Last updated: August 7, 2026, 3:45 PM ET
Equities
U.S. stocks rose sharply on Friday after the July jobs report came in much cooler than expected, prompting traders to scale back their rate-hike expectations. Major indexes gained as the Dow industrials led the rally, while the Nasdaq Composite pared gains after an initial morning surge. The S&P 500 is poised for another record as the AI spending narrative holds strong, with Big Tech stocks storming back as fears over excessive capital expenditure fade. European stocks rose for a fourth straight week, with the Stoxx 600 index reaching fresh records on a stronger-than-expected earnings season and growing M&A chatter. The FTSE 100 also gained as oil prices dipped on hopes of a Strait of Hormuz deal, while UK shares have become "hotter than below decks in a heatwave" according to one columnist. Japanese stocks were mixed as chip-related shares declined, but the broader Nikkei 225 recovered some losses on optimism over Iran deal talks. China's AI-linked stocks slid on fears of a US ban on optical transceivers, while the country's export boom continued despite a domestic slowdown.
Corporate earnings drove European indexes higher on Thursday, with consumer-facing stocks and healthcare leading the advance. Deutsche Telekom lifted its buyback by up to $3.5 billion and raised its cash-flow guidance after posting higher second-quarter revenue. Allianz posted an 11% rise in operating profit, reaching a new record as the insurer reshapes its portfolio through dealmaking. WPP shares surged after its top-line decline eased thanks to a recovery in media-buying operations. Under Armour lowered its revenue outlook on soft demand, noting weakened traffic trends in North America and Asia-Pacific. Take-Two Interactive logged higher sales but losses widened due to discontinued development of a title. Eli Lilly posted higher revenue on continued demand for its GLP-1 weight-loss drugs. Dream Finders agreed to buy Beazer Homes for about $915 million, marking a consolidation play in the homebuilding sector.
Wendy's withdrew its outlook and slashed its dividend as its turnaround struggles to gain traction. Papa John's also cut its outlook and suspended its dividend citing a soft consumer environment. Warby Parker swung to a profit thanks to a tariff refund, offsetting costs of its upcoming AI eyewear launch. AIG profit beat estimates on strong underwriting, roughly two months after Eric Andersen took over as CEO. Blackstone's BDC profit dropped 94% even as loan performance steadied. Blue Owl Capital sought to shore up confidence in its private credit funds, stressing that borrower fundamentals remained strong. SpaceX shares sank after reporting $15.8 billion in AI spending in Q2, and the company doesn't plan to slow down.
Veritas-backed Gainwell Technologies began a $5.8 billion debt overhaul, the US software sector's biggest of 2026. Private-equity firms eager for exits are pouncing on the hot IPO market as sluggish dealmaking makes it hard to find buyers. Whatnot, a live-shopping platform, nearly doubled its valuation to $20 billion in less than a year. Reformation's IPO growth story looks flimsy according to analysis, as its edge on quality and value appears unproven. Unitree Robotics aims to raise about $900 million in an IPO that tests investor appetite for humanoid robots. Dien May Xanh rose in its Vietnam trading debut even as the broader market retreated.
Big US hedge funds were targeted by a wave of cyber attacks, including Point72 and Citadel, via audio phishing schemes. Bank of America's sentiment gauge hit its most extreme bullish level since 2021, prompting strategists to warn it's time to reduce exposure to risky assets. The S&P 500 is poised for another record as AI spending momentum continues, with SpaceX reporting higher-than-expected AI-related outlays. Index funds that seem identical are performing very differently this year due to the concentration in a few hot stocks.
Fixed Income
US Treasuries rallied after the weak July jobs report, which diminished expectations that the Federal Reserve will raise interest rates. Treasury yields fell following the much-weaker-than-expected payrolls data, with the 10-year yield dropping sharply. The US Treasury sparked debate by discussing auction cutbacks to temper yields, challenging long-held beliefs about the world's biggest bond market. Bond traders were bracing for labor market data that could tip the scale on a Fed rate hike in September. The bond market is signaling rising risks as yields remain elevated, causing hardship for home buyers and raising hurdles for AI data centers and stocks, but offering a boon for retirees.
Japanese government bonds extended their rally tracking overnight Treasury gains, as traders priced in a potential pause in rate hikes. Japan's four largest life insurers reported a 7% increase in unrealized bond losses to a combined ¥15 trillion ($96 billion) in the June quarter, highlighting risks from rising interest rates. The Fed's Fima repo facility went unused for an eighth straight week, suggesting Japan didn't use the tool for its latest yen intervention. Wellington Asset Management reduced its US Treasury exposure and shifted into German bonds after last week's Fed meeting fueled doubts about its inflation-fighting credentials.
San Juan triggered a $121 million muni-bond sale rush as investors seized a rare opportunity to get exposure to Puerto Rico. Once-AAA bonds on a New York megamall face a $350 million loss as Pyramid Management Group buys back the mortgage for cents on the dollar. South Africa's bond market has already upgraded the country's debt to investment grade even as rating firms lag, with authorities focused on hitting budget targets.
Currencies
The dollar fell to a seven-week low against a basket of currencies after the July payrolls data showed an unexpected decline in nonfarm jobs. The WSJ Dollar Index fell 0.2%, down six of the past seven trading days, as rate-hike expectations faded. The dollar dropped to its lowest level since May after soft US labor data reduced expectations that the Federal Reserve will raise rates soon. The yen surged 1% against the dollar after the jobs data, following earlier speculation that authorities might intervene again. Japan confirmed it intervened in the currency market three times during the spring Golden Week holiday to prop up the yen, going beyond its usual twin-punch playbook. Bank of America expects the yen to strengthen 6% against the dollar by year-end following coordinated currency intervention.
The US selling euros to support Japan's yen is adding to geopolitical risks and further dimming the appeal of longer-maturity government bonds, according to BlackRock. India's foreign exchange reserves are expected to swell to a near-record high within weeks, driven by stronger capital inflows after central bank measures. The Chinese yuan remained under pressure as the central bank stockpiled more gold in Hong Kong to support the city's bullion hub ambitions.
Commodities
Oil futures moved higher as the market waited for news on a deal to reopen the Strait of Hormuz, with concerns over supply disruptions persisting. Iran's oil exports have stalled and Kharg Island has idled under the US naval blockade, with interdiction halting tankers from carrying Tehran's crude. Oil analysts are stumped by the case of the missing barrels as data discrepancies puzzle the market. U.S. crude oil inventories rose by 2.5 million barrels in the week ended July 31, contrary to expectations of a draw. U.S. natural gas futures picked up following losses on the expanding inventory surplus.
Global food prices rose to a three-year high in July as renewed concerns over key grain export corridors compounded adverse weather across major growing regions. Food prices rose due to the near-total closure of the Strait of Hormuz and expectations of a strong El Niño that could disrupt harvests. El Niño threatens to disrupt the world's most-traded commodities and is set to be one of the strongest since 1950, raising the risk of food shortages and inflation. Ukraine's grain exports could fall by more than half after Russian attacks disrupted Black Sea ports, threatening the country's biggest source of export revenue.
Copper is heading for new highs as the US and China squeeze buffers, depleting LME inventories and raising the risk of another spike in futures. A copper market crunch is brewing as a surge in shipments to the US and rising orders in China set the stage for a rally to all-time highs. Hindalco's first-quarter profit jumped 75% after supply disruptions from the Middle East war drove metal prices higher. China's central bank extended its gold buying streak to 21 months, ramping up additions as bullion prices built support above $4,000 an ounce. China is also stockpiling gold in Hong Kong to support the city's push to become a major bullion-trading hub.
Brazil's CSN is seeking at least $2.9 billion for its cement business and expects four bids. Ghana's central bank incurred losses of $1.9 billion under a domestic gold purchase program. The Democratic Republic of Congo will investigate reports of excess uranium in cobalt exports, following an FT and Lighthouse Reports investigation. Sodium-ion batteries, made from salt, are finally here and could be cheap enough to reduce fossil-fuel dependence. Global sugar traders are losing trust in Brazil's cane-crush data, the most important data piece in the market, as opacity increases.
Macro & Policy
The July jobs report showed the US economy unexpectedly shed jobs, with nonfarm payrolls declining for the first time in months. The labor market shifted into reverse as employers balked at hiring, with a spring surge rapidly fading amid higher prices and uncertainty. However, the weak jobs report does not eliminate the prospect of a rate rise as Fed officials remain focused on inflation after five years of overshooting the 2% target. BlackRock's Rick Rieder said the surprise contraction reflects a "productivity revolution" rather than economic weakness, arguing the US economy remains on track for 6% growth. The jobs report poses a new test for Fed Chair Kevin Warsh as investors increasingly expect the Fed to begin raising rates as soon as next month. Warsh's silence is manufacturing market noise as investors seek clarity on how the Fed will react to changing data.
The Senate passed a sanctions bill targeting Russia and Iran, championed by Senator Lindsey Graham after his sudden death last month spurred quick action. The Trump administration restarted its battle to fire Fed Governor Lisa Cook, sending a letter saying it is "considering" removing her after the Supreme Court rebuffed an earlier attempt. Christopher Phelan was confirmed as chairman of the Council of Economic Advisers, a former adviser to the Federal Reserve Bank of Minneapolis. Bill Cassidy will back Todd Blanche as Attorney General, salvaging his confirmation by giving Republicans enough votes for a majority. Trump officials deported a group of Mexicans despite torture risk, using a rare authority even though their removal was blocked over concerns they would be tortured.
US law firms are weighing stake sales to private equity according to the First FT newsletter. The CFTC warned prediction markets against using American-style casino odds as it fends off legal challenges alleging the platforms are illicit sports betting. DraftKings CEO Jason Robins blasted prediction markets for allowing bets on what executives say on earnings calls. The Clarity Act for digital assets is a matter of national security, argues an op-ed, as if the US does not set terms, crypto activity will migrate beyond American laws. Senator Cynthia Lummis defends the Clarity Act as providing clear jurisdictional lines, consumer protections and safeguards against illicit finance.
Other Markets & Notable Moves
The yen jumped 1% against the dollar after the jobs data, while the dollar hit a seven-week low. The Australian dollar gained on improved risk appetite, and emerging market currencies broadly strengthened. Hong Kong's Hang Seng index rose as Chinese tech stocks rebounded on hopes of policy easing. Brazil's B3 experienced its worst-ever trading outage, the latest disruption to bedevil investors in Latin America's biggest economy. SK Hynix suffered a second 30% pre-market flash crash on Nextrade, raising fresh questions about trading volatility on South Korea's alternative exchange. Nextrade will temporarily prohibit orders at the daily price limit following the repeated flash crashes.
Apollo's upmarket plans for easyJet include premium seats and more charges under a proposed £5.7 billion takeover. Monte dei Paschi is weighing options to fend off Intesa's bid, as its CEO questions the impact of Intesa Sanpaolo's $35 billion offer. JBS secured $2.5 billion from Indonesia's Danantara sovereign fund to form a joint venture focused on the protein market in Southeast Asia. ADNC spent $1.3 billion to expand its tanker fleet as crude exports boom after the UAE left OPEC. The UK managed a record share of assets on behalf of overseas clients, helping dispel worries over London's status as a financial centre.