WEEKLY MARKET RECAP – August 7, 2026

Strong corporate earnings momentum propelled the S&P 500 and Dow to record highs, with the indexes gaining 3.6% and 3.0%, respectively, for the week. The NASDAQ climbed an even stronger 5.2%, though it remained about 1.5% below the record high reached more than two months earlier.

The latest labor market report pointed to a significant slowdown in hiring. The U.S. economy lost 23,000 jobs in July, falling well short of expectations for a gain of roughly 90,000. Estimates for May and June were also revised downward by a combined 103,000 jobs. As a result, average monthly job growth over the past three months fell to just 20,000, a sharp reversal from March’s gain of 214,000.

Corporate earnings continued to exceed expectations as reporting season entered its final stages. According to FactSet, second-quarter earnings for S&P 500 companies are now projected to rise 50.4% from a year earlier, based on reported results and estimates for companies yet to announce. That would mark the strongest growth since the second quarter of 2021 and is more than double the 23.1% growth forecast at the end of June.

Friday’s disappointing jobs report reduced expectations for a Federal Reserve rate increase in September. Futures markets indicated a roughly 42% probability of a quarter-point hike and a 58% chance that rates would remain unchanged, according to CME FedWatch. A week earlier, markets had placed the likelihood of a rate increase at 67%.

Oil prices declined as developments surrounding efforts to ease Middle East tensions and restore shipments through the Strait of Hormuz remained uncertain. U.S. crude traded near $78 per barrel on Friday, down from almost $85 a week earlier and well below the recent high above $92 reached on July 23.

Market volatility continued to ease. The Cboe Volatility Index closed Friday at 14.9, its lowest level in seven months and down considerably from the recent high of 20.7 reached on July 29.

Higher borrowing costs continued to pressure the U.S. housing market. The average 30-year fixed mortgage rate increased for a fifth consecutive week to 6.69%, its highest level in just over a year, according to Freddie Mac. Mortgage rates had briefly fallen below 6.00% in February, raising hopes for a recovery in home sales that has yet to materialize.

Investors will turn their attention to Wednesday’s Consumer Price Index report for signs that inflation continued to moderate in July. The most recent CPI reading showed annual inflation slowing to 3.5% in June from 4.2% in May, largely due to lower energy costs. Core inflation, which excludes food and energy, stood at 2.6%.