Weekly Market Update: Bad Jobs Data Just Gave Stocks Their Best Week
Here’s a sentence that shouldn’t work, but somehow did this week: the US economy lost jobs, wage growth slowed, and stocks threw their biggest party since April. The S&P 500 closed at a record. The Nasdaq had its best week in months. Oil slid. Gold jumped. If you’re new to investing and think “bad news, good market” sounds backwards, you’re right to be suspicious. It usually is. This week, though, there’s a real reason behind the madness, and it’s worth five minutes of your Saturday to understand it.
📊 What’s Happening
Friday’s jobs report kicked things off, and it wasn’t pretty on the surface. The US economy shed 23,000 jobs in July. Economists had expected a gain of about 80,000. On top of that, the government quietly cut its estimates for May and June by a combined 103,000 jobs. Wage growth slowed to 3.2%. The unemployment rate actually dipped to 4.1%, but that’s the trap: it fell because almost 1.4 million people simply stopped looking for work, not because more people found jobs.
Weirdly, that was the best news the market had heard in weeks. The S&P 500 climbed 3.6% for the week and closed above 7,700 for the first time ever, ending at a record 7,757.64. The Nasdaq did even better, up 5.2% to 26,690.62. The Dow added nearly 3%. It was the strongest week for US stocks since April.
Then there’s Palantir. The data and AI software company reported Monday evening, and the numbers were, frankly, ridiculous: revenue up 93% year-on-year to $1.94 billion, its US commercial business up 149%, and management raised full-year guidance to around $8.15 billion. The stock jumped 30% the next day, its biggest single-session gain in over two years, and wiped out close to $3 billion in paper profits for traders who’d bet against it. That one earnings report dragged the whole chip sector along for the ride: Intel jumped 11% on its own strong AI datacentre numbers, and the semiconductor ETF SOXX finished the week up more than 7%.
Oil, meanwhile, went the other way. Brent crude dropped below $80 a barrel for the first time in nearly a month as talks between the US and Iran showed signs of progress, easing fears about supply disruptions in the Middle East. WTI crude ended the week near $77, down more than 9%. Gold did the opposite, jumping over 7% as falling bond yields made the shiny stuff more appealing.
And it’s not just Palantir carrying the season. Of the roughly 300 S&P 500 companies that have reported second-quarter results so far, 85% have beaten expectations, with aggregate profit growth tracking above 47%.
🤔 Why It Matters
Normally, weak jobs data means the Fed is more likely to cut interest rates, which is straightforwardly good for stocks. This year has been different. Inflation’s been running hotter than the Fed would like, sitting around 3.5% back in June, and the central bank has actually been debating whether it needs to raise rates again. At its July meeting, three Fed officials voted for a hike. Markets had been pricing in something close to a 30% chance of one happening in September.
That’s what makes Friday’s report so important. A weakening labour market takes pressure off the Fed to hike. It doesn’t guarantee a cut, and some economists, Bank of America among them, still think a hike is coming by year-end regardless. But for now, the odds of the Fed standing pat jumped to 56% from 45% in a single day, and that was enough to send bond yields lower and risk assets higher across the board.
Palantir’s rally matters for a different reason. AI-adjacent stocks have spent much of the past few months under a cloud, with investors worried that hyperscaler spending on chips and data centres was running ahead of actual demand. Palantir’s numbers, especially that 149% jump in US commercial revenue, gave the bulls something concrete to point to: companies are paying real money for this stuff, not just running pilot projects. Which is why the rally spread so fast to Intel, AMD, and the rest of the chip complex. One earnings report doesn’t settle the debate, but it bought the AI trade some breathing room.
💡 The Opportunity
None of this means it’s time to chase what just happened. A stock jumping 30% in a single session, the way Palantir did, is a sign of a short squeeze as much as it is a vote of confidence, and the stock still trades at somewhere around 45 to 50 times forward sales. It’s an expensive bet on a company continuing to grow at a pace almost nobody else in the market can match.
What’s more interesting is the breadth of the move. Intel’s rally wasn’t about a short squeeze; it came from 59% growth in its data centre and AI business, its strongest revenue growth in over fifteen years by the CEO’s own account. If you want exposure to the AI infrastructure buildout without betting everything on one name at a rich valuation, broad semiconductor exposure, through an ETF like SOXX rather than a single stock, spreads that bet across a sector that’s clearly still growing.
Gold’s move is also worth a second look. It’s up more than 7% in a week and sitting at a record above $4,400 an ounce, largely because falling yields make it more attractive relative to bonds. If you’re worried this rally in stocks is running a little hot, a small allocation to gold is a fairly boring, time-tested way to hedge that without predicting exactly when or how a pullback happens.
The next real test comes fast. July’s inflation report lands on August 12, forecast to show prices rising at an annual pace of around 3.4%. If that number comes in hot, this whole “no hike coming” narrative gets a lot shakier. Given how much of this week’s rally was built on rate-hike relief, that’s the one date worth circling before you make any big moves.
🎯 Bottom Line
This was a genuinely odd week: stocks celebrated a shrinking labour force, oil fell because diplomacy might actually be working for once, and a single earnings report from a controversial AI stock dragged an entire sector higher. None of that is necessarily bad. Record highs are still record highs. But a market that’s rallying because bad news makes a rate hike less likely is a market standing on a fairly narrow ledge. One hot inflation print on August 12 could change the story completely. Enjoy the highs this week. Just don’t mistake relief for certainty.
Disclaimer: This article constitutes the author’s personal views and is for entertainment and educational purposes only. It is not to be construed as financial advice in any form. Please do your own research and seek advice from a qualified financial advisor. From time to time, I have positions in all or some of the mentioned stocks when publishing this article. This is a disclosure - not a recommendation to buy or sell stocks.