New York, Aug 1 (AP) Stocks slumped in morning trading on Wall Street Friday and Treasury yields fell sharply after the government reported a sharp slowdown in hiring last month.

Markets are also reacting to the latest tariff news. President Donald Trump once again extended the date at which punishing import taxes will take effect for a long list of countries. The tariffs are now expected to take effect August 7 for countries that have yet to make a deal with the US.

The S&P 500 fell 1.5 per cent and is on track to close the week with a loss. The Dow Jones Industrial Average fell 599 points, or 1.4 per cent as of 9:44 am Eastern. The Nasdaq composite fell 2 per cent.

Worries on Wall Street about a weakening economy were heavily reinforced by the latest report on job growth in the US. Employers added just 73,000 jobs in July. That is sharply lower than economists expected. The Labour Department also reported that revisions shaved a stunning 2,58,000 jobs off May and June payrolls.

The surprisingly weak hiring numbers led investors to step up their expectations for an interest rate cut in September.

The yield on the 10-year Treasury fell to 4.24 per cent from 4.39 per cent just before the hiring report was released. The yield on the two-year Treasury, which more closely tracks expectations for Federal Reserve actions, plunged to 3.75 per cent from 3.94 per cent just prior to the report's release.

The market is betting that the Fed may finally have to act to cut interest rates in order help bolster a weak jobs market. It 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 fuelling inflation, which is hovering stubbornly above the central bank's 2 per cent target.

Wall Street is now betting that the Fed will cut rates at its September meeting. Traders see a 80 per cent chance of a quarter-point rate cut at that meeting, up from just under 38 per cent a day earlier.

Apple rose 0.3 per cent following an encouraging earnings report.

Stocks in Europe and Asia also fell. (AP) NPK NPK

Tariff extension prompts market turmoil as weak hiring data raises expectations of central bank rate cuts. The document reports a regulatory postponement of punitive import tariffs-extending the effective date to August 7 for countries without trade agreements-maintaining the threatened tariff framework as a contingent trade policy measure. It further explains that unexpectedly weak hiring data prompted markets to raise expectations of a central bank rate reduction, causing bond yields to fall and equity prices to decline, thereby linking trade policy adjustment and labor market weakness to increased market volatility and altered investor pricing of future monetary policy.