TLDR
- The Nasdaq gained 5% for the week, the S&P 500 rose nearly 3.5%
- The US economy lost 23,000 jobs in July, well below the 80,000 expected
- Unemployment dipped slightly to 4.1% from 4.2%
- Odds of a September Fed rate hike fell to 42%, down from 55%
- Attention now shifts to the July CPI report due August 12
US stocks finished higher on Friday, capping their best week since April, after a weaker-than-expected jobs report cooled fears of another Federal Reserve rate hike.
The Dow Jones Industrial Average rose 151 points, or 0.3%. The S&P 500 gained 0.6%, and the Nasdaq climbed 1.3% on the day.
For the week, the gains were larger. The Nasdaq jumped 5%, and the S&P 500 rose nearly 3.5%. All three major indexes posted winning weeks.
The catalyst was the July jobs report, released Friday morning by the Labor Department. The US economy lost 23,000 nonfarm payroll jobs last month. Economists had expected a gain of 80,000.
BREAKING: The US economy unexpectedly loses -23,000 jobs in July, well below expectations of +85,000.
The unemployment rate fell to 4.1%, below expectations of 4.2%.
June's jobs number was also revised down by -37,000 jobs.
This marks the 3rd biggest monthly job loss since the…
— The Kobeissi Letter (@KobeissiLetter) August 7, 2026
The unemployment rate dipped to 4.1% from 4.2%, a small move that did little to change the overall picture of a softening labor market.
Bond Market Rallies on Weak Jobs Data
Bond markets reacted quickly to the data. The yield on the 2-year Treasury note fell 4.2% for the week, its biggest one-week drop since June. The 10-year yield fell below 4.66%.
Bond prices move opposite to yields, so falling yields meant a bond market rally. Stocks followed that move higher.
David Rosenberg of Rosenberg Research said the report was “bond-bullish” and argued he could not see the case for a Fed rate hike in September or beyond.
According to the CME FedWatch Tool, odds of a September rate hike fell to 42%, down from 55% before the report. Traders now see a 24.8% chance that rates stay flat for the rest of the year, up from 15.5% the day before.
All Eyes on CPI Next Week
With the jobs report now in the books, investors are turning their focus to inflation data. The Consumer Price Index for July is due on August 12, followed by the Producer Price Index on August 13.
Christopher Shaffer of Talaria Capital Management said the jobs report puts “100% of the focus on CPI.”
Earnings season is winding down, but results from Super Micro Computer, Applied Materials, and Cisco Systems are still on the calendar and will be watched.
On the oil front, prices slipped Friday as uncertainty remained over the US-Iran situation. Iran and Oman are still working toward a deal to reopen the Strait of Hormuz, with Iran reportedly seeking to block US and Israeli ships from using the waterway.
The next major market test comes Wednesday, August 12, when the CPI report lands.
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