The Fed Held but Three Voted to Hike — Now Nonfarm Payrolls Will Decide September
Last week was the busiest of the year. The Fed held rates 9–3, but three dissenters and hawkish language sent stocks down 2% on Wednesday. Microsoft then reversed the mood with Azure growth of 43%, and Amazon added 10% after AWS hit its fastest growth in 18 quarters. The week ended with the S&P 500 in the green. Now the data takes over: this week brings ISM Manufacturing Monday, ADP Wednesday, ISM Services Thursday, and nonfarm payrolls Friday — four readings that will determine whether September’s hike becomes a certainty or fades away.
Summary
Three key numbers this week
The week played out in three acts. First, the Fed held but with its most hawkish statement of the Warsh era: three dissenters, a note on energy-driven inflation, and no forward guidance. Stocks fell 2% on Wednesday. Second, Microsoft reported Azure growth of 43% and said demand exceeds supply — the market finally got the AI revenue proof it had been asking for, and the stock jumped 8%. Amazon added to the relief, with AWS growing 37%, its fastest rate in 18 quarters.
Third, oil quietly gave back ground. Trump said a Hormuz deal was close, and WTI slid 4% on the week to $86.80. That matters because it reduces the inflationary pressure that forced the three Fed dissenters’ hands. This week, the argument resolves at the data level: nonfarm payrolls on Friday, preceded by ISM Manufacturing Monday, ADP Wednesday and ISM Services Thursday. A soft payroll number (<88,000 consensus) could push September hike bets back below 70%. A strong one locks it in.
Last Week
What happened last week
August 1 (Fri) closing prices. Weekly change vs the previous Friday.
Wednesday was the defining day. The Fed held rates at 3.50–3.75% on a 9–3 vote, with Cleveland’s Hammack, Minneapolis’ Kashkari and Dallas’ Logan dissenting in favour of a hike. The statement dropped forward guidance entirely and noted that inflation remains elevated “partly due to energy supply shocks linked to the Middle East conflict.” Stocks fell sharply: the Dow lost over 1,100 points and the S&P 500 dropped 1.5%.
The recovery came the same evening. Microsoft reported Azure growth of 43% — well above expectations — and said explicitly that “Azure demand is greater than supply.” The stock jumped 8% Thursday. Amazon followed with AWS revenue growing 37% year-over-year, its fastest in 18 quarters, and the stock gained 10%. Meta fell 8% after EPS missed due to a $2.4 billion legal charge and a $4.6 billion Reality Labs loss, even as revenue grew 28%. Apple fell 4% on a China revenue miss. By Friday, the S&P 500 had recovered to a weekly gain of +1.05%.
| Asset | Close | Weekly change | Direction | Comment |
|---|---|---|---|---|
| Stock indices | ||||
| S&P 500US500 | 7,489.72 | +1.05% | Rose | Recovered above its 50-day average for the first time in three weeks. Microsoft and Amazon did the lifting after Wednesday’s Fed sell-off. NFP Friday decides whether the move holds. |
| Nasdaq CompositeCOMP | 25,373.85 | +1.1% | Rose | Still 2.2% below its 50-day average and closed below 25,000 mid-week. Microsoft’s +8% and Amazon’s +10% Thursday drove the recovery. July monthly return: −3.2%. |
| Dow JonesUS30 | 52,485.03 | +1.04% | Rose | Fourth consecutive monthly gain (+0.3% in July). Apple’s Friday recovery helped. Traditional industrials provided a cushion against tech volatility. |
| Russell 2000RUT | ~2,920 | −0.3% | Little changed | Small caps lagged as 10-year yields hit 2026 highs. September hike probability near 82% weighs most on rate-sensitive smaller companies. |
| Currencies | ||||
| US Dollar IndexDXY | ~101.80 | +0.4% | Stayed elevated | Hawkish Fed hold kept the dollar firm even as oil gave back ground. NFP Friday is the next major catalyst: a soft print would weaken the dollar quickly. |
| Euro / US dollarEURUSD | ~1.1250 | −0.3% | Edged lower | Remained under pressure from the strong dollar and high US yields. ISM Services and NFP this week are the key triggers for a reversal. |
| US dollar / Japanese yenUSDJPY | ~152.40 | −3.7% | Yen strengthened | The BOJ held rates at 0.50% but issued a surprisingly hawkish outlook — core inflation expected to rise “clearly above” 2% in the second half. USD/JPY fell sharply from 158. |
| Pound / US dollarGBPUSD | ~1.3340 | +0.5% | Rose | BOE held at 4.25% but the vote was 7–2 for a hold, with two members voting to cut. GBP firmed on the BOE’s relatively balanced tone. |
| Energy and commodities | ||||
| WTI crude oilUSOIL | ~$86.80 | −4.1% | Fell but stays elevated | Trump said a Hormuz deal is “close” and that the US is holding off new strikes, pulling WTI from its $92+ highs. Still up 51% year-to-date. A confirmed deal would send it toward $70. |
| Brent crude oilUKOIL | ~$90.10 | −3.5% | Pulled back | OPEC+ also added 188,000 barrels a day for September supply, adding to the downward pressure alongside Iran deal hopes. |
| Natural gasNATGAS | ~$3.40 | −4.2% | Fell | Followed oil lower on reduced Hormuz risk. Summer demand offered some support. |
| Metals | ||||
| GoldXAUUSD | ~$4,041 | −0.3% | Near flat | Essentially unchanged for a second straight week. Oil easing reduced inflation fear, which offset safe-haven demand. 10-year real yields near 2026 highs are the main headwind. |
| CopperCOPPER | ~$4.68 | +1.3% | Rose | Microsoft’s Azure “demand exceeds supply” statement lifted AI infrastructure demand expectations, which are positive for copper. |
| Cryptocurrencies | ||||
| BitcoinBTCUSD | ~$62,818 | −3.9% | Fell | Weekly ETF flows were net negative (−$61.5 million). Bitcoin was rejected at its 200-day moving average. NFP and the September hike path are the two key inputs this week. |
| EthereumETHUSD | ~$1,920 | +2.1% | Partial recovery | Recovered partially after last week’s sharp drop. Monthly options expiry on Friday produced volatility around the settlement price, as expected. |
| Government bond yields | ||||
| US 10-year yieldUS10Y | ~4.70% | +0.05pts | At 2026 high | Kept rising even as equities recovered — a second straight week where bonds and stocks moved in opposite directions. The 30-year yield hit its highest since 2007. NFP Friday is the pivot. |
| US 2-year yieldUS2Y | ~4.42% | +0.04pts | September bets hold | September hike priced at ~82%. A soft payroll print this week is the only near-term catalyst likely to push that probability back below 70%. |
| Notable companies | ||||
| MicrosoftMSFT | ~$422 | +8.1% | AI demand confirmed | Azure grew 43%, above expectations. Revenue of $90 billion beat consensus. The statement “Azure demand is greater than supply” changed the AI narrative for the week. |
| AmazonAMZN | ~$231 | +10.0% | AWS fastest in 18 qtrs | AWS revenue grew 37% to $42.2 billion, nearly $2 billion above estimates — its fastest growth in 18 quarters. Total revenue reached $200.6 billion, up 19.6%. |
| Meta PlatformsMETA | ~$584 | −8.0% | EPS miss | Revenue grew 28% to $60.8 billion but EPS of $6.18 missed the $7.22 consensus due to a $2.4 billion legal charge, $1.18 billion in severance and a $4.6 billion Reality Labs loss. Full-year capex raised to $130–145 billion. |
| AppleAAPL | ~$221 | −4.0% | China miss | Record revenue of $109.4 billion (+16%) and EPS of $2.02 (+29%), but Greater China revenue of $18.8 billion missed the $19.6 billion estimate. Services revenue also missed. Memory shortages flagged for future pricing. |
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.
Nonfarm payrolls Friday — the single number that reprices September
The Fed dropped forward guidance at last week’s meeting, which means the data is now the guidance. Nonfarm payrolls arrive Friday at 8:30 am ET (GMT−4), with the consensus expecting a rebound to roughly 88,000 after June’s shock miss of 57,000. That June weakness — along with cooler CPI — was the Fed’s primary justification for holding rather than hiking last week. But three members still dissented, and the statement explicitly linked elevated inflation to the Middle East energy shock.
Preceding payrolls are three other labour readings: ISM Manufacturing Monday (with its employment sub-index), ADP private payrolls Wednesday, and ISM Services Thursday. Taken together, these four releases will either confirm that the labour market is cooling enough to keep the Fed patient, or show enough strength to make September’s hike a near-certainty. The 10-year yield is already at 4.70%, its 2026 high, and the 30-year has hit its highest since 2007.
The Iran situation is also relevant: Trump said last week that a Hormuz deal is “close.” A confirmed de-escalation would pull oil below $80 and remove the energy inflation argument that forced the three dissenters’ hands — potentially giving the Fed room to signal patience into September without hiking.
Microsoft confirmed the demand. Does the rest of the market believe it?
Last week produced the clearest split the AI trade has seen. On one side: Microsoft and Amazon, both of which showed AI revenue growing faster than AI costs. Microsoft’s Azure grew 43% and the company said demand exceeds supply. Amazon’s AWS grew 37%, the fastest in 18 quarters. On the other side: Meta, which raised its capex floor to $130–145 billion while EPS fell 14%, and Apple, which posted a China revenue miss and warned of memory shortages driving price increases.
The market’s verdict was clear within the week: companies that can show the revenue get rewarded; those that ask investors to wait for the return get sold. The question for this week is whether that distinction holds as the earnings season broadens out. Palantir reports Monday as one of the clearest AI software revenue stories outside the Magnificent Seven. Nvidia does not report until late August, but every week’s data on chip demand feeds the debate about whether the Azure “demand exceeds supply” statement is sustainable.
Trump says a Hormuz deal is close — the market is not yet convinced
WTI fell 4% last week after Trump said the US is holding off new strikes because a deal is close. Tehran has not confirmed it. OPEC+ simultaneously added 188,000 barrels a day for September, providing an additional supply cushion. The combination pulled WTI from $92+ down to $86.80. But oil is still up 51% year-to-date and Brent is above $90, so the energy inflation argument for a September hike has not disappeared.
The crucial point this week is that the relationship between oil and the Fed has become direct and visible. The FOMC statement last week explicitly named the Middle East energy shock as a reason inflation remains elevated. If a Hormuz deal is confirmed this week — even a preliminary framework — oil would likely fall toward $75–78, PCE expectations for August would drop, and the September hike probability could slip meaningfully below 82%.
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 a full labour market week: four readings in five days ending with nonfarm payrolls 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 | 7,400 · 7,200 | 7,575 · 7,621 (record) | Closed back above its 50-day average. A soft NFP could push toward the record at 7,621. A strong print with rising yields could break 7,400 again. |
| Nasdaq CompositeCOMP | 24,800 · 24,200 | 25,700 · 26,000 | Still below its 50-day average at ~25,940. The AI revenue divergence (Microsoft vs Meta vs Apple) will determine whether the Nasdaq can close that gap this week. |
| WTI crude oilUSOIL | $80 · $75 | $91 · $95 | Pulled back to $86.80 on Iran deal hopes and OPEC+ supply. A confirmed deal = $75–78 target. No deal + Saudi bypass disruption = back above $91. |
| GoldXAUUSD | $3,980 · $3,860 | $4,120 · $4,200 | Flat for two consecutive weeks. Caught between oil easing (reduces inflation fear) and high real yields (rate-hike pressure). NFP Friday breaks the stalemate. |
| BitcoinBTCUSD | $58,000 · $54,000 | $66,000 · $68,000 | Rejected at the 200-day average and ETF flows went net negative. NFP soft = risk-on return and a test of $66K. NFP strong = rate fear drags toward $58K support. |
| US dollar / Japanese yenUSDJPY | 150 · 147 | 154 · 158 | Fell sharply from 158 to 152 on the BOJ’s hawkish hold. NFP strong = dollar rebounds and USDJPY could test 154. NFP soft = yen extends gains toward 150. |
| MicrosoftMSFT | $408 · $392 | $435 · $455 | Crossed its 200-day average for the first time since the May sell-off on last week’s earnings. “Azure demand exceeds supply” is the new support narrative. |
| Euro / US dollarEURUSD | 1.118 · 1.108 | 1.138 · 1.148 | Edged lower as dollar stayed firm on hawkish Fed hold. ISM Services Thursday and NFP Friday are the two events most likely to move EUR/USD significantly this week. |
Checklist
Points to check this week
Highlighted boxes are the most important items. Friday’s nonfarm payrolls at 8:30 am ET (GMT−4) is the single most consequential release this week — it reprices September more than anything else on the calendar.