Job Shock and Rally: A Relief Rally or an Illusion?

On the 7th (local time), New York stock markets rose across the board despite the July jobs shock, with the S&P 500 once again hitting a record high. The S&P 500 climbed 0.6% to 7,757.64, the Dow rose 0.3% to 54,036.93, and the Nasdaq surged 1.3%, underscoring a risk-on preference focused on growth stocks.

What shifted market sentiment was the unexpected weakness in employment. Nonfarm payrolls for July fell by 23,000, and May–June figures were revised down by a combined 103,000, confirming a slowdown in hiring. As a result, the view that the Federal Reserve may hold off on further rate hikes to assess incoming data has gained traction, sending the 10-year Treasury yield down to 4.64%.

However, the Fed’s stance has not fully turned dovish. Just two days ago, Governor Lisa Cook said she stands ready to raise rates if disinflation does not persist, and investors continue to view the consumer price index (CPI) report due before the September meeting as the final inflection point following this jobs shock. In the end, only the timing of a rate hike has been pushed back amid the ‘growth slowdown vs. inflation resurgence’ debate; the risk of further tightening remains intact.

On the corporate front, large tech stocks and select consumer and travel names led the rally. Nvidia and Broadcom each rose about 2%, lifting growth shares broadly, while Airbnb jumped into the high teens after yesterday’s close—driven by a 17% year-over-year revenue gain and an upward guidance revision—drawing strong retail investor interest. Meanwhile, as the conflict with Iran continues, Brent crude rose 1.3% to $83.55 a barrel, leaving energy-driven inflation and Strait of Hormuz risks as persistent market wildcards.