This Week's Market Notes: US July Non-Farm Payrolls, SpaceX, AMD, Sandisk Earnings, AI Sector Volatility, and Middle East Tensions

This week's major global events include the release of the US July non-farm employment report and a series of corporate earnings announcements, such as SpaceX (SPCX-US), which will release its first quarterly report since its IPO on Tuesday, along with semiconductor manufacturer AMD, memory stock Sandisk (SNDK-US), and major pharmaceutical company Eli Lilly (LLY-US).

This Week's Market Notes (20260803-0808)

1. Employment Report as the First Major Test Post-Fed Meeting

Markets will receive the US July non-farm payroll report this Friday. According to a Reuters survey of economists, non-farm employment is expected to have increased by 91,000 in July, with the unemployment rate holding steady at 4.3%.

If employment data exceeds expectations, it could further increase market expectations for a Federal Reserve (Fed) rate hike in September to curb inflation, which remains above target. According to LSEG data, as of last Friday, federal funds futures indicated a roughly 64% probability of a Fed rate hike in September.

The Fed held rates steady last Wednesday, but three officials advocated for a rate hike, and Chair Kevin Warsh reiterated the Fed's firm commitment to returning inflation to the 2% target. However, investors remain unclear about how Warsh intends to achieve this long-term goal.

Given Warsh's advocacy for reducing the Fed's forward guidance on future policy, markets will increasingly focus on economic data, including this Friday's employment report.

Jim Baird, Chief Investment Officer at Plante Moran Financial Advisors, said, "The new Fed leadership has significantly changed thinking on forward guidance, transparency, and communication. As a result, market reactions to key economic data releases may become more volatile, as clarity on policy direction becomes less certain."

2. Markets Closely Watching Major Earnings Reports

Over a quarter of S&P 500 companies will report earnings this week, including pharmaceutical giant Eli Lilly (LLY-US), chip designer AMD (AMD-US), Caterpillar (CAT-US), Palantir Technologies (PLTR-US), and Merck (MRK-US).

The most anticipated report may be SpaceX's first quarterly results since its June IPO, to be released on Tuesday, with CEO Elon Musk expected to participate. Investors will focus on Starlink's growth, Starship development timelines, and capital expenditure plans.

SpaceX's stock surged initially after listing but has since weakened, so this earnings report could influence overall market risk appetite.

According to LSEG IBES data, combining already reported results and market estimates, S&P 500 companies are expected to report a 29.3% year-over-year increase in adjusted EPS for Q2.

3. AI Sector Enters Period of Intense Volatility

The quiet period for SK Hynix (SKHY-US) following its IPO will end this week, allowing analysts to begin issuing formal investment ratings on the memory giant.

SK Hynix's stock price in Seoul surged 30% last Friday, closing at 1.718 million Korean won per share (approximately $1,197), hitting South Korea's daily price limit. In contrast, its American Depositary Receipts (ADRs) closed down 3.6% at $143.69 per share, still below its IPO price of $149 on July 9.

The AI sector is entering a period of intense volatility, as investors worry about AI profitability, increasing competition, and who will bear the massive capital expenditures. A prime example is South Korea's Kospi index, which, after plummeting 40% over the past six weeks, surged 18% last Friday, driven by strong gains in SK Hynix and Samsung Electronics.

4. Middle East Conflict Escalates Further

Markets will continue to closely monitor the Middle East situation. The ceasefire agreement announced by the US and Iran in mid-June now appears to be obsolete, with oil prices nearing $90 per barrel.

This five-month-long conflict may open new fronts, as two US-owned liquefied natural gas carriers were attacked by drones at Egypt's Mediterranean port of Damietta, raising concerns that the strategically vital Suez Canal could be threatened.

Additionally, Saudi Arabia publicly confirmed joint airstrikes with US forces against Iran-backed armed groups in eastern Iraq—the first such announcement. Meanwhile, US forces launched what they described as "large-scale" airstrikes against Iran in response to Iran's attempted ballistic missile attack on a US military base.

At the same time, diplomatic efforts continue, with Saudi Arabia pushing a 14-nation coalition to strengthen maritime defense in critical global energy transport routes, including the Bab el-Mandeb Strait, the Red Sea, and the Gulf of Aden.