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The U.S. Labor Department reported that nonfarm payrolls contracted by 23,000 in July, missing economists’ forecasts for an 80,000 increase by a wide margin. The unemployment rate stood at 4.1 percent according to the data. This unexpected softening in the labor market prompted traders to scale back their expectations for tighter monetary policy with LSEG money market data showing the probability of a September rate hike falling sharply.
Major indexes posted gains for the session putting them on track for their best weekly performance since April Reuters reported. The Dow Jones Industrial Average rose 0.17 percent to close at 53,976.97. The S&P 500 added 0.62 percent to end at 7,757.98 while the Nasdaq Composite surged 1.30 percent to 26,691.82.
Earnings momentum continued to support equities with 85 percent of S&P 500 companies beating estimates so far this season above the typical rate according to LSEG I/B/E/S data. Atlassian shares jumped more than 30 percent after the software firm exceeded quarterly expectations. However The Trade Desk tumbled over 20 percent following a disappointing forecast.
Edward Jones analyst Brian Therien noted that the report could keep the Fed on a path toward raising rates but with reduced urgency. He added that the precise timing would hinge on upcoming readings on inflation and employment. The comments came as the central bank now led by Chair Kevin Warsh continues to emphasize data-dependent decision making.
The weak jobs figure arrives amid a backdrop where inflation has remained above the Fed’s 2 percent target for several years a New York Times analysis found. Warsh who assumed the chairmanship in May 2026 has signaled limited tolerance for persistent price pressures according to Federal Reserve statements. This balance between labor market signals and inflation concerns is likely to shape policy in the coming months.
