Stocks Settle Higher as a Weak Jobs Report Allays Rate Hike Fears

The S&P 500 Index ($SPX) (SPY) closed up +0.62% on Friday, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.28%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.19%.  September E-mini S&P futures (ESU26) rose +0.55%, and September E-mini Nasdaq futures (NQU26) rose +1.17%.

Stock indices settled higher on Friday amid strength in corporate earnings results and reduced Fed rate hike fears.  Stock indices found support on Friday as bond yields fell after US July nonfarm payrolls unexpectedly declined and average hourly earnings rose less than expected, bolstering speculation that the Fed won’t be forced to raise interest rates any time soon.  The 10-year T-note yield fell -3 bp to 4.65%.  The payroll report cut the chances of a Fed rate hike at next month’s FOMC meeting to 44% from 58% before the report.

Atlassian surged more than +36% to lead software stocks higher today after forecasting stronger-than-expected Q1 revenue.  Cybersecurity stocks also rallied on Friday, led by a 4% jump in Cloudflare after it reported better-than-expected quarterly earnings. In addition, chipmakers received support on Friday as Microchip Technology rallied more than +13% after forecasting stronger-than-expected net sales for next quarter. 

US July nonfarm payrolls unexpectedly fell by -23,000, weaker than expectations of an +80,000 increase and the first decline in 5 months. June payrolls were revised downward to show a +20,000 increase from the previously reported +57,000.  The July unemployment rate unexpectedly fell -0.1 to a 13-month low of 4.1%, showing a stronger labor market than expectations of no change at 4.2%.

US July average hourly earnings rose +0.1% m/m and +3.2% y/y, weaker than expectations of +0.3% m/m and +3.5% y/y.

US June consumer credit rose $14.173 billion, stronger than expectations of $11.850 billion.

Thursday evening, St. Louis Fed President Alberto Musalem said policymakers cannot afford to tolerate higher inflation and "it is crucial that monetary policy put a meaningful restraint on underlying inflation, rather than tolerating somewhat higher inflation today to pursue productivity growth tomorrow."

Sep WTI crude oil prices (CLU26) rose more than +1%  on Friday as the markets await news of an Iran-Oman agreement to partially reopen the Strait of Hormuz.  A joint statement from the two countries is under review, and the route would remain active for two to four months, though the agreement does not mean a full reopening, according to Iranian officials.  Iran said that a normalization of the strait will depend on the US lifting its blockade on Iranian ports.

However, crude prices gave up their gains and turned lower Friday afternoon in post-market trading after Reuters reported that the US will lift its blockade of Iranian ports once a deal to reopen shipping through the Strait of Hormuz is announced. 

The Wall Street Journal reported on Friday that Arab negotiators are concerned that Iran's diplomats may not be able to guarantee compliance with any agreement reached, as Iran's lead negotiators are under pressure from hardline officials to eke out more explicit references to Iran's role in the strait and clearer benefits.  On Thursday, Iran's semi-official Fars news agency reported that vessels belonging to the US, Israel, or any other nation that has "caused damage" to Iran would be prohibited from the Strait of Hormuz under the proposed deal with Oman to reopen the waterway, which would restrict some oil exports from several Gulf States. 

The outlook for strong Q2 earnings is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1’s blowout earnings of +30%, which was more than double the +12% analysts had expected. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.  So far, earnings results have been positive, with 86% of the 440 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 44% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets settled mixed on Friday.  The Euro Stoxx 50 climbed to a new all-time high and closed up +0.33%.  China's Shanghai Composite rose to a 3-week high and closed up +1.02%.  Japan's Nikkei-225 Stock Average closed down -0.12%.

Interest Rates

September 10-year T-notes (ZNU6) closed up +4.5 ticks on Friday.  The 10-year T-note yield fell -2.4 bp to 4.654%.  T-note prices rose on Friday after the Fed-friendly July payroll report showed an unexpected decline in nonfarm payrolls and a smaller-than-expected increase in average hourly earnings, bolstering speculation that the Fed won’t be forced to raise interest rates any time soon.  T-notes fell back from their best level on Friday as stocks rallied, which curbed safe-haven demand for government debt securities.

European government bond yields moved lower on Friday.  The 10-year German bund yield fell -0.8 bp to 3.132%.  The 10-year UK gilt yield fell -1.6 bp to 4.921%.

German trade news was better than expected.  German June exports rose +0.9% m/m, stronger than expectations of +0.5% m/m.  Also, June imports rose +4.4% m/m, stronger than expectations of +2.0% m/m.

German June industrial production rose +0.2% m/m, right on expectations.

Markets are discounting an 85% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

Microchip Technology (MCHP) closed up more than +13% to lead chipmakers higher after forecasting Q2 net sales of $1.59 billion to $1.62 billion, well above the consensus of $1.56 billion.  Also, Qualcomm (QCOM) closed up more than +4%, and Marvell Technology (MRVL), NXP Semiconductors NV (NXPI), and Analog Devices (ADI) closed up more than +3%.  In addition, Nvidia (NVDA), Applied Materials (AMAT), ASML Holding NV (ASML), KLA Corp (KLAC), and Texas Instruments (TXN) closed up more than +2%.

Atlassian (TEAM) closed up more than +35% to lead software stocks higher after forecasting stronger-than-expected Q1 revenue. Also, Palantir Technologies (PLTR) closed up more than +10% and ServiceNow (NOW) closed up more than +6%.  In addition, Workday (WDAY) closed up more than +5%, and Salesforce (CRM) closed up more than +3% to lead gainers in the Dow Jones industrials. Finally, Oracle (ORCL), Datadog (DDOG), and Autodesk (ADSK) closed up more than +2%, and Intuit (INTU) and Adobe Systems (ADBE) closed up more than +1%. 

Mining stocks rallied on Friday amid the surge in gold and silver prices.  Coeur Mining (CDE) closed up more than +10%, and Anglogold Ashanti (AU) closed up more than +9%.  Also, Newmont Corp (NEM) closed up more than +7%, and Hecla Mining (HL) closed up more than +6%.  In addition, Barrick Mining (B) closed up more than +5%, Southern Copper (SCCO) closed up more than +3%, and Freeport McMoRan (FCX) closed up more than +2%.

Cybersecurity stocks are rallying today, led by a +5% jump in Cloudflare (NET) after it reported better-than-expected quarterly earnings. Also, Zscaler (ZS), Okta (OKTA), and CrowdStrike Holdings (CRWD) closed up more than +3%, and Palo Alto Networks (PANW) closed up more than +1%. 

Doximity (DOCS) closed up more than +31% after raising its 2027 revenue forecast to $671 million to $681 million from a previous forecast of $664 million to $676 million, stronger than the consensus of $672.8 million.

Twilio (TWLO) closed up more than +24% after boosting its full-year adjusted operating income forecast to $1.14 billion to $1.16 billion from a previous forecast of $1.04 billion to $1.06 billion, higher than the consensus of $1.10 billion. 

Natera (NTRA) closed up more than +20% after raising its full-year revenue forecast to $2.85 billion to $2.91 billion from a previous forecast of $2.74 billion to $2.82 billion, stronger than the consensus of $2.80 billion.

Airbnb (ABNB) closed up more than +17% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q2 revenue of $3.61 billion, better than the consensus of $3.58 billion, and said it now expects full-year revenue growth to improve to “at least mid-teens,” up from previous expectations for “low- to mid-teens.” 

Maplebear (CART) closed up more than +10% after reporting Q2 revenue of $1.04 billion, better than the consensus of $1.03 billion, and forecasting Q3 gross transaction value of $10.30 billion to $10.55 billion, above the consensus of $10.27 billion.

Trade Desk (TTD) closed down more than -21% to lead losers in the S&P 500 after reporting Q2 revenue of $715 million, weaker than the consensus of $752.4 million, and forecasting Q3 revenue of $650 million, well below the consensus of $808.4 million. 

Sweetgreen (SG) closed down more than -8% after cutting its full-year outlook and warning that diners are less willing to eat freshly prepared foods during the cyclospora outbreak. 

ResMed (RMD) closed down more than -5% after reporting Q4 adjusted gross margin of 62.3%, below the consensus of 62.7%. 

Monster Beverage (MNST) closed down more than -4% after reporting Q2 operating expenses of $$679.2 million, well above the consensus of $596.3 million. 

Fiserv (FISV) closed down more than -3% as analysts cut the price target on the stock by an average of 9.8% since the company reported earnings on Thursday. 

Earnings Reports (8/10/2026)

AAON Inc (AAON), AECOM (ACM), Amentum Holdings Inc (AMTM), AST SpaceMobile Inc (ASTS), Axsome Therapeutics Inc (AXSM), Bridgebio Pharma Inc (BBIO), Ferguson Enterprises Inc (FERG), JBS NV (JBS), Medical Properties Trust Inc (MPT), NIQ Global Intelligence Plc (NIQ), Rocket Lab Corp (RKLB), Simon Property Group Inc (SPG).