US stocks jump as employers unexpectedly cut 23,000 jobs, raising hopes that rate hikes can wait

NEW YORK — Stocks on Wall Street gained Friday and Treasury costs declined after the government said companies unexpectedly cut 23,000 jobs last month.

All major indices posted a second straight week of advances, with several setting new records. It is a good start to August after a number of poor months.

The S&P 500 climbed 47.68 points, or 0.6%, to 7,757.64. That surpassed its previous all-time high of 3,731. The benchmark index has been making a record run throughout the year.

The Dow Jones Industrial Average added 151.83 points, or 0.3%, to 54,036.93. That was just short of the record it established on Wednesday. The Nasdaq composite gained 342.26 points, or 1.3 percent, to 26,690.62.

Big cap tech stocks did a lot of the heavy lifting for the broader market. They often carry the heaviest weights that decide the direction of the market. Nvidia climbed 2.3% and Broadcom advanced 1.7%.

The bond market responded more vigorously to the weaker signal on the jobs market, which can be regarded as giving the Federal Reserve more time before raising interest rates to battle inflation.

The 10-year Treasury yield dipped to 4.64% from 4.67% earlier before the jobs report. It was down as low as 4.60% before it bounced a bit.

The two-year Treasury yield, a better gage of expectations for Fed action on interest rates, dipped to 4.20% from 4.22% before the announcement. It fell to 4.15% and then crept back up.

“The stock market will likely cheer the dovish implications of the report, but investors should be wary of the future growth potential of an economy where less people are working,” Peter Graf, chief investment officer at Amova Asset Management Americas, wrote in a research note.

Overall, the study casts a gloomier outlook on the jobs market, which has been a brighter spot in the economy amid rising inflation and concerns about household spending. It also includes a change to the data for June and May that slashed a total 103,000 jobs from payrolls for those months.

Eyes on Fed's next move. The Fed has kept interest rates constant as inflation concerns have mounted due to rising oil prices from the U.S. conflict with Iran. Wall Street expecting at least one rate hike by year end, projection changes for next meeting Expectations for a rate cut in September have slipped to 42% from 55% on Thursday and 67% a week earlier, CME FedWatch said.

A worse jobs market might make things more difficult for the Fed, which needs to walk a tightrope between encouraging job growth and battling inflation. Higher interest rates can cool inflation by slowing down the economy. However, a weaker jobs market could become more fragile with higher interest rates as businesses could be unable to grow when borrowing costs more.

Interest rates lower can help spur investments, which is why businesses, and Wall Street, want them. This may help the labor market ease but also increase already stubborn inflation.

Next week, Wall Street will get several key inflation updates. The consumer price index, or CPI, which tracks expenditures for consumers, will be widely watched. Wall Street anticipates it will show inflation in July grew at a 3.4% pace, a small slowdown from the 3.5% gain in June. Inflation has stubbornly been above 3% for much of the year.

“The disappointing payrolls print today may relieve some of the pressure on the Fed to hike at its September meeting, but next week’s inflation data will likely still be the key,” Ellen Zentner, chief economist at Morgan Stanley Wealth Management, said in a research note.

The earnings story The jobs report arrives after a week dominated by business results and worries about the ongoing U.S. confrontation with Iran.

Corporate earnings are on track for their best gain since 2021 for the second quarter. Analysts estimate a 50% jump in profits overall, with over 90% of companies in the S&P 500 having reported. That has eased some Wall Street concerns about whether the huge gains for stocks in 2026 are justified. Those stock increases are supported by strong profitability.

Earnings were light as companies near the end of the latest round of reporting.

Airbnb soared 17.4% after the vacation-rental company said late Thursday that it beat analysts’ profit and revenue expectations for its latest quarter.

Oil prices climbed. Brent crude, the worldwide benchmark, increased 1.3% to $83.55 a barrel.

The hotter inflation has been driven by higher oil prices. At one time in the now five-month U.S. battle with Iran, prices hit $113 a barrel. That boosted the cost of gasoline and of shipping a variety of things. Both the U.S. and Iran have stated they are working on agreements that might reopen the Strait of Hormuz, thru which a fifth of the world’s oil and natural gas formerly passed.