4:15pm: Winning week
Wall Street wrapped up the week on a strong note Friday, with all three major averages climbing as investors cheered a softer-than-expected US jobs report and scaled back expectations for further Federal Reserve rate hikes.
The Dow gained 152 points, or 0.3%, to close at 54,037. The S&P 500 advanced 48 points, or 0.6%, to finish at 7,758, while the Nasdaq jumped 342 points, or 1.3%, ending the session at 26,691.
The gains capped off a winning week for the major indexes. The Nasdaq led the charge with a roughly 5% weekly gain, while the S&P 500 climbed nearly 3.5% and the Dow also finished higher.
Stocks rallied after the July nonfarm payrolls report showed the US economy unexpectedly lost 23,000 jobs, sharply missing economist expectations for an 83,000 increase. Investors viewed the weaker labor market data as a sign that the Federal Reserve may have less urgency to raise interest rates at its September meeting.
Treasury yields moved sharply lower following the report, adding further support to equities, particularly growth and technology stocks that tend to benefit from lower borrowing costs.
Looking ahead, investors will turn their attention to next week’s inflation data, with expectations that July consumer price pressures remained relatively contained, although some inflationary pressures could remain concentrated in specific sectors. Retail sales are also expected to show modest growth, while the housing market continues to face pressure from elevated mortgage rates.
The earnings calendar will remain active, with results expected from companies including Applied Materials, Cisco, Barrick Mining Corporation and Rocket Lab.
3:45pm: Proactive news headlines
- American Resources Corp (NASDAQ:AREC) said its ReElement Technologies affiliate successfully commissioned its first commercial-scale germanium production column, marking a key milestone in scaling its chromatography-based refining process.
- RBC Capital Markets initiated coverage of Pan African Resources PLC (LSE:PAF, OTCQX:PAFRY, JSE:PAN) with an Outperform rating and a 155p price target, citing expected production growth and rising EBITDA through the end of the decade.
- Standard Uranium Ltd (TSX-V:STND, OTCQB:STTDF, FRA:9SU0) secured a C$3 million strategic investment through a non-brokered private placement with a Southeast Asian conglomerate, which will acquire a nearly 20% stake in the company.
2:40pm: Market movers
- Unity Software Inc (NYSE:U) shares rose after Wedbush and Bank of America lifted their outlooks, citing strong growth in its Vector advertising platform and further upside from runtime data integration.
- Atlassian (NASDAQ:TEAM) shares surged more than 30% after the software company reported better-than-expected fourth-quarter revenue and cloud growth and issued a stronger fiscal 2027 cloud revenue outlook.
- Lyft Inc (NASDAQ:LYFT) shares gained after the ride-hailing company reported second-quarter revenue and gross bookings that beat expectations alongside continued growth in riders and trips.
- Canopy Growth Corporation (TSX:WEED, NYSE:CGC) shares climbed after the cannabis company posted stronger-than-expected first-quarter revenue growth and narrowed its adjusted EBITDA loss.
- Under Armour Inc (NYSE:UA) shares fell after the apparel maker reported an earnings beat but slightly missed revenue expectations and issued a more cautious full-year outlook.
- Oklo shares jumped despite reporting a wider-than-expected quarterly loss as revenue significantly exceeded analyst estimates.
- Twilio shares soared after the communications software company delivered second-quarter earnings and revenue that topped Wall Street expectations.
- Trade Desk Inc (NASDAQ:TTD) shares plunged after the digital advertising company missed second-quarter revenue and earnings estimates and issued weaker-than-expected third-quarter guidance.
- Cloudflare shares were set to rally after the cloud connectivity company reported second-quarter results that exceeded expectations and provided stronger-than-expected guidance for the current quarter.
1:30pm: 'Impossible to justify' rate hike
deVere Group CEO Nigel Green says the scale of the jobs miss removes almost any realistic path to a September rate increase.
"A jobs report this weak, layered on top of two months of substantial downward revisions, makes a hike next month almost impossible to justify.
"Three consecutive months of softening data is not noise. It’s a labour market losing momentum in a way policymakers cannot responsibly ignore."
The deVere CEO added that markets are already repricing accordingly.
"Gold was rallying into this release, and reports of weak hiring will likely extend that move further.
“When a currency loses support at the same time a safe-haven asset gains it, that combination tells you plainly which way sentiment has shifted."
12:05pm: Atlassian (NASDAQ:TEAM) surges
Atlassian (NASDAQ:TEAM) (Atlassian (NASDAQ:TEAM)) shares jumped more than 30% on Friday after the software maker posted fourth-quarter revenue and cloud growth that topped analyst estimates and issued a stronger-than-expected cloud revenue outlook for fiscal 2027.
Revenue for the quarter came in at $1.8 billion, up 28% from a year earlier and above the $1.66 billion analysts had expected.
Cloud revenue rose 31% to $1.2 billion, while subscription annual recurring revenue climbed 23% to $6.6 billion. Remaining performance obligations, a measure of contracted future revenue, grew 44% to $4.8 billion.
Jefferies raised its price target on the stock to $200, citing accelerating backlog growth and what it called a cheap valuation relative to peers. The brokerage pointed to cross-selling from Atlassian (NASDAQ:TEAM)'s Service Collection and Teamwork Collection products, along with seat expansion within Jira and Confluence, as drivers of the beat.
11:00am: Mixed signals
Analysts largely viewed the weaker-than-expected July jobs report as reinforcing expectations that the Federal Reserve will keep interest rates unchanged, despite a surprise decline in nonfarm payrolls.
Jamie Cox, managing partner at Harris Financial Group, said the loss of 23,000 jobs validated the Fed's decision not to raise rates in July. “While I expect this weakness to be temporary, the softening labor market remains one of my biggest concerns for the economy,” Cox said.
Jeffrey Roach, chief economist at LPL Financial, described the labor market slowdown as "orderly," noting that labor stress indicators remain historically low.
“Today’s jobs report is likely to support risk appetite,” Roach said. “However, the decline in the unemployment rate will complicate the Fed’s decision process because the economy appears to be at full employment.”
Bill Adams, chief US economist at Fifth Third Commercial Bank, said the report reflects slower job growth but a labor market that continues to tighten because of a shrinking labor force.
“The Fed will see the unemployment rate’s further decline in July as a reason to look past the month’s weak payrolls print and continue to focus on controlling inflation,” Adams said.
“The July CPI release will influence the Fed’s September decision more than the month’s jobs report.”
10:00am: Jobs surprise lifts markets
Wall Street opened higher on Friday after a surprisingly weak July jobs report reinforced expectations that the Federal Reserve may be nearing the end of its tightening cycle. The Nasdaq climbed 0.7%, while the S&P 500 gained 0.3% and the Dow Jones Industrial Average added 0.2%.
The July employment report showed the US economy lost 23,000 jobs, far below expectations for an increase of 80,000, signaling that the labor market may be losing momentum. Investors viewed the data as reducing the likelihood of additional interest rate hikes this year, lifting equities at the open.
Charlie Ripley, Senior Investment Strategist at Allianz Investment Management, said the sharp payroll miss shifts the market's focus back to the employment side of the Federal Reserve's mandate. "This report squarely puts the spotlight back on the employment side of the Fed's mandate," Ripley said. "The Fed is unlikely to ignore this signal, and, if anything, it raises the bar for any Fed rate increases heading into the fall."
Among individual stocks, Trade Desk plunged after the digital advertising company reported weaker-than-expected earnings and revenue and issued disappointing guidance. Meta Platforms was also in focus after being ordered to pay nearly $1 billion over claims related to harm caused to children through social media.
Looking ahead, markets will also keep an eye on June consumer credit data for additional clues on the strength of consumer spending.
9:00am: Payrolls unexpectedly contract in July
The US labor market unexpectedly weakened in July as nonfarm payrolls fell by 23,000, marking the first monthly decline in employment in years and missing expectations for an 80,000-job gain. Private payrolls increased by just 30,000, well below forecasts of 82,000, while May and June payrolls were revised down by a combined 103,000 jobs.
The unemployment rate edged down to 4.1% from an expected 4.2%, although average hourly earnings rose just 0.1% month-over-month and 3.2% year-over-year, both below forecasts. The labor force participation rate slipped to 61.4% from an expected 61.6%, while the average workweek held steady at 34.3 hours.
The weaker-than-expected employment report prompted investors to sharply scale back expectations for a Federal Reserve interest rate hike in September, with market-implied odds falling significantly following the release.
Payrolls day
Good morning, and welcome to payrolls day, the Friday each month when Wall Street stops talking over itself to stare at one spreadsheet.
US stock futures nudged higher ahead of the July jobs report, due at 8.30 am eastern time.
Dow futures were essentially flat, the S&P 500 added 0.2% and the Nasdaq-100 rose 0.5%, which counts as enthusiasm after Thursday's muddle.
Economists surveyed by Bloomberg expect 80,000 positions were added last month, with unemployment parked at 4.2%.
Not thrilling, but the labour market has been quietly stable while everyone shouted about inflation and artificial intelligence spending.
The Federal Reserve will be reading closely as it weighs its next move on interest rates.
Oil, meanwhile, kept climbing because the US and Iran still have not shaken hands.
An Iranian semi-official news agency reported explosions in the Strait of Hormuz on Thursday night, blamed on the interception of "hostile targets".
Iran and Oman are still working towards reopening the waterway, though the latest word is US and Israeli ships need not apply.
What all that does to inflation expectations is Friday's other question, with the New York Fed's one-year survey also landing.
Earnings are thin: Vistra, Oklo, Under Armour and Wendy's.