The S&P 500 climbed to a fresh record close on Friday as investors viewed July’s unexpectedly weak jobs report as a sign that the Federal Reserve may have less reason to raise interest rates in the near term.
The broad-market index gained 0.62% to finish at a record 7,757.64. The Nasdaq Composite led the major averages, rising 1.3% to 26,690.62, while the Dow Jones Industrial Average added 151.83 points, or 0.28%, to close at 54,036.93.
All three major indexes recorded a second consecutive weekly gain. The S&P 500 advanced 3.6% for the week after breaking above 7,700 for the first time earlier in the period. The Nasdaq jumped 5.2%, helped by a strong rebound in semiconductor stocks, with the iShares Semiconductor ETF gaining more than 7%. The Dow rose nearly 3%. Each index posted its strongest weekly performance since April.
The July employment report showed that U.S. nonfarm payrolls unexpectedly declined by 23,000, compared with economists’ expectations for an increase of 83,000 jobs. The unemployment rate edged down to 4.1%, while labor-force participation fell to its lowest level in more than five years. Economists had expected the unemployment rate to remain at 4.2%.
The weaker labor-market data also changed expectations for the Fed’s next move. According to CME FedWatch, most fed funds futures traders now expect the central bank to keep its benchmark interest rate unchanged at 3.50%–3.75% at its September meeting. Just one day earlier, markets had assigned a 55% probability to a 25-basis-point rate hike.
Software stocks were among Friday’s strongest performers after recent earnings reports eased concerns about artificial intelligence disrupting the sector. Cloudflare gained more than 5% after providing a positive outlook for the full year and current quarter. Atlassian surged 35% after reporting better-than-expected fourth-quarter adjusted earnings and revenue and issuing upbeat guidance.
Airbnb also jumped 17% after the vacation-rental company reported stronger-than-expected quarterly results.
Oil prices edged higher as markets continued to watch for a possible agreement between the U.S. and Iran that could allow the Strait of Hormuz to reopen. Treasury Secretary Scott Bessent had indicated earlier in the week that a deal could potentially be reached soon.
September West Texas Intermediate crude futures rose 1.15% to settle at $78.18 a barrel, while Brent crude, the international benchmark, gained 1.29% to finish at $83.55 a barrel.
