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The S&P 500 fell 1.2%. The decline marks a sharp shift for the index, which hasn't fallen by more than 1% since June. It is also on track for a weekly loss following last week's record-setting streak.

The Dow Jones Industrial Average fell 451 points, or 1% as of 12:01 p.m. Eastern. The Nasdaq composite fell 1.6%.

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.

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% from 4.39% just before the hiring report was released. That' a big move for the bond market. The yield on the two-year Treasury, which more closely tracks expectations for actions, plunged to 3.73% from 3.94% 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 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.

Wall Street is now betting that the Fed will cut rates at its September meeting. Traders see a 80.9% chance of a quarter-point rate cut at that meeting, up from just under 38% a day earlier.

The again at its most recent meeting this week. Fed Chair Jerome 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 shift in the on-again-off-again policy gives 66 countries, the European Union, Taiwan and the Falkland islands another seven days, instead of taking effect on Friday.

Companies have been warning investors that the policy, with current and proposed tariffs, 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 fell 7.7%, despite reporting encouraging profit and sales for its most recent quarter. Technology behemoth fell 1.8% after also beating Wall Street’s profit and revenue forecasts. Both companies face tougher operating conditions because of tariffs.

Exxon Mobil fell 1.7% 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 in Europe and Asia also fell.