 4.70% in April.<\/p>\n Amid all the fear, some voices on Wall Street were still advising caution.<\/p>\n \u201cWhile worries of a policy mistake are rising, one negative miss shouldn\u2019t lead to overreaction,\u201d according to Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors.<\/p>\n She points out the U.S. economy is still growing, and inflation is still slowing. The S&P 500, meanwhile, isn\u2019t far off its record set two weeks ago. \u201cEquities selling off should be seen as a normal reaction, especially considering the high valuations in many pockets of the market. It\u2019s a good reminder for investors to focus on the earnings of companies going forward.\u201d<\/p>\n In stock markets abroad, Japan\u2019s Nikkei 225 dropped 5.8%. It\u2019s been struggling since the Bank of Japan raised its\u00a0benchmark interest rate<\/a>\u00a0on Wednesday. The hike pushed the value of the Japanese yen higher against the U.S. dollar, potentially hurting profits for exporters and deflating a boom in tourism.<\/p>\n Chinese stocks fell week as investors registered disappointment with the\u00a0government\u2019s latest efforts<\/a>\u00a0to spur growth through various piecemeal measures, instead of hoped-for infusions of broader stimulus, while stock indexes dropped by more than 1% across much of Europe.<\/p>\n Commodity prices have also had a rough ride this week. Oil prices surged after the killings of leaders of\u00a0Hamas and Hezbollah<\/a>\u00a0that fueled fears that a widening conflict in the Middle East could disrupt the flow of crude.<\/p>\n But prices fell back Thursday and Friday on worries that a weakening economy will burn less fuel. A barrel of benchmark U.S. crude tumbled 3.7% Friday to bring its loss for the week to 4.8%.<\/p>\n<\/div>\n\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n