U.S. stocks finished higher on Friday, with the S&P 500 reaching a record closing high, as a softer-than-expected July jobs report dampened expectations for a Federal Reserve interest rate increase in September. The data fueled a rally in technology and growth shares, helping the major indices cap their best weekly performance since April.
The S&P 500 advanced 0.6% to 7,756.44, while the Nasdaq Composite climbed 1.3% to 26,690.62. The Dow Jones Industrial Average added 151 points, or 0.3%, to close at 54,036.43. For the week, the S&P 500 and Dow each gained more than 3%, and the Nasdaq rose about 5%, supported by a rebound in semiconductor shares. The iShares Semiconductor ETF (SOXX) also climbed roughly 7% over the week.
Weak jobs data shifts Fed expectations
The Labor Department reported that nonfarm payrolls fell by 23,000 in July, versus economists' forecasts for an increase of about 80,000 to 83,000 jobs. Payroll figures for the prior two months were also revised sharply lower. Despite the decline in employment, the unemployment rate eased to 4.1% from 4.2%, as labor force participation dropped to its lowest level in more than five years.
The weaker labor market data prompted traders to scale back expectations for another Fed rate increase. According to the CME FedWatch tool, the probability of a September rate hike fell to about 44%, down from 55% a day earlier and around 67% a week ago. The report reinforced the view that the central bank could hold rates steady at its September meeting, especially as Fed Chair Kevin Warsh has offered limited forward guidance, leaving markets increasingly data-dependent.
Earnings drive tech and software rally
Corporate earnings remained a key catalyst, with strong quarterly results helping offset concerns about AI-related spending and enterprise software demand. Atlassian was among the session's biggest gainers, soaring about 36% after reporting better-than-expected fiscal fourth-quarter earnings and revenue while issuing upbeat guidance. Cloudflare gained around 4% after raising its full-year and current-quarter outlook, reflecting continued demand for its cloud cybersecurity and AI offerings.
Airbnb rallied roughly 15% after the vacation rental platform beat Wall Street's expectations on both revenue and earnings for the second quarter. Microchip Technology also advanced after forecasting quarterly revenue above analyst estimates, while SpaceX rose following the expiry of the first of several post-IPO share lockup restrictions. With earnings season nearing completion, more than 85% of S&P 500 companies that had reported results through Friday morning exceeded analyst expectations, according to LSEG data.
Oil prices edge lower as Middle East tensions monitored
Oil prices finished modestly lower as investors continued to monitor diplomatic developments surrounding the Strait of Hormuz. West Texas Intermediate crude for September delivery settled 0.35% lower at $77.02 per barrel, while Brent crude fell 0.44% to settle at $82.13 per barrel. Markets tracked reports that the United States and Iran were making progress toward an agreement to reopen the Strait of Hormuz, a key global energy shipping route. Expectations that tensions could eventually ease helped keep broader inflation concerns in check, supporting equities even as crude prices posted gains during the session.
Investors also kept an eye on other market-moving stories, including AI-driven earnings lifting major indices and AMD's post-earnings slide. Meanwhile, Rolls-Royce shares hit a record high on AI demand and strong margins, and Western Digital shares slid despite a record quarter.
This article is for informational purposes only and does not constitute financial advice.
