U.S. Stocks Post Best Weekly Performance Since April, Focus Shifts to CPI
N.R. Finch
US equities closed higher Friday, capping their best week since April; a surprise contraction in payrolls cooled rate-hike expectations, but next week's CPI data will be the real test of the Fed's policy path.
How much did US stocks gain this week?
The Dow rose 151 points (+0.28%), the S&P 500 gained 0.62%, and the Nasdaq climbed 1.30% — all three posted their best weekly performance since April.
Small caps joined in: the Russell 2000 added 1.07%. The VIX fell 1.78%, signaling a clear shift in sentiment.
What triggered the rally?
The catalyst was the July nonfarm payrolls report: the US economy shed 23,000 jobs, while unemployment edged down from 4.2% to 4.1%.
This means → the labor market is cooling, and the case for another Fed rate hike just got weaker.
Bonds moved first: the 2-year Treasury yield posted its largest weekly drop since June, and the 10-year yield fell below 4.66%.
In plain terms = bond prices rose, expected borrowing costs fell, and equities followed the signal.
How much have rate-hike expectations shifted?
Per the CME FedWatch tool, the probability of a September hike dropped from 55% to 42% after the report.
Traders now price a 24.8% chance that rates stay unchanged all year — up from just 15.5% the day before.
This means → the market is moving from "hike likely" toward "maybe not," but it has not fully priced out tightening.
This is a bond-friendly report, and I see no reason for the Fed to hike in September or beyond.
David Rosenberg
Founder, Rosenberg Research
(comment following the payrolls release)
What should investors watch next week?
July CPI lands on August 12; PPI (Producer Price Index) follows on August 13.
Christopher Shaffer, co-founder of Talaria Capital Management, told *Barron's*: "Today's jobs report puts 100% of the focus on CPI."
In plain terms = the payrolls data removed the urgency for a September hike, but the inflation print is the real exam — a hot CPI would snap rate-hike expectations right back.
How did individual stocks and other markets perform?
Atlassian surged 35.31% to lead large-cap gainers; Twilio rose 24.94%, Natera 21.37%. The biggest decliner, Amrize, fell 8.92%.
Commodities diverged: gold climbed 2.38% (driven by safe-haven demand and fading hike bets), Brent crude slid 1.76%, and Bitcoin edged up to $64,957.
In Asia, the Shanghai Composite gained 1.02% while the Nikkei 225 dipped 0.12%. In Europe, the Stoxx 600 and FTSE 100 both rose 0.31%.
Content is for reference only, not financial advice.