Weak U.S. data reaffirmed investor worries on Friday, fueling a sell-off in global equities and pressuring U.S. Treasury yields to multi-month lows.

Canada’s main stock index hit its lowest in over three weeks after a weak jobs reading in the United States added to recession fears, while higher gold prices lifted mining stocks.

At 10:39 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 559.54 points, or 2.46%, at 22,163.67, after it logged its worst day since February on Thursday.

The index was set to log its worst week since September 2023.

Data showed that U.S. job growth slowed more than expected in July, while the unemployment rate increased, heightening fears of a deteriorating labor market and a potential recession.

“(The data) is obviously signaling a slowdown in the US economy and, unfortunately, perhaps a recession. At least that’s how the markets are taking it,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.

Traders are now betting the Federal Reserve will cut interest rates by a big half percentage point in September following the data.

“I don’t think it’s the best idea. We want them to cut rates based on soft landing, not a hard landing. The market is fearing (this) over the past few days, so the big sell-off,” Small added.

In the Canada market, technology shares were the worst hit, with a 3.7% loss, tracking declines in the tech-heavy Nasdaq after downbeat quarterly reports from Intel and Amazon.com.

Healthcare stocks followed with a 3.7% decline, pulled down by a 9.2% decline in Bausch Health Companies after brokerages cut their PTs on the stock. It sank to the bottom of the TSX.

The index saw broader declines with the exception of materials, as they tracked the rise in gold prices, and utilities.

The yield on the two-year Canadian government bond fell to its lowest since August 2022, and is set to log its sixth session of declines.

Meanwhile in corporate news, Magna International fell 3.6% after the auto parts supplier missed analysts’ estimates for second-quarter results.

Globaly, richly valued technology firms took much of the pain, and an index of European bank stocks headed for its largest weekly decline in 17 months on soft earnings.

The VIX stock market volatility measure, dubbed Wall Street’s fear gauge, surged.

Investors turned to safe havens, including government debt and gold, as Friday’s U.S. jobs report

flagged unexpected economic weakness.

Markets were already rattled by downbeat earnings updates from Amazon and Intel and Thursday’s softer-than-expected U.S. U.S. factory activity survey and the monthly U.S. non-farm payrolls report, which showed job growth slumped to 114,000 new hires in July from 179,000 in June.

The weak data raised expectations of multiple rate cuts by the Federal Reserve this year, which just this week opted to keep rates unchanged.

“The jobs data are signaling substantial further progress that the Federal Reserve made a policy error by not reducing the Fed Funds rate this week,” said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.

“It’s very possible the Fed alters its inter-meeting communications on the balance of risks to remove all doubt all a September rate cut. “

With thin summer trading likely exaggerating moves, a slump that began in Asia with a 5.8% drop for Japan’s Nikkei, its biggest daily fall since March 2020 during the COVID-19 crisis, rippled through Europe and headed for Wall Street.

MSCI’s global stock gauge MSCI’s gauge of stocks across the globe fell 2.26% to 785.26.

The Dow Jones Industrial Average fell 569.93 points, or 1.41%, to 39,778.04, the S&P 500 lost 119.44 points, or 2.19%, to 5,327.24 and the Nasdaq Composite lost 560.79 points, or 3.26%, to 16,633.36.

The STOXX 600 index fell 2.42%, while Europe’s broad FTSEurofirst 300 index fell 49.58 points, or 2.44%

Emerging market stocks fell 23.92 points, or 2.20%, to 1,063.88. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.27% lower 2.27%, at 554.93.

Japan’s Nikkei fell 2,216.63 points, or 5.81%, to 35,909.70.

The Fed has kept benchmark borrowing costs at a 23-year high of 5.25%-5.50% for a year, and some analysts believe the world’s most influential central bank may have kept monetary policy tight for too long, risking a recession.

Money markets on Friday rushed to price a 70% chance of the Fed, which was already widely expected to cut rates from September, implementing a jumbo 50 basis points cut next month to insure against a downturn.

The “employment report flashes a warning signal that this economy does have the ability to turn rather quickly,” said Charlie Ripley, Senior Investment Strategist for Allianz Investment Management in Minneapolis.

“Ultimately, today’s employment data should embolden the committee to cut policy by more than 25 basis points at the next meeting.”

Shares in U.S. chipmaker Intel tumbled to a more than 11-year low after the group suspended its dividend and announced hefty job cuts alongside underwhelming earnings forecasts.

Artificial intelligence chipmaker Nvidia, one of the biggest contributors to the tech rally, dropped 4.2%

Nvidia, up more than 700% since January 2023, has left many asset managers with an outsized exposure to the fortunes of this single stock.

Safe-haven buying went full throttle, with government debt, gold and currencies traditionally all rallying. They are assets viewed as likely to hold value during market chaos.

The yield on benchmark U.S. 10-year notes fell 15 basis points to 3.828%, from 3.978%.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 24.6 basis points to 3.9187%, from 4.165%.

In foreign exchange markets, the yen added over 1%, extending a rapid bounceback as the Bank of Japan raising interest rates to levels unseen in 15 years.

In commodities, spot gold added 0.92% to $2,467.89 an ounce. U.S. gold futures gained 1.4% to $2,469.10 an ounce.

Oil prices, however, took a hit on the growth worries. U.S. crude lost 3.3% to $73.79 a barrel and Brent fell to $77.19 per barrel, down 2.93% on the day.

Both benchmarks have fallen around 10% over the past four weeks in the longest run of weekly losses this year.

Reuters and The Associated Press