Market Wrap US-Europe 7 August: Nasdaq Rallies 1.3 Percent After the Jobs Shock

By The Edge Research Team

Wall Street closed the week higher on Friday, with technology stocks leading a rally that built through the session after a surprisingly weak US jobs report faded expectations of another Federal Reserve rate increase. The Nasdaq Composite jumped 1.30 percent, the S&P 500 rose 0.62 percent and the Dow Jones added 0.28 percent, per CNBC, while Europe closed higher earlier in the day, led by Germany’s DAX. Gold held above 4,400 dollars into the US close and oil gave back its earlier gains in late trading.

In the United States, the session validated the market’s first read of the payrolls miss. The Nasdaq Composite closed at 26,690.62, up 1.30 percent, the S&P 500 at 7,757.64, up 0.62 percent, and the Dow Jones at 54,036.93, up 0.28 percent, per CNBC, with the gains holding firmly into the close. The July report showed nonfarm payrolls falling by 23,000 against expectations for an 83,000 gain, with May and June revised down by a combined 103,000, and equities rose on the bad news as investors priced a sharply higher bar for further Fed tightening rather than an imminent downturn. The 10-year Treasury yield eased 2.5 basis points to 4.645 percent and the VIX slipped 1.65 percent to 14.90, a calm close to a turbulent week.

In Europe, the tone was firm but more measured. Germany’s DAX led with a 0.69 percent gain to 26,319.45, while the Euro Stoxx 50 rose 0.33 percent to 6,523.86, London’s FTSE 100 added 0.31 percent to 10,901.09 and Paris’s CAC 40 edged up 0.17 percent to 8,714.93, per CNBC. The region closed before Wall Street’s final push, capturing the first leg of the rate relief that followed the US data.

In commodities, gold stayed the day’s standout, trading at 4,402.60 dollars an ounce in late electronic trading around the US equity close, up 2.40 percent, per CNBC, holding above the 4,400 dollar mark it first crossed after the jobs data. Oil reversed lower after settling the official session higher at 78.20 dollars for West Texas Intermediate and 83.56 dollars for Brent, as covered in our commodities wrap, with late trading pulling WTI to 76.98 dollars, down 0.40 percent from Thursday, and Brent to 82.11 dollars, down 0.46 percent, leaving crude caught between the day’s earlier strength and the demand question embedded in the weak US labor data.

In currencies and crypto, the dollar stayed offered. The euro rose 0.30 percent to 1.1558 and sterling 0.28 percent to 1.3490, while the yen firmed to 157.65 per dollar, per CNBC. Bitcoin gained 0.88 percent to about 64,946 dollars. The Kuwaiti dinar stood at its latest official reference of 0.3071 per dollar, with Gulf and Egyptian onshore currency markets closed for the weekend.

For reference, Friday’s closes from our Asia wrap showed the region ending the week mixed, with China’s Shenzhen Component up 1.42 percent leading the gainers, South Korea’s Kospi down 0.60 percent in a far milder decline after Thursday’s drop, and, in the only Gulf session of the day, Dubai up 0.45 percent while Abu Dhabi eased 0.26 percent.

Why it matters: Friday’s close settles the question the jobs report raised at 3:30 PM Kuwait time: markets treated the payrolls miss as a policy story, not a recession story, our reading. Stocks rose on bad news because the data raised the bar for further Fed tightening, and the composition of the move supports that interpretation, with the rate-sensitive Nasdaq leading, the 10-year yield easing rather than collapsing, and the VIX finishing below 15. The telling pairing is gold above 4,400 dollars alongside a Nasdaq led rally: two very different assets responding to the same shift toward lower expected rates, which reads less as a conventional risk-on signal than as a repricing of the policy path. Oil’s late fade is the loose end, a reminder that the same weak data that helps rate-sensitive assets can eventually read as a demand warning.

Outlook: The next scheduled test is Wednesday’s July US consumer price report at 8:30 AM Eastern Time, 3:30 PM Kuwait time, which decides whether the week’s fade in rate hike expectations survives contact with the inflation data, our reading. Fed commentary between now and the September meeting carries extra weight after the payrolls miss, and the market will watch whether Nasdaq leadership and a sub-15 VIX persist or give way to a broader reassessment. Regional markets reopen with most exchanges trading Sunday and the UAE returning Monday, and our next wrap picks up the story there.

Table – US equities, 7 August close, ranked by change:

Table – Europe equities, 7 August close, ranked by change:

Table – Asia and UAE equities, Friday 7 August closes, for reference, ranked by change:

Table – Commodities, intraday 7 August, ranked by change:

Table – Currencies, rates, volatility and crypto, intraday 7 August, ranked by percent change:

Sources: CNBC.

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