The U.S. labor market shed 23,000 jobs in July, a surprise contraction that sent stocks higher. Economists surveyed by The Wall Street Journal had expected a gain of 83,300. The unexpected decline renewed questions about the economy’s strength amid elevated inflation, and traders slightly pared back bets that the Fed will raise interest rates next month. Treasury yields initially fell but retraced most of their declines.

The manufacturing sector bucked the broader trend, adding 5,000 jobs in July, led by makers of transportation and computer equipment. Factory production has strengthened for months, though manufacturers still employ fewer workers than a year ago. Trade Desk shares dropped 22% after reporting second-quarter revenue that fell short of expectations, making it the S&P 500’s biggest mover. Airbnb’s stock gained 17%, becoming the index’s biggest gainer after the short-term rental company raised its forecast for the year, citing global demand growth and AI-driven platform improvements.

The Nasdaq climbed 1.3%, and the Dow industrials edged 0.3% higher. Gold rose 2.3%, while crude oil fell slightly.