If the last week of July was tough for the faint of heart on Wall Street, the first full week of August turned into a party.
Bad news became good news.
What did the trick? A weaker-than-expected job report boosted expectations that the Federal Reserve will keep interest rates on hold in September, putting the finishing touch on a strong week for Wall Street.
The labor market cracks
The U.S. economy unexpectedly shed 23,000 nonfarm payrolls in July, far below the 83,000 gain economists had forecast.
Yet the weakness was concentrated in government hiring, where payrolls fell by 53,000. Private-sector employment proved more resilient, adding 30,000 jobs, though that still came in well below the 78,000 economists had expected.
The unemployment rate ticked down to 4.1%, but
only because the labor force participation rate slid to 61.4%, the lowest in over five years.
The bigger blow came in the revisions: May and June were cut by a combined 103,000, leaving the three-month picture materially weaker than the market had believed.
The average hourly wage rose just 3.1% year-over-year, the slowest pace since 2021.
Stocks celebrate, gold steals she show
By midday Friday, the S&P 500 had climbed more than 3.5% for the week, its strongest performance since April, while reaching fresh record highs.
The Dow Jones Industrial Average gained about 3% during the week, also setting new records, and the Nasdaq 100 rallied nearly 5%.
The biggest winner, however, wasn't a stock.
Gold surged more than 7% during the week — its strongest rally since January — as Treasury yields and the U.S. dollar retreated on expectations of a more patient Federal Reserve.
Palantir’s blowout quarter
Palantir Technologies Inc. delivered what CEO Alex Karp called an "otherworldly" quarter Monday: Second-quarter revenue jumped 93% year-over-year to $1.94 billion, U.S. commercial revenue soared 149%, and full-year guidance was raised to $8.15 billion.
Shares surged 29.5% Tuesday, narrowly missing the stock's best day ever.
All eyes turn to inflation
Attention now shifts to next week's July consumer price index report.
Economists expect the report to show that headline inflation eased to 3.4% from 3.5% last month, while core inflation slowed to 2.5% from 2.6%. Another benign inflation reading would reinforce expectations that the Fed will keep interest rates steady.
Investors also will watch Applied Materials Inc., one of 2026's best-performing semiconductor stocks, when it reports earnings next Thursday after the closing bell.
Benzinga is a financial news and data company headquartered in Detroit.
This article originally appeared on Detroit Free Press: In unexpected twist, stocks rise after unexpected jobs report
