U.S. Stocks Hit Record High Despite Weak Jobs Data

What happened

In July, U.S. nonfarm payrolls fell by 23,000, far below the expected gain of 80,000, and May and June figures were revised down to 63,000 and 20,000. Despite this, the S&P 500 rose 0.62% on August 7 to a record closing high. The CME FedWatch showed the probability of a September rate hike fell from 55% to 44% after the jobs report. The ISM Manufacturing Index for July rose 2.3 points to 55.6, the highest since May 2022.

Why it matters

The stock market sees weak employment as reducing the need for aggressive Fed rate hikes, easing pressure from high interest rates. Strong manufacturing data and tech earnings revisions also support growth. However, the key risk is oil: if rising oil prices combine with weakening jobs, stagflation concerns could return and hurt stocks.