US stocks jump as employers unexpectedly cut 23,000 jobs, raising hopes
that rate hikes can wait
[August 08, 2026] By
DAMIAN J. TROISE
NEW YORK (AP) — Stocks rose on Wall Street Friday and Treasury yields
fell after the government reported that employers unexpectedly cut
23,000 jobs last month.
Every major index notched a second straight week of gains, which
included several fresh records. It marks a strong start to August
following several weak months.
The S&P 500 rose 47.68 points, or 0.6%, to 7,757.64. That topped the
all-time high it set on Tuesday. The benchmark index has been on a
record run throughout the year.
The Dow Jones Industrial Average rose 151.83 points, or 0.3%, to
54,036.93. That put it just short of the record it set on Wednesday. The
Nasdaq composite rose 342.26 points, or 1.3%, to 26,690.62.
Technology stocks, with their big market values, did much of the heavy
lifting for the broader market. They are often the heaviest weights
determining the market’s direction. Nvidia jumped 2.3% and Broadcom rose
1.7%.
The bond market reacted more strongly to the weaker signal on the jobs
market, which can be seen as allowing the Federal Reserve more time
before raising interest rates to fight inflation.
The yield on the 10-year Treasury fell to 4.64% from 4.67% just prior to
the jobs update. It was as low as 4.60% before recovering a bit.
The yield on the two-year Treasury, which more closely tracks
expectations for Fed action on interest rates, fell to 4.20% from 4.22%
prior to the report's release. It was as low as 4.15% before edging back
up.
“Although the stock market is likely to welcome the dovish implications
of the report, investors should be wary of the future growth potential
of an economy where fewer people are working,” said Peter Graf, chief
investment officer at Amova Asset Management Americas, in a research
note.
Overall, the report paints a dimmer picture of the jobs market, which
has been one of the brighter areas of the economy amid rising inflation
and worries about household spending. It included a revision to the
figures for June and May that involved slashing a combined 103,000 jobs
from payrolls for those months.
Eyes on the Fed's next move
The Fed has been holding interest rates steady amid worries about hotter
inflation, fueled by a rise in oil prices because of the U.S. war with
Iran. Wall Street expects at least one rate increase by the end of the
year, with forecasts shifting for the next meeting. Expectations for a
rate cut in September are down to 42%, from 55% on Thursday and from 67%
a week ago, according to CME FedWatch.
A weakening jobs market could make matters more complicated for the Fed,
which has to balance supporting job growth with fighting inflation.
Raising interest rates can help tame inflation by slowing economic
growth. A weaker jobs market, though, could become even shakier under
higher interest rates as businesses find it more difficult to expand
under increased borrowing rates.
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Specialist Michael Pistillo works on the floor of the New York Stock
Exchange, Wednesday, Aug.. 5, 2026, in New York. (AP Photo/Yuki
Iwamura)
 Businesses, and Wall Street, prefer
lower interest rates because it can help boost investments. That
might bolster a weakened jobs market, but it could worsen already
stubborn inflation.
Wall Street will get several important inflation updates next week.
The most closely watched will be the consumer price index, or CPI,
which measures costs for consumers. Wall Street expects it to show
that inflation in July rose at a 3.4% rate, which would be a slight
easing from the 3.5% rise in June. Inflation has held stubbornly
above 3% for most of the year.
“Today’s weak payrolls print may ease the pressure on the Fed to
raise rates at its September meeting, but next week’s inflation data
will still likely be the deciding factor,” said Ellen Zentner, chief
economic strategist for Morgan Stanley Wealth Management, in a
research note.
The earnings picture
The jobs report caps a week dominated mostly by corporate earnings
and concerns about the ongoing U.S. war with Iran.
Corporate earnings for the second quarter are on track for the
strongest growth since 2021. Nearly 90% of companies in the S&P 500
have reported their results and analysts expect profit growth of 50%
overall. That has helped allay some concerns on Wall Street about
whether big gains for stocks in 2026 are justified. Strong profits
help support those gains in stock values.
It was a light day for earnings as companies near the close of the
latest round of reports.
Airbnb jumped 17.4% following the vacation-rental company's report
late Thursday that showed stronger profit and revenue for its most
recent quarter than analysts expected.
Oil prices gained ground. The price of Brent crude, the
international standard, rose 1.3% to $83.55 a barrel.
Rising oil prices have been behind hotter inflation. Prices were as
high as $113 per barrel at one point during the now five-month U.S.
war with Iran. That raised prices for gasoline and shipping for a
wide range of products. The U.S. and Iran have both said they are
working on deals that could reopen the Strait of Hormuz, where a
fifth of the world's oil and natural gas once passed through.
___
Associated Press Business Writer Elaine Kurtenbach contributed to
this report.
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