July jobs miss flips Fed bets, sends S&P 500 and Nasdaq to weekly highs
A weaker-than-expected July payrolls report reset Federal Reserve rate expectations Friday and lifted U.S. equities on the session. The S&P 500 gained 0.3%, the Nasdaq Composite rose 0.9%, and the Dow Jones Industrial Average closed up 67 points, or 0.1%. The September Fed policy meeting is the next fixed milestone for traders now repricing the path of rates.
Key takeaways
- A weaker-than-expected July jobs report showed the U.S. economy shed 23,000 jobs versus a forecast 83,000 gain, flipping Fed rate-hike bets on Friday.
- The S&P 500 gained 0.3%, the Nasdaq Composite rose 0.9%, and the Dow rose 67 points (0.1%) on the session.
- Fed funds futures now show most traders expecting the benchmark to hold at 3.50% to 3.75% in September, reversing Thursday's 55% odds of a quarter-point hike.
- The unemployment rate edged down to 4.1% from 4.2% while labor force participation fell to a more-than-five-year low.
- Atlassian surged 34%, Airbnb climbed 12%, and Cloudflare gained 10% on strong earnings and outlooks.
A weaker-than-expected July payrolls report reset Federal Reserve rate expectations Friday and lifted U.S. equities on the session. The S&P 500 gained 0.3%, the Nasdaq Composite rose 0.9%, and the Dow Jones Industrial Average closed up 67 points, or 0.1%. The September Fed policy meeting is the next fixed milestone for traders now repricing the path of rates.
What the print showed
The economy shed 23,000 jobs in July against an 83,000 gain that economists polled by Dow Jones had forecast. Revisions to May and June payrolls, per The Wall Street Journal, showed 103,000 fewer positions added in those months than originally counted. The unemployment rate edged down to 4.1% from 4.2%, while the labor force participation rate fell to a more-than-five-year low.
The rate reset
Fed funds futures now show most traders expecting the benchmark to hold at 3.50% to 3.75% in September, CME FedWatch data show. That is a sharp reversal from Thursday, when futures assigned a 55% probability to a quarter-point increase. The 10-year Treasury yield dropped to 4.632% after the release.
Nuveen Chief Investment Officer Saira Malik, on CNBC's "Squawk Box," said the two biggest market concerns remain yields and inflation, and that the softer number works against the Fed's narrative for raising rates.
Stocks and the week's tape
The session capped a strong week. The S&P 500 advanced more than 3% across the five days. The Nasdaq is tracking toward its best weekly showing since April, up more than 4%. Chip shares contributed: the iShares Semiconductor ETF gained north of 7% for the week.
Three names moved sharply on Friday. Atlassian surged 34% after fourth-quarter adjusted earnings and revenue beat expectations, with guidance above forecasts. Cloudflare gained 10% following an upbeat full-year outlook. Airbnb climbed 12% after quarterly results exceeded Wall Street's bar on both revenue and earnings.
Oil retreated as traders monitored potential progress in U.S.-Iran talks over the Strait of Hormuz. West Texas Intermediate futures fell 0.3% to near $77 a barrel; Brent crude dropped 0.6% to about $82.
What to watch: the September Federal Reserve meeting, where CME FedWatch pricing now places a hold on the 3.50% to 3.75% benchmark as the consensus call.
Related reading
Filed by the newsroom of MarketPR on August 7, 2026. Source: finance.yahoo.com. Indicative figures are not investment advice.