US Stocks Jump on Rate Hopes           08/07 15:28

   Stocks rose on Wall Street Friday and Treasury yields fell after the 
government reported that employers unexpectedly cut 23,000 jobs last month.

   NEW YORK (AP) -- Stocks rose on Wall Street Friday and Treasury yields fell 
after the government reported that employers unexpectedly cut 23,000 jobs last 
month.

   Every major index notched a second straight week of gains, which included 
several fresh records. It marks a strong start to August following several weak 
months.

   The S&P 500 rose 47.68 points, or 0.6%, to 7,757.64. That topped the 
all-time high it set on Tuesday. The benchmark index has been on a record run 
throughout the year.

   The Dow Jones Industrial Average rose 151.83 points, or 0.3%, to 54,036.93. 
That put it just short of the record it set on Wednesday. The Nasdaq composite 
rose 342.26 points, or 1.3%, to 26,690.62.

   Technology stocks, with their big market values, did much of the heavy 
lifting for the broader market. They are often the heaviest weights determining 
the market's direction. Nvidia jumped 2.3% and Broadcom rose 1.7%.

   The bond market reacted more strongly to the weaker signal on the jobs 
market, which can be seen as allowing the Federal Reserve more time before 
raising interest rates to fight inflation.

   The yield on the 10-year Treasury fell to 4.64% from 4.67% just prior to the 
jobs update. It was as low as 4.60% before recovering a bit.

   The yield on the two-year Treasury, which more closely tracks expectations 
for Fed action on interest rates, fell to 4.20% from 4.22% prior to the 
report's release. It was as low as 4.15% before edging back up.

   "Although the stock market is likely to welcome the dovish implications of 
the report, investors should be wary of the future growth potential of an 
economy where fewer people are working," said Peter Graf, chief investment 
officer at Amova Asset Management Americas, in a research note.

   Overall, the report paints a dimmer picture of the jobs market, which has 
been one of the brighter areas of the economy amid rising inflation and worries 
about household spending. It included a revision to the figures for June and 
May that involved slashing a combined 103,000 jobs from payrolls for those 
months.

   Eyes on the Fed's next move

   The Fed has been holding interest rates steady amid worries about hotter 
inflation, fueled by a rise in oil prices because of the U.S. war with Iran. 
Wall Street expects at least one rate increase by the end of the year, with 
forecasts shifting for the next meeting. Expectations for a rate cut in 
September are down to 42%, from 55% on Thursday and from 67% a week ago, 
according to CME FedWatch.

   A weakening jobs market could make matters more complicated for the Fed, 
which has to balance supporting job growth with fighting inflation. Raising 
interest rates can help tame inflation by slowing economic growth. A weaker 
jobs market, though, could become even shakier under higher interest rates as 
businesses find it more difficult to expand under increased borrowing rates.

   Businesses, and Wall Street, prefer lower interest rates because it can help 
boost investments. That might bolster a weakened jobs market, but it could 
worsen already stubborn inflation.

   Wall Street will get several important inflation updates next week. The most 
closely watched will be the consumer price index, or CPI, which measures costs 
for consumers. Wall Street expects it to show that inflation in July rose at a 
3.4% rate, which would be a slight easing from the 3.5% rise in June. Interest 
rates have held stubbornly above 3% for most of the year.

   "Today's weak payrolls print may ease the pressure on the Fed to raise rates 
at its September meeting, but next week's inflation data will still likely be 
the deciding factor," said Ellen Zentner, chief economic strategist for Morgan 
Stanley Wealth Management, in a research note.

   The earnings picture

   The jobs report caps a week dominated mostly by corporate earnings and 
concerns about the ongoing U.S. war with Iran.

   Corporate earnings for the second quarter are on track for the strongest 
growth since 2021. Nearly 90% of companies in the S&P 500 have reported their 
results and analysts expect profit growth of 50% overall. That has helped allay 
some concerns on Wall Street about whether big gains for stocks in 2026 are 
justified. Strong profits help support those gains in stock values.

   It was a light day for earnings as companies near the close of the latest 
round of reports.

   Airbnb jumped 17.4% following the vacation-rental company's report late 
Thursday that showed stronger profit and revenue for its most recent quarter 
than analysts expected.

   Oil prices gained ground. The price of Brent crude, the international 
standard, rose 1.3% to $83.55 a barrel.

   Rising oil prices have been behind hotter inflation. Prices were as high as 
$113 per barrel at one point during the now five-month U.S. war with Iran. That 
raised prices for gasoline and shipping for a wide range of products. The U.S. 
and Iran have both said they are working on deals that could reopen the Strait 
of Hormuz, where a fifth of the world's oil and natural gas once passed through.

   ___

   Associated Press Business Writer Elaine Kurtenbach contributed to this 
report.

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