Weak July payrolls spark stock rally as Fed hold bets rise

Friday’s July employment data surprised to the downside with payrolls falling 23,000 while the unemployment rate eased to 4.1% as participation remained near pandemic lows. The softer hiring pace and softer wage growth reinforce expectations the Fed will keep rates unchanged this year, helping Treasury yields slide and equities jump, led by large tech names such as Nvidia, Microsoft and Meta. Traders also trimmed odds of a September rate hike, signaling a more favorable backdrop for stocks despite ongoing inflation concerns.