U.S. Stocks Rise in Early Trading as Weak Jobs Report Eases Fed Rate Hike Concerns

U.S. stocks rose at Friday's (7th) opening, with both the S&P 500 Index and the Nasdaq Composite Index posting gains. The U.S. July nonfarm payroll unexpectedly decreased by 23,000, indicating a clear slowdown in the labor market. Although the data itself was disappointing, investors saw the 'silver lining'—that the Federal Reserve (Fed) may not need to rush into another rate hike soon, increasing the probability of a hold in September and driving simultaneous gains in both stock and bond markets.

As of press time, the Dow Jones Industrial Average was up 0.02%, the Nasdaq Composite Index rose nearly 220 points or about 0.9%, the S&P 500 Index gained 0.3%, and the Philadelphia Semiconductor Index surged nearly 2.2%. TSMC ADR climbed nearly 0.6%.

Ahead of the market open, S&P 500 futures were up 0.4%; bond market sentiment improved, with the 10-year U.S. Treasury yield falling 6 basis points to 4.62%. The dollar also weakened alongside declining yields, reflecting a market reassessment of the Fed’s future interest rate path.

The U.S. Bureau of Labor Statistics (BLS) reported Friday that July’s nonfarm employment fell by 23,000, indicating employers reduced hiring during the month. Previous months’ figures were also significantly revised downward, suggesting that the U.S. labor market, which showed resilience earlier in the year, may now face greater pressure.

However, the U.S. July unemployment rate dipped to 4.1% from the prior month, superficially indicating labor market resilience. One reason behind this, however, is the continued decline in labor force participation. This means some workers have exited the job market, so the drop in unemployment does not necessarily reflect an improvement in employment conditions.

On the geopolitical front, President Trump stated that talks between Iran and Oman regarding the Strait of Hormuz are 'making progress,' though a final agreement has not yet been reached, with details reportedly still under discussion within Tehran.

An agreement on managing the Strait of Hormuz has become a key factor in assessing whether energy supply can further recover. Even though regional conflicts occasionally occur, energy transportation has not been fully disrupted, although volumes remain below pre-U.S.-Iran war levels. If this critical global energy corridor reopens, it could not only increase crude oil shipments but also pave the way for broader U.S.-Iran negotiations and conflict resolution.

As of around 9:00 PM Taipei time on Friday (7th):

Dow Jones Industrial Average rose 29.44 points or 0.05%, temporarily at 53,914.54

Nasdaq Composite Index rose 210.14 points or 0.80%, temporarily at 26,558.49

S&P 500 Index rose 27.57 points or 0.36%, temporarily at 7,737.53

Philadelphia Semiconductor Index rose 280.03 points or 2.32%, temporarily at 12,328.73

TSMC ADR rose 1.21% to $423.13 per share

10-year U.S. Treasury yield fell to 4.62%

New York light crude oil down 0.49% to $76.91 per barrel

Brent crude oil down 0.73% to $81.89 per barrel

Gold up 2.59% to $4,411.00 per ounce

DXY (U.S. Dollar Index) fell to 99.49

Key individual stocks:

Airbnb (ABNB-US) rose 9.80% in pre-market trading to $166.51 per share

Airbnb surged nearly 7% before the market open. The vacation rental platform reported second-quarter EPS of $1.37 and revenue of $3.61 billion, both exceeding LSEG analyst consensus estimates of $1.25 EPS and $3.58 billion in revenue.

Cloudflare (NET-US) rose 10.60% in pre-market trading to $314.57 per share

Cloudflare jumped over 16.5% pre-market, driven by strong guidance and better-than-expected Q2 results. The cloud security company forecasts adjusted Q3 EPS of $0.34 and revenue between $736 million and $737 million, surpassing LSEG consensus estimates of $0.32 EPS and $722 million in revenue.

First Solar (FSLR-US) rose 6.97% in pre-market trading to $261.17 per share

Solar stocks rose pre-market after President Trump announced tariffs on imported products used in solar panel manufacturing, boosting U.S.-based firms. First Solar surged over 5%, Invesco Solar ETF (TAN-US) rose nearly 3%, and SolarEdge Technologies (SEDG-US) gained 2%.

Today’s key economic data:

U.S. July nonfarm payroll change: -23,000 (expected +85,000, revised prior: +20,000)

U.S. July unemployment rate: 4.1% (expected 4.2%, prior 4.2%)

U.S. July average weekly hours: 34.3 hours (expected 34.3, prior 34.3)

U.S. July average hourly earnings YoY: 3.2% (expected 3.5%, revised prior: 3.4%)

U.S. July average hourly earnings MoM: 0.1% (expected 0.3%, prior 0.3%)

U.S. July labor force participation rate: 61.4% (prior 61.5%)

Wall Street analysis:

BCA Research, a prominent Wall Street macro research firm, recently stated that gold’s recent pullback may be ending, as key macro headwinds weighing on precious metals begin to recede. The firm believes real interest rates may have peaked, and the dollar could eventually shift from being a headwind to a tailwind for gold.

After expressing a neutral stance in spring, BCA Research’s chief commodities strategist, Roukaya Ibrahim, now finds gold attractive and recommends investors begin building positions, with a stop-loss set at $3,900 per ounce.