Weak Jobs Data Sends US Stocks Higher on Rate Hike Fears

The US stock market ended higher on Friday as weak jobs data led traders to price in deferred rate hikes by the Federal Reserve. The S&P 500 rose 0.6%, its best week since April, while the Nasdaq 100 jumped 1.2% and the Dow Jones Industrial Average added 0.3%. Tech stocks, chipmakers, and broader AI stocks were among the biggest gainers, with the VanEck Semiconductor ETF (SMH) rising 2% on support from Broadcom, ASML Holdings, and Nvidia.

The jobs report for July showed a substantial miss, with the economy shedding 23,000 jobs against a projected gain of 83,000. The unemployment rate fell to 4.1%, but the labor force participation rate dropped to its lowest level in over five years, defying expectations that it would hold steady at 4.2%. This led most fed funds futures traders to anticipate that the Federal Reserve will maintain its key lending rate between 3.50% and 3.75% during the upcoming September policy meeting.

Palantir was the top weekly gainer in the S&P 500, while Trade Desk dropped to the bottom. Other stocks in focus included Sezzle (SEZL), which plunged 34% on Friday following a strong quarterly beat, and SpaceX (SPCX), whose investors looked past recent lock-up expiration fears.