US stocks maintained their upward trajectory midday on Friday, with all three major indices on track to post weekly gains. The July nonfarm payrolls report unexpectedly showed a decline in employment, leading traders to anticipate that the Federal Reserve will keep interest rates unchanged.
The Dow Jones Industrial Average rose 74.80 points, or 0.14%, to 53,959.90. The Nasdaq Composite gained 319.46 points, or 1.21%, to 26,667.81. The S&P 500 added 43.86 points, or 0.57%, to 7,753.82.
Airbnb shares surged 15.3% after the vacation rental company reported revenue and profit that exceeded expectations. Cloudflare stock climbed more than 7% following the cloud cybersecurity firm's solid full-year and current-quarter outlook.
Meanwhile, oil prices edged lower on Friday. West Texas Intermediate crude for September delivery fell 0.6% to $76.85 per barrel, while the international benchmark Brent crude declined 0.7% to $81.90 per barrel.
Wall Street had closed lower the previous session, as rising oil prices weighed on the market. The Dow dropped more than 460 points, or 0.9%, snapping a five-day winning streak. The S&P 500 fell 0.2%, and the Nasdaq Composite slipped 0.1%.
Despite this, the market is still poised to close higher for the second consecutive week. The Nasdaq is on track for its best weekly performance since May, driven by a rebound in chip stocks. The iShares Semiconductor ETF (SOXX) has gained more than 5% this week.
Market sentiment among many on Wall Street has improved this week, despite the recent pullback. Investors are hopeful that a potential agreement on passage through the Strait of Hormuz will ultimately lower oil prices and curb inflation expectations.
The technology sector has been a standout, with the semiconductor segment rebounding this week. This follows last month's momentum trade unwind, which many believe provided the market with the necessary adjustment for the next leg higher. Strong earnings reports have further bolstered recent confidence.
"There will be a wave of chasing the market," said Tom Lee, head of research at Fundstrat Global Advisors, on Thursday. "I think this wave will push the index to 7,900, 8,000 points this month."
The US economy unexpectedly lost 23,000 jobs in July, while the unemployment rate ticked lower to 4.1%, according to a report from the Bureau of Labor Statistics on Friday that pointed to a slowdown in the labor market. The decline in nonfarm payrolls, seasonally adjusted, followed a downwardly revised loss of 20,000 jobs in June. Economists surveyed by Dow Jones had expected a gain of 83,000 jobs.
The labor force participation rate fell further to 61.4%, the lowest level in more than five years. In addition to the weak June and July data, the final reading for May was revised down to a gain of 63,000 jobs, which is 66,000 fewer than previously estimated. After revisions, the 12-month average increase in new jobs fell to just 34,000.
The decline in employment was primarily driven by a loss of 50,000 jobs in local government education and a decrease of 19,000 jobs in the retail sector. Financial activities also shed 14,000 jobs. The healthcare sector, which had been a major driver of job growth, added 22,000 jobs, below its 12-month average of 36,000.
Alongside the stagnation in job growth, worker wages showed little increase for the month. Average hourly earnings rose by only 2 cents, bringing the 12-month average gain to 3.2%, below the market expectation of 3.5%.
The report comes as Federal Reserve policymakers are divided on the direction of interest rates in the current economic climate. The labor market has improved from a sluggish 2025, but inflation remains well above the central bank's 2% target. Several Fed officials have recently indicated support for raising rates as early as September if price increases do not slow down. The Federal Open Market Committee voted 9-3 last week to keep the benchmark rate unchanged.
Following the employment report, traders adjusted their bets on when the Fed will raise rates. According to the CME Group's FedWatch tool, the probability of a rate hike in September fell to 44%, while the probability for October dropped to 58.3%.
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