For once, a batch of miserable labor data was exactly what Wall Street wanted to see.
Friday's July jobs report came in so far below consensus that the odds of a September rate hike were basically cut in half within minutes, and the S&P 500 promptly closed at a fresh record.
Add in a runaway performance from Airbnb, a weekend earnings release from Berkshire Hathaway, and yet another twist in the Hormuz saga, and there is more than enough to unpack heading into the new week.
The Rundown
- July payrolls came in deeply negative and pushed rate-hike odds sharply lower.
- The S&P 500 closed the week at a new all-time high.
- A high-profile travel platform delivered a standout quarter with a raised outlook.
- Berkshire Hathaway is finally deploying its cash pile under its new CEO.
A Payrolls Miss That Nobody Saw Coming
The July employment report was the kind of print that changes the tone of an entire trading session before the ink is dry.
The U.S. economy shed 23,000 jobs in July where the consensus was looking for a gain of around 80,000, and the numbers for May and June were revised sharply lower as well. The unemployment rate actually ticked down to 4.1 percent, but only because participation slipped to 61.4 percent, the lowest reading since the 1970s if you set the pandemic aside. Average hourly earnings decelerated to 3.2 percent year-on-year, a five-year low.
For a market that has spent months worrying about whether Chair Warsh would keep leaning restrictive, this was the pivot moment.
CME FedWatch shows the odds of a September hike collapsing from 57 percent to 44 percent. Interestingly, the market still assigns nearly 80 percent probability to a hike by December, so the debate has shifted from "if" to "how much longer can the Fed wait."
The dollar softened, Treasury yields dropped, and gold added more than 2 percent on the day for a weekly gain of roughly 7 percent, its best week since January.
Wall Street Prints Another Record
The Dow Jones (DJI | ???0.28%) added a modest 0.3 percent, but the broader S&P 500 (SPX | ???0.60%) closed at 7,757.64 points, a fresh all-time high. The Nasdaq (COMPX | ???1.10%) capped a weekly gain of roughly 5 percent.
It is a striking rotation: a soft labor market that would normally hurt cyclicals is being interpreted as pure liquidity oxygen. I would not read too much strength into it beyond that. When the same data point simultaneously lifts equities, bonds, and gold, sentiment is running the show.
Airbnb Books a Five-Star Quarter
The single most eye-catching name of the session was without question AIRBNB INC-CLASS A (ABNB | ???17.43%), sprinting to $178 for its highest close since 2022. The Q2 shareholder letter had it all:
- revenue up 17 percent year-on-year to $3.6 billion,
- net income up 27 percent to $816 million,
- and a full-year outlook that now points to around 15 percent revenue growth versus the previous 10 to 15 percent range.
A detail I found worth flagging is that Airbnb's net income actually exceeds its operating income.
The reason is straightforward: with $12 billion sitting on the balance sheet plus another $12.2 billion held temporarily on behalf of customers who pre-pay for future stays, the company banked $183 million in interest income last quarter alone. As long as the Fed keeps short rates elevated, that is essentially a second revenue engine running in the background.
CEO Brian Chesky is careful to frame the FIFA World Cup boost as a template rather than a one-off, pointing to partnerships with the Tour de France, Art Basel, Lollapalooza and NASCAR. Whether that fully replicates the tailwind of a global tournament is a fair question, but there is no arguing with the acceleration in booked nights.
Berkshire Hathaway: Abel Is Finally Buying
BERKSHIRE HATHAWAY INC-CL B (BRK.B | ???0.54%) posted its second-quarter results on Saturday morning, and the numbers show that the transition from Warren Buffett to Greg Abel is starting to leave a visible fingerprint.
- Operating earnings rose 16 percent to $12.98 billion,
- net income doubled to $25.7 billion,
- and, more importantly, the legendary cash pile finally shrank. Berkshire put $19.8 billion to work over the quarter, dropping cash on the balance sheet by $15 billion from its previous $366 billion peak.
The most striking allocation was $10 billion to triple the existing stake in ALPHABET INC-CL A (GOOGL | ???0.96%), a clear vote of confidence in the AI capex cycle at a moment when even Alphabet itself is issuing multi-decade bonds to fund it.
Add the $8.5 billion acquisition of homebuilder Taylor Morrison Home Holding Company (TMHC | ???0.03%) plus fresh positions in DELTA AIR LINES INC (DAL | ???0.70%) and MACY'S INC (M | ???1.07%), and the message is unmistakable: after four years of being a net seller, Abel wants Berkshire back in the game.
Given that the stock has essentially flatlined since his appointment was announced in May 2025 while the S&P has run away, I suspect investors will finally start giving him the benefit of the doubt when the U.S. session opens today.
Other Movers Worth Watching
Chip news kept flowing.
ADVANCED MICRO DEVICES (AMD | ???1.21%) announced the acquisition of AI startup Taalas late Thursday, but the market treated it as an incremental step rather than a game-changer. Peers NVIDIA CORP (NVDA | ???2.27%) and BROADCOM INC (AVGO | ???1.71%) still closed higher.
LYFT INC-A (LYFT | ???7.12%) rode a strong second quarter on the back of premium ride demand, while CLOUDFLARE INC - CLASS A (NET | ???5.57%) added nearly 6 percent after lifting its own outlook despite a widening loss.
FIRST SOLAR INC (FSLR | ???2.42%) climbed on President Trump's decision to slap a 15 percent tariff on imported polysilicon and derivatives, effective December 4, plus a floor price mechanism for wafers, cells and modules. That closes a well-known loophole that had let China-linked supply chains undercut domestic labor costs.
Hormuz: Deal Hopes Cool Off Again
Coming into the weekend, energy traders were pricing in real optimism around an Iran-Oman framework to reopen the Strait of Hormuz.
That optimism took a knock on Saturday when Mohammad Baqer Zolqadr, secretary of Iran's Supreme National Security Council, essentially set a maximalist list of preconditions:
- lift the U.S. naval blockade,
- pull American forces out of the region,
- end support for allies of Iran across Lebanon, Palestine, Yemen and Iraq,
- remove sanctions, and pay financial compensation.
In parallel, reports emerged of an Iranian attack on a vessel in the UAE and Houthi claims of a strike on the Jazan refinery in Saudi Arabia. Oil dropped roughly 8 percent last week on deal hopes, so any repricing higher this morning would not be a surprise.
Conclusion
Friday delivered a rare alignment where soft economic data was interpreted as unambiguous good news for risk assets, and the market ran with it.
But scratch the surface and the picture is more brittle: labor market weakening, participation at multi-decade lows, wage growth cooling, and a Hormuz situation that just hardened rather than softened over the weekend. Add Berkshire's fresh capital deployment as a new signal to watch, and I would treat today's open with a healthy dose of respect for volatility.
The rally has room to run, but the number of moving parts is climbing faster than the index.
ChartMill Market Desk - Kristoff
With regard to the stocks discussed in the article above; the author owns individual shares in Nvidia.
This daily update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
Read full article here »
View the Zacks #1 Rank List
Cold Jobs Report Warms Up Wall Street, Airbnb Steals the Show
For once, a batch of miserable labor data was exactly what Wall Street wanted to see.
Friday's July jobs report came in so far below consensus that the odds of a September rate hike were basically cut in half within minutes, and the S&P 500 promptly closed at a fresh record.
Add in a runaway performance from Airbnb, a weekend earnings release from Berkshire Hathaway, and yet another twist in the Hormuz saga, and there is more than enough to unpack heading into the new week.
The Rundown
A Payrolls Miss That Nobody Saw Coming
The July employment report was the kind of print that changes the tone of an entire trading session before the ink is dry.
The U.S. economy shed 23,000 jobs in July where the consensus was looking for a gain of around 80,000, and the numbers for May and June were revised sharply lower as well. The unemployment rate actually ticked down to 4.1 percent, but only because participation slipped to 61.4 percent, the lowest reading since the 1970s if you set the pandemic aside. Average hourly earnings decelerated to 3.2 percent year-on-year, a five-year low.
For a market that has spent months worrying about whether Chair Warsh would keep leaning restrictive, this was the pivot moment.
CME FedWatch shows the odds of a September hike collapsing from 57 percent to 44 percent. Interestingly, the market still assigns nearly 80 percent probability to a hike by December, so the debate has shifted from "if" to "how much longer can the Fed wait."
The dollar softened, Treasury yields dropped, and gold added more than 2 percent on the day for a weekly gain of roughly 7 percent, its best week since January.
Wall Street Prints Another Record
The Dow Jones (DJI | ???0.28%) added a modest 0.3 percent, but the broader S&P 500 (SPX | ???0.60%) closed at 7,757.64 points, a fresh all-time high. The Nasdaq (COMPX | ???1.10%) capped a weekly gain of roughly 5 percent.
It is a striking rotation: a soft labor market that would normally hurt cyclicals is being interpreted as pure liquidity oxygen. I would not read too much strength into it beyond that. When the same data point simultaneously lifts equities, bonds, and gold, sentiment is running the show.
Airbnb Books a Five-Star Quarter
The single most eye-catching name of the session was without question AIRBNB INC-CLASS A (ABNB | ???17.43%), sprinting to $178 for its highest close since 2022. The Q2 shareholder letter had it all:
A detail I found worth flagging is that Airbnb's net income actually exceeds its operating income.
The reason is straightforward: with $12 billion sitting on the balance sheet plus another $12.2 billion held temporarily on behalf of customers who pre-pay for future stays, the company banked $183 million in interest income last quarter alone. As long as the Fed keeps short rates elevated, that is essentially a second revenue engine running in the background.
CEO Brian Chesky is careful to frame the FIFA World Cup boost as a template rather than a one-off, pointing to partnerships with the Tour de France, Art Basel, Lollapalooza and NASCAR. Whether that fully replicates the tailwind of a global tournament is a fair question, but there is no arguing with the acceleration in booked nights.
Berkshire Hathaway: Abel Is Finally Buying
BERKSHIRE HATHAWAY INC-CL B (BRK.B | ???0.54%) posted its second-quarter results on Saturday morning, and the numbers show that the transition from Warren Buffett to Greg Abel is starting to leave a visible fingerprint.
The most striking allocation was $10 billion to triple the existing stake in ALPHABET INC-CL A (GOOGL | ???0.96%), a clear vote of confidence in the AI capex cycle at a moment when even Alphabet itself is issuing multi-decade bonds to fund it.
Add the $8.5 billion acquisition of homebuilder Taylor Morrison Home Holding Company (TMHC | ???0.03%) plus fresh positions in DELTA AIR LINES INC (DAL | ???0.70%) and MACY'S INC (M | ???1.07%), and the message is unmistakable: after four years of being a net seller, Abel wants Berkshire back in the game.
Given that the stock has essentially flatlined since his appointment was announced in May 2025 while the S&P has run away, I suspect investors will finally start giving him the benefit of the doubt when the U.S. session opens today.
Other Movers Worth Watching
Chip news kept flowing.
ADVANCED MICRO DEVICES (AMD | ???1.21%) announced the acquisition of AI startup Taalas late Thursday, but the market treated it as an incremental step rather than a game-changer. Peers NVIDIA CORP (NVDA | ???2.27%) and BROADCOM INC (AVGO | ???1.71%) still closed higher.
LYFT INC-A (LYFT | ???7.12%) rode a strong second quarter on the back of premium ride demand, while CLOUDFLARE INC - CLASS A (NET | ???5.57%) added nearly 6 percent after lifting its own outlook despite a widening loss.
FIRST SOLAR INC (FSLR | ???2.42%) climbed on President Trump's decision to slap a 15 percent tariff on imported polysilicon and derivatives, effective December 4, plus a floor price mechanism for wafers, cells and modules. That closes a well-known loophole that had let China-linked supply chains undercut domestic labor costs.
Hormuz: Deal Hopes Cool Off Again
Coming into the weekend, energy traders were pricing in real optimism around an Iran-Oman framework to reopen the Strait of Hormuz.
That optimism took a knock on Saturday when Mohammad Baqer Zolqadr, secretary of Iran's Supreme National Security Council, essentially set a maximalist list of preconditions:
In parallel, reports emerged of an Iranian attack on a vessel in the UAE and Houthi claims of a strike on the Jazan refinery in Saudi Arabia. Oil dropped roughly 8 percent last week on deal hopes, so any repricing higher this morning would not be a surprise.
Conclusion
Friday delivered a rare alignment where soft economic data was interpreted as unambiguous good news for risk assets, and the market ran with it.
But scratch the surface and the picture is more brittle: labor market weakening, participation at multi-decade lows, wage growth cooling, and a Hormuz situation that just hardened rather than softened over the weekend. Add Berkshire's fresh capital deployment as a new signal to watch, and I would treat today's open with a healthy dose of respect for volatility.
The rally has room to run, but the number of moving parts is climbing faster than the index.
ChartMill Market Desk - Kristoff
With regard to the stocks discussed in the article above; the author owns individual shares in Nvidia.
This daily update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
Read full article here »