Last week, America learned payrolls shrank 23,000 in July (versus the 83,000 gain economists expected) and revisions to May and June data erased another 103,000 jobs. Investors heard the news and piled money into stocks anyway, with the confidence of the guy who insists gas-station sushi is safe.
- The S&P 500 Index rose 3.6% for the week and ended at a record high, while the Nasdaq gained 5.2%. Technology led; energy and utilities lagged. Growth beat value and large caps outperformed small caps.
- Rates and commodities finished the week moving in a way that suggested the bond market actually read the jobs report. Treasury yields fell across the yield curve, sending the Bloomberg U.S. Aggregate Bond Index up 0.6%.
- Meanwhile, commodities weren't exactly screaming inflation panic. Gold rose 2.4%, benefiting from lower yields and renewed hopes for easier monetary policy. Oil slipped to about $77 a barrel and copper was essentially unchanged.
- Nonfarm payrolls fell 23,000 in July and have now averaged about 20,000 a month over the past three months. The consumer-facing economy is where the hiring stopped first; the factory floor is the exception (for now). Leisure and hospitality shed 40,000 jobs in July and food services another 26,000, while manufacturing added 30,000. And keep an eye on revisions: initial payroll estimates are built on incomplete survey data; when the economy softens, the stragglers tend to be the weak reports. When every correction points the same way, it’s not noise, it’s the signal.
- Unemployment fell from 4.2% to 4.1% in July, but participation dropped to 61.4%, so the rate improved the way a class average does when half the students drop the course. Fewer people working and a lower unemployment rate is what happens when job seekers give up rather than get hired.
- Initial jobless claims for the week ending August 1 held at 199,000, keeping the four-week average at its lowest since October 2022.
- The June Job Openings and Labor Turnover Survey showed openings fell to 178,000 to 7.36 million and the quits rate held at 2.0%. Health care openings fell 147,000, which matters because it’s been the roommate covering everyone’s rent for the past two years, and now it wants to talk.
- 2Q26 productivity gained 1.4%, more than double the 0.6% economists expected, while unit labor costs rose just 1.3%. Strong productivity with tame labor costs is the Fed-friendliest combination in the report—although buried inside it, labor's share of income hit 52.9%, the lowest in a series dating back to 1947. Workers are doing more of the work, and labor is getting less of the credit.
- The Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) hit 55.6 in July, its highest reading since May 2022. Services PMI notched its 25th consecutive month of expansion. But both price indexes sit above 70—signaling cost pressures are still building in the pipeline.
- 2Q26 earnings season is winding down: 436 of the S&P 500's companies have reported, with 64 to go. Blended earnings growth (reported results plus estimates for those remaining) stands at 51.1% year over year. 85% of companies have beaten earnings estimates. The encouraging part: companies aren't just beating estimates by trimming expenses. Revenue is growing 15.2% and 75% of companies are exceeding sales forecasts. Customers are still showing up