Did the July jobs report show hiring or job losses?
Payrolls fell in July, they did not rise. Nonfarm payrolls dropped by 23,000, the first monthly decline in months and far below the roughly 83,000 jobs economists expected. The unemployment rate ticked down to 4.1 percent from 4.2 percent, but that came from a shrinking labor force rather than stronger hiring, since the participation rate fell to 61.4 percent, its lowest level in more than five years.
The BLS employment situation report put the July change at negative 23,000 against a consensus near 83,000, a miss of more than 100,000 jobs in either direction depending on which survey you compare it to.
How much were May and June payrolls revised?
The two prior months got weaker too. May's initial gain was cut by 66,000 to 63,000, and June's gain was cut by 37,000 to just 20,000. Combined, the two months came in 103,000 lower than first reported, continuing a string of downward payroll revisions that has run through most of 2026.
Those revisions come from the same BLS report and matter more than the headline print. A single month can be noisy. Three straight months revised the same direction is a trend.
What happened to wages in July?
Wage growth barely moved. Average hourly earnings rose 2 cents to $37.62, holding the year-over-year rate at 3.2 percent. That's modest by recent standards, and it gives the Fed room to argue labor-side inflation isn't accelerating even as the headline jobs number looks weak.
Production and nonsupervisory workers saw a similar pattern, per the BLS release: average hourly earnings of $32.40, up 4 cents on the month.
How did the S&P 500 respond to the weaker labor data?
Stocks read the miss as good news for rate policy, not a warning sign. The S&P 500 gained 3.6 percent for the week, its best since April, and closed Friday at a record 7,757.64. The Nasdaq Composite rose 5.2 percent on the week as chip stocks rebounded from a summer slump.
Earnings did some of the lifting too. Roughly 85 percent of S&P 500 companies beat estimates this season, above the four-quarter average of 80 percent, giving the rally a fundamentals leg alongside the rate-relief trade.
Which sectors led and lagged this week?
Technology carried the index and energy dragged on it. Tech gained 7.2 percent for the week, the best-performing sector, while energy fell 3.4 percent, the weakest, as oil gave back part of its Thursday spike once the Hormuz de-escalation narrative firmed back up into the weekend.
Is the Fed still on track to hike in September?
Markets aren't pricing a cut, they're pricing a hike. Despite the weak jobs report, CME FedWatch shows roughly a 61 to 62 percent probability of a 25 basis point hike at the September 16 meeting, with an 82 percent cumulative probability of a hike printing by that date. The Fed funds rate has held at 3.50%-3.75% since the July meeting, where three members dissented in favor of a hike rather than a cut.
That combination, soft jobs and hike odds rising, is the tension defining August: traders are betting sticky services inflation outweighs a cooling labor market in the Fed's reaction function.
What is the Fed's balance sheet doing?
It's still creeping higher, not shrinking. The Fed's balance sheet reached $6.749 trillion as of August 6, up from $6.738 trillion a week earlier. Quantitative tightening ended months ago, and routine reserve management purchases have nudged total holdings up rather than down since.
What's on the calendar for the week ahead?
Earnings season isn't finished, and two inflation prints are due. Berkshire Hathaway reports Monday, August 10, before the open. Cisco reports Wednesday, August 12, the same day July CPI prints at 8:30 AM ET. Applied Materials reports Thursday, August 13, alongside PPI. Retail sales close out the data week Friday, August 14, also at 8:30 AM ET.
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