The Economy Lost Jobs and Wall Street Hit a Record — Now CPI Must Justify the Party
Friday delivered the sharpest reversal of the year. The US economy unexpectedly shed 23,000 jobs in July against an expected gain of 80,000, and prior months were revised down by 103,000. Instead of falling, stocks surged: the S&P 500 closed at a record high and posted its best week since April. A rate hike that looked near-certain two weeks ago is now off the table. This week, the market must prove the optimism is justified: July CPI arrives Wednesday, PPI Thursday, and retail sales Friday — the clearest test yet of whether the Fed can hold rates through September.
Summary
Three key numbers this week
Two weeks ago the debate was whether the Fed would hike in September. Friday’s jobs report ended that debate in a single line. The US economy lost 23,000 jobs in July when economists had expected a gain of about 80,000, and the previous two months were revised down by a combined 103,000. Private payrolls added just 30,000, and wage growth slowed to 3.2% year-over-year.
Counterintuitively, stocks rallied hard. A weakening labour market removed the case for a rate hike and revived hope for a cut, sending the S&P 500 to a record close and the Nasdaq up 5% on the week — its best since April. Gold jumped to $4,343 and 10-year yields fell to 4.64%. The one caveat: the unemployment rate actually fell to 4.1%, because people left the labour force rather than because hiring was strong.
This week is about whether inflation data validates the dovish turn. July CPI on Wednesday is the single most important release, followed by PPI on Thursday and retail sales on Friday. A soft CPI locks in the no-hike view and keeps the record rally alive. A hot CPI — still possible given $77 oil feeding through — would reopen the hawkish debate that dominated only two weeks ago.
Last Week
What happened last week
August 7 (Fri) closing prices. Weekly change vs the previous Friday.
The week built toward Friday’s payrolls report. Monday through Thursday, markets were cautious as reports circulated that Fed Chair Warsh was considering a September hike, and memory chip stocks sold off. The S&P 500 drifted lower into Thursday’s close, and oil stocks outperformed as crude held firm.
Friday changed everything. The July jobs report showed the economy lost 23,000 positions against an expected 80,000 gain — the first monthly decline in years — and May and June were revised down by 103,000 combined. Markets immediately took a September hike off the table and began pricing the possibility of a cut. The S&P 500 closed at a record 7,757.64, the Nasdaq jumped 1.3% Friday to cap a 5% weekly gain, and gold surged 2.4% on the day to a seven-month best week. SpaceX rose 12% in its first week of trading.
Not everything rose. The Trade Desk collapsed roughly 25% after weak guidance and a management shake-up, and Datadog fell 17% despite beating estimates, a reminder that individual earnings disappointments were still being punished even amid the broad rally.
| Asset | Close | Weekly change | Direction | Comment |
|---|---|---|---|---|
| Stock indices | ||||
| S&P 500US500 | 7,757.64 | +3.5% | Record close | Best week since April. The soft jobs report removed the rate-hike threat and sent the index to a record high. CPI Wednesday is the test of whether the record holds. |
| Nasdaq CompositeCOMP | 26,690.62 | +5.0% | Led the rally | Rate-sensitive tech led the advance as hike bets collapsed. Recovered well above its 50-day average. Memory chip weakness earlier in the week was fully reversed by Friday. |
| Dow JonesUS30 | 54,036.93 | +2.9% | Rose | Fifth consecutive positive stretch. Broad participation as lower yields lifted rate-sensitive sectors across the board. |
| Russell 2000RUT | ~3,010 | +4.2% | Outperformed | Small caps rallied hard as the rate-hike threat vanished. Rate-sensitive smaller companies benefit most from the dovish repricing. |
| Currencies | ||||
| US Dollar IndexDXY | ~99.60 | −1.8% | Weakened | Fell sharply as the jobs report erased hike expectations. CPI Wednesday is the next catalyst: a soft print extends dollar weakness; a hot one triggers a bounce. |
| Euro / US dollarEURUSD | ~1.1420 | +1.5% | Rose | Recovered on broad dollar weakness. The 1.148 resistance is the next level to watch if CPI comes in soft on Wednesday. |
| US dollar / Japanese yenUSDJPY | ~148.20 | −2.8% | Yen strengthened | Extended its rally as US yields fell and the hawkish BOJ outlook from the prior week continued to support the yen. Now well below the 158 intervention zone. |
| Pound / US dollarGBPUSD | ~1.3480 | +1.1% | Rose | Firmed on dollar weakness. UK data is light this week, so GBP will trade primarily on the US CPI and the broad dollar direction. |
| Energy and commodities | ||||
| WTI crude oilUSOIL | ~$77.00 | −11.3% | Fell sharply | Slid on Strait of Hormuz diplomacy as Iran, Oman and the US negotiated over transit fees. Still elevated year-to-date but the sharp drop eases the inflation concern that worried the Fed. |
| Brent crude oilUKOIL | ~$82.00 | −9.0% | Fell | Followed WTI lower on diplomatic progress, though Tehran published a more restrictive draft framework mid-week that kept some risk premium in the price. |
| Natural gasNATGAS | ~$2.65 | −12.5% | Fell hard | Dropped on record production and ample storage, adding to the broad disinflationary signal from energy this week. |
| Metals | ||||
| GoldXAUUSD | ~$4,343 | +7.5% | Near record | Best week in seven months. The soft jobs report and rate-cut hopes lifted the non-yielding metal. Central bank buying and Iran tension added support. A record high is within reach. |
| SilverXAGUSD | ~$34.20 | +6.8% | Rose | Followed gold higher on the rate-cut repricing, with industrial demand from AI infrastructure adding a second tailwind. |
| CopperCOPPER | ~$4.75 | +1.5% | Rose | Gained on lower yields and continued AI data centre demand. A weaker dollar also supported industrial metals broadly. |
| Cryptocurrencies | ||||
| BitcoinBTCUSD | ~$64,940 | +3.4% | August high | Rode the risk-on wave to its highest since late July, briefly above $65,300. Lower yields and rate-cut hopes support crypto. CPI Wednesday is the key input this week. |
| EthereumETHUSD | ~$2,050 | +6.8% | Recovered | Outperformed Bitcoin on the risk-on move. The delayed crypto market structure legislation remains a headwind until the Senate returns in September. |
| Government bond yields | ||||
| US 10-year yieldUS10Y | ~4.64% | −0.10pts | Fell | Dropped from 4.74% a week earlier as the soft jobs report pulled hike expectations off the table. CPI Wednesday determines whether the decline continues toward 4.5%. |
| US 2-year yieldUS2Y | ~4.10% | −0.32pts | Fell sharply | The rate-sensitive 2-year fell hard as the market removed the September hike and began pricing a possible cut later in the year. A soft CPI would extend the move. |
| Notable companies | ||||
| SpaceXSPACE | — | +12.0% | Strong debut week | Rose 12% Friday to cap a strong first week of trading. The high-profile listing added to the risk-on tone as the market rallied on rate-cut hopes. |
| The Trade DeskTTD | ~$540 | −25.0% | Guidance shock | Fell roughly 25% after Q3 revenue guidance of $650 million came in far below the $805 million expected. The company replaced its CFO, CMO and commercial chief in the same release. |
| DatadogDDOG | ~$235 | −17.0% | Sold on the beat | Beat on Q2 revenue and earnings and raised guidance, but the stock fell 17% after nearly doubling in 2026 — a sign of high expectations already priced in. |
Main Influences
Three main influences on the market this week
The full reasoning is here. The calendar and price levels below refer back to this section.
July CPI on Wednesday — does inflation justify the rate-cut hope?
Friday’s jobs report removed the case for a September hike. But the Fed’s July statement explicitly named energy-driven inflation as a concern, and that risk has not fully disappeared even with oil now at $77. July CPI arrives Wednesday at 8:30 am ET (GMT−4) and is the single most important release of the week. It is the first inflation reading that fully reflects the oil spike that pushed WTI above $90 in late July, before the recent pullback.
The market has priced out the hike and started pricing a possible cut. A soft CPI — headline near 3.3% or below — would confirm that repricing and likely extend the record-high rally in equities. A hot CPI, particularly if energy or shelter costs surprise higher, would reopen the hawkish debate that dominated only two weeks ago and challenge the new record levels. PPI on Thursday and retail sales on Friday provide the follow-through reads.
A shrinking workforce — is this cooling or something worse?
The July jobs report was weak in almost every detail. Payrolls fell 23,000, private hiring was just 30,000, and the prior two months were revised down by 103,000. But the unemployment rate actually fell to 4.1% — not because hiring was strong, but because the labour force participation rate dropped to 61.4%, its lowest in more than five years, as nearly 1.4 million people left the workforce this year.
This creates a genuine ambiguity for the Fed. One reading is that the labour market is cooling enough to justify a cut. The other is that a falling participation rate keeps the unemployment rate low and the labour market tighter than the payroll number suggests, which could keep the Fed patient rather than easing. That tension is why CPI matters so much this week: with the labour signal mixed, inflation becomes the deciding variable for the September decision.
Hormuz diplomacy pulled oil to $77 — the disinflation tailwind
WTI fell more than 11% last week to around $77 as Iran, Oman and the United States negotiated over Strait of Hormuz transit fees. This is a major shift: for weeks, the risk was that oil above $90 would keep inflation elevated and force the Fed to hike. With crude now at $77 and natural gas down 12% on record production, energy has flipped from an inflation threat to a disinflation tailwind heading into Wednesday’s CPI.
The situation remains fragile. Tehran published a more restrictive draft framework mid-week, so a deal is not yet secured and the risk premium has not fully disappeared. But the direction of travel matters for the Fed: sustained lower oil makes the July energy-inflation concern look temporary and supports the case for holding rates through September. A breakdown in talks that pushes oil back toward $85+ is the main upside risk to this week’s CPI.
The Week Ahead
Economic calendar and central bank decisions
All times are US Eastern Time (ET / GMT−4). Importance: H high · M medium · L low. This is an inflation-heavy week: CPI Wednesday, PPI Thursday, retail sales Friday.
Current central bank interest rates
Price Levels
Important price levels
For technical reference only. Support in green, resistance in red. These are estimates, not price targets.
| Instrument | Support | Resistance | Context |
|---|---|---|---|
| S&P 500US500 | 7,620 · 7,490 | 7,800 · 7,900 | Closed at a record 7,757.64. A soft CPI could push toward 7,800+. A hot CPI risks a pullback to the prior record zone near 7,620. |
| Nasdaq CompositeCOMP | 26,200 · 25,700 | 27,000 · 27,400 | Led the rally with a 5% weekly gain. Back well above its 50-day average. CPI determines whether the tech-led momentum continues toward 27,000. |
| WTI crude oilUSOIL | $73 · $68 | $82 · $88 | Fell to $77 on Hormuz diplomacy. A confirmed deal points toward $68–73. A breakdown in talks re-opens $82–88 and reintroduces inflation risk into CPI. |
| GoldXAUUSD | $4,240 · $4,120 | $4,400 · $4,500 | Surged to $4,343, near record. A soft CPI plus rate-cut hopes could drive a new all-time high toward $4,400+. JPMorgan’s $4,500 fourth-quarter target is in view. |
| BitcoinBTCUSD | $62,000 · $58,000 | $66,000 · $68,000 | Rose to an August high near $65,300. A soft CPI extends the risk-on move toward $68,000. A hot CPI would pull it back toward $62,000 support. |
| US dollar / Japanese yenUSDJPY | 146 · 143 | 150 · 152 | Fell to 148 on lower US yields and the hawkish BOJ outlook. A soft CPI extends the move toward 146. A hot CPI could push it back toward 150. |
| Euro / US dollarEURUSD | 1.132 · 1.122 | 1.148 · 1.158 | Recovered to 1.142 on dollar weakness. A soft CPI opens the 1.148–1.158 resistance zone. A hot CPI triggers a dollar bounce and a pullback toward 1.132. |
| US 10-year yieldUS10Y | 4.50% · 4.40% | 4.75% · 4.90% | Fell to 4.64% on the jobs data. A soft CPI could push it toward 4.50%. A hot CPI reverses the move back toward 4.75%+ and pressures rate-sensitive assets. |
Checklist
Points to check this week
Highlighted boxes are the most important items. Wednesday’s CPI at 8:30 am ET (GMT−4) is the single most consequential release — it decides whether last week’s record-high rally on rate-cut hopes is justified.