S&P closes at record high as soft jobs report eases rate-hike concerns

On August 7, US stocks rose sharply, pushing the S&P 500 index to a record high, as a weaker-than-expected jobs report eased concerns about the Federal Reserve raising interest rates at its upcoming September meeting. The Labor Department reported that nonfarm payrolls fell by 23,000 jobs in July, significantly below the estimated 80,000 jobs.

Initial job gains for two months were also revised downward, while the unemployment rate dropped to 4.1% in July, due to workers exiting the labor force. Market expectations for a rate hike from the Fed dropped to around 44%, down from 55% the previous day and 67% a week earlier. Progress towards a potential peace deal in the Iran conflict had helped lower oil prices, easing inflation worries that might have prompted a Fed rate hike and increased Treasury yields.

Strong earnings from various companies contributed to the positive market sentiment, with 85.1% of the 436 S&P 500 companies that reported results exceeding analyst expectations. With the final stretch of earnings season underway, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all achieved their biggest weekly percentage gains since mid-April.

Tom Siomades, a market economist, noted that despite the weak job numbers and potential inflation, the market was thriving due to exceptional earnings.