〈After Hours〉Cold Non-Farm Payrolls Cool Fed Hike Chances! S&P Hits Record High with 3.6% Weekly Surge – Second Best This Year

U.S. non-farm payrolls for July unexpectedly decreased, lowering the Federal Reserve's (Fed) need to raise interest rates in September. U.S. stocks rose on Friday (July 7), with the S&P 500 index hitting a new record high and gaining 3.6% for the week—the best performance since April and the second-largest weekly gain of the year.

The S&P 500 briefly surpassed 7,700 earlier this week and closed the week up 3.6%. The Nasdaq surged 5.2%, led by chip stocks, while the Dow Jones climbed nearly 3%. All three major indices posted their best weekly performance since April.

On Friday, the U.S. reported that July non-farm payrolls unexpectedly fell by 23,000, far below the market forecast of an 83,000 increase. The unemployment rate dropped to 4.1%, below economists’ prediction of 4.2%, while labor force participation hit its lowest level in over five years.

According to CME Group’s FedWatch tool, traders now widely expect the Fed to hold rates steady in September within the 3.50–3.75% range. Just one day earlier, traders had priced in a 55% chance of a rate hike.

Former U.S. President Donald Trump reiterated his preference for lower interest rates during a Friday interview with Punchbowl News.

Meanwhile, oil prices edged higher as investors awaited a potential agreement between the U.S. and Iran to reopen the Strait of Hormuz. U.S. Treasury Secretary Scott Bessent said earlier this week that a deal could be reached soon.

Iranian officials are reportedly fine-tuning the wording of an agreement with Oman regarding the Strait of Hormuz, while Trump insists progress is being made.

Major U.S. indices on Friday, July 7:

Dow Jones Industrial Average rose 151.83 points, or 0.28%, to close at 54,063.93.

Nasdaq Composite gained 342.26 points, or 1.30%, ending at 26,690.62.

S&P 500 increased by 47.68 points, or 0.62%, closing at 7,757.64.

Philadelphia Semiconductor Index jumped 308.09 points, or 2.56%, to finish at 12,356.79.

NYSE FANG+ Index rose 301.95 points, or 1.64%, closing at 18,723.04.

Eight of the S&P 11 sectors advanced, led by basic materials and industrials. Energy, communication services, and financials declined.

(Image: finviz)

Key Stocks

Most of the tech giants in the NYSE FANG+ Index rose. Meta (META-US) gained 0.37%; Apple (AAPL-US) rose 0.29%; Alphabet (GOOGL-US) fell 0.96%; Microsoft (MSFT-US) edged up 0.03%; Amazon (AMZN-US) gained 0.82%.

Semiconductor stocks mostly rallied. Microchip (MCHP-US) surged nearly 14%, Coherent (COHR-US) jumped over 13%, Qualcomm (QCOM-US) rose 4.66%, and Nvidia (NVDA-US) gained 2.3%. Micron (MU-US) dipped 0.44%, and AMD (AMD-US) fell 1.21%.

Taiwanese ADRs were mixed. TSMC ADR (TSM-US) rose 0.44%; ASE ADR (ASX-US) gained 0.38%; UMC ADR (UMC-US) dropped 2.50%; and China Telecom ADR (CHT-US) rose 0.57%.

Corporate News

Software stocks led gains on Friday, as recent earnings dispelled concerns that artificial intelligence (AI) would disrupt the software industry. Cloudflare (NET-US), a cloud security company, surged 5.8% after issuing strong full-year and quarterly guidance. Atlassian (TEAM-US) soared 35% after reporting better-than-expected adjusted earnings and revenue for Q4 and providing optimistic forecasts.

Microchip Technology (MCHP-US) saw its shares jump 13.9% after its Q2 outlook exceeded market expectations.

Airbnb (ABNB-US) shares surged 17.4% after the vacation rental platform reported Q2 revenue and profits above estimates and raised its full-year revenue forecast, citing strong demand in the U.S. and Europe.

U.S. solar stocks rose after Trump ordered a 15% tariff on imported polysilicon-derived products, including silicon wafers, solar cells, and solar modules, along with a minimum import price. First Solar (FSLR-US) gained 2.4%.

Wall Street Analysis

Regarding the weak non-farm payrolls, Saira Malik, Chief Investment Officer at Nuveen, said:

'From an employment standpoint, this data shows job growth isn’t booming and may even be weakening; but for markets, the two main concerns remain yields and inflation. This softer data doesn’t strengthen the case for the Fed needing to hike rates.'

Joe Gilbert, Portfolio Manager at Integrity Asset Management, said: 'As interest rates cool, investors are rotating back into the prior tech leadership group.' He noted that one reason for this week’s strength was the 10-year Treasury yield peaking last Friday.

Brent Wilsey, Chief Investment Officer at Wilsey Asset Management, stated: 'While a single weak jobs report is unlikely to dictate Fed policy, we believe the central bank will maintain a “wait-and-see” approach, allowing more time to assess upcoming economic data.'

All figures are updated before publication. Please refer to actual market quotes for accuracy.