Weekly Economic Update
Last Week and the Economy
The major U.S. indices finished higher across the board last week, and several set record highs. The Nasdaq Composite led with a 5.19% gain – its best week since April – while the S&P 500 rose 3.58%. The Dow Jones Industrial Average added 2.96%, and the Russell 2000 climbed 3.52%. Overseas, the MSCI EAFE index of developed-market stocks gained 2.20%.
U.S. Economy Unexpectedly Sheds 23,000 Jobs in July
The Bureau of Labor Statistics reported Friday that total nonfarm payroll employment fell by 23,000 in July. Economists had expected a gain of roughly 83,000.
Private employers added 30,000 jobs, while government payrolls dropped 53,000 – led by a 50,000 slide in local government education. Retail trade lost 19,000 positions, concentrated in general merchandise retailers and gasoline stations, and leisure and hospitality shed 40,000. Health care remained the main source of gains, adding 22,000 jobs, though below its 12-month average of 36,000.
The report also revised the prior two months sharply lower. The agency cut May payrolls from 129,000 to 63,000 and June from 57,000 to 20,000, a combined reduction of 103,000 jobs. Those revisions dragged the 12-month pace of hiring down to just 34,000.
The unemployment rate edged down to 4.1% from 4.2%, but largely because the labor force shrank. The participation rate fell to 61.4% – its lowest level in more than five years. Average hourly earnings rose 3.2% over the year to $37.62, and the average workweek held at 34.3 hours. The report points to a cooling labor market as the Federal Reserve weighs its next move in September.
Stocks Rally to Records in Their Best Week Since April
Wall Street closed out its strongest week since April and a second straight week of gains, with several fresh records along the way. The S&P 500 topped the all-time high on Tuesday, and the Dow reached a record midweek. The Nasdaq jumped 5.2% on a sharp rebound in chip stocks, with a benchmark semiconductor index up more than 7% on the week. Small caps advanced alongside the large-cap indices.
Solid corporate earnings and renewed enthusiasm for artificial-intelligence names set the tone early, helped by optimism that the Strait of Hormuz would reopen and pull oil prices lower. Friday’s weak jobs report added to the gains, as investors read the payroll miss as a reason for the Federal Reserve to hold rates steady rather than hike. The rally left the major indices at or near records, even as the economy posted its first monthly job loss in years.
Treasury Yields Fall as Markets Pare September Rate-Hike Bets
Traders entered the week leaning toward a Federal Reserve rate hike in September – a stance that reflected a central bank still focused on inflation. As such, futures put the odds of a September hike near 68% at the start of the week. Then, a midweek rebound in oil prices, tied to renewed friction over the Strait of Hormuz, briefly lifted yields and kept those bets alive.
After Friday’s payroll report, the yield on the 10-year Treasury note fell to about 4.64%, and the policy-sensitive 2-year yield slipped to 4.19% – its lowest since mid-July. In additiona, odds of a September hike dropped to roughly 42% from 58% a day earlier.
The Federal Reserve now faces a sharper trade-off between a cooling labor market and inflation that still sits above its 2% target. July inflation data is due this week, and it will help decide whether a September hike stays on the table.
Both ISM Surveys Signal Expansion Even as Hiring Stalls
Two surveys from the Institute for Supply Management showed a firmer July than the payroll data. The ISM Manufacturing PMI jumped 2.3 points to 55.6% – its highest reading since May 2022 and a seventh straight month of expansion. New orders and output both accelerated, and the employment gauge returned to growth for the first time since January 2025.
Services, the far larger share of the economy, held firm. The ISM Services PMI edged up to 54.1% – a 25th consecutive month of expansion – with business activity and new orders both strengthening. The services employment index fell back into contraction at 47.4%, and input prices stayed elevated above 70.
Together, the surveys describe an economy that keeps expanding even as hiring stalls. The split between firm output and weak employment ran through last week’s data, and it is what the Federal Reserve must weigh at its September meeting.
Data Sources for stock and index quotes: Yahoo Finance, WSJ
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Key Economic Data Points
| Data Point | Date | Current | Change from Prior Period | Next Report |
| Unemployment Rate | 06-2026 | 4.2% | -0.1 | August 7th |
| FOMC Target Rate | 07-2026 | 3.50% – 3.75% | No Change | September 16th |
| GDP | Q2 2026 (Advance) | 1.5% | -0.6 | August 26th |
| PCE Inflation | 06-2026 | 3.7% | -0.4 | August 26th |
Data Sources: U.S. Bureau of Labor Statistics, Federal Reserve, U.S. Bureau of Economic Analysis, U.S. Bureau of Economic Analysis
Weekly Quote:
There are many things money can buy, but the most valuable of all is freedom. Freedom to do what you want and to work for whom you respect.
-J.L. Collins – Author
The Week Ahead – Economic Data & Events
Monday: None.
Tuesday: NAR Existing Home Sales, Consumer Credit Panel
Wednesday: Consumer Price Index (CPI)
Thursday: Producer Price Index (PPI)
Friday: Advance Retail Sales, Business Inventories, Michigan Consumer Survey (Preliminary), Survey of Professional Forecasters
Weekly Reports: Mortgage Applications (Wednesday), EIA Petroleum Status Report (Wednesday), Jobless Claims (Thursday), EIA Natural Gas (Thursday), Fed Balance Sheet (Thursday), Baker Hughes Rig Count (Friday), New York Fed Staff Nowcast (Friday)
Source: New York Fed
The Week Ahead – S&P 500 Companies Reporting Earnings
Monday: Ferguson Enterprises (FERG) – PMO, Simon Property Group (SPG) – AMC
Tuesday: Cardinal Health (CAH) – PMO, Lumentum Holdings (LITE) – AMC, Super Micro Computer (SMCI) – AMC
Wednesday: Amcor (AMCR) – PMO, Trimble (TRMB) – PMO, Cisco (CSCO) – AMC, Coherent (COHR) – AMC
Thursday: Tapestry (TPR) – PMO, Applied Materials (AMAT) – AMC
Friday: No S&P 500 companies reporting.
AMC = After Market Close, PMO = Prior to Market Open
Source: Yahoo Finance
Weekly Tip:
For any impulse purchase over 1% of your annual income, force a mandatory one-week waiting period. You’ll find the emotional urge to buy completely vanishes 80% of the time.
Data Sources for stock and index quotes: Yahoo Finance, WSJ
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Last Week's Riddle and Answer
Last Week's Riddle:
I have branches, but no fruit, no trunk, and no leaves. What am I?
Last Week's Answer:
A bank.
Meld Financial, Inc. is a registered investment advisor.
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