The U.S. economy shed 23,000 nonfarm payroll jobs in July, the Bureau of Labor Statistics reported Friday, reversing the revised 20,000-job gain in June and coming in well below the roughly 83,000 jobs economists had forecast. Employment figures for May and June were also revised lower, with combined revisions of 103,000 below prior estimates. The unemployment rate ticked down to 4.1% from 4.2%, but that decline reflected a shrinking labor force rather than hiring strength: the labor force participation rate fell to 61.4%, its lowest level in more than five years.
Job losses were concentrated in local government education, which shed 50,000 positions, and retail trade, which lost 19,000. Health care continued to add jobs, gaining 22,000, though at a slower pace than its 12-month average. Average hourly earnings for private-sector workers were $37.62, up 3.2% year over year, while the average workweek held at 34.3 hours. The number of workers on temporary layoff rose by 153,000 to 921,000.
Equity markets treated the report as good news for rate-sensitive assets. The S&P 500 gained 0.62% to a record close of 7,757.64, the Nasdaq rose 1.30%, and the Dow added 0.28%. The 2-year Treasury yield, which closely tracks Fed expectations, fell to 4.20% from 4.22% before the report and briefly touched 4.15%. Under new Fed Chair Kevin Warsh, the central bank has offered limited forward guidance, leaving traders to parse each data release closely.
Morgan Stanley Wealth Management's chief economic strategist Ellen Zentner noted that the weak payrolls print may ease pressure on the Fed ahead of its September meeting, but added that next week's inflation data will likely be the decisive factor. With nearly 90% of S&P 500 companies having reported second-quarter results u2014 and analysts projecting overall profit growth of roughly 50% u2014 the strong earnings backdrop is providing equity markets an additional cushion against the softening labor data.
Stocks climbed across the board Friday after the July jobs miss shifted rate-hike probability sharply lower. The S&P 500 closed at 7,757, the Nasdaq gained 1.3%, and the Dow added 151 points. With 85% of S&P 500 reporters topping estimates this earnings season, the rally rests on two legs: reduced rate risk and strong corporate profits.
Expectations for a Fed rate hike at the September meeting fell after Friday's payrolls miss. The 2-year Treasury yield settled near 4.20%, down from 4.22% just before the report. Analysts say next week's consumer price index reading will be the critical data point before the September FOMC meeting.
ENEOS Holdings, Japan's largest energy company, agreed on Friday to acquire U.S. petrochemical producer TPC Group in a transaction Bloomberg reported values the company at roughly $1.28 billion including debt. The deal gives ENEOS control of TPC's Houston operations and terminal facilities in Port Neches, Texas, and Lake Charles, Louisiana u2014 making ENEOS the world's third-largest butadiene producer. Regulatory approvals are expected by October 2026.
Specialty chemicals maker Ashland Inc. is working with Citigroup and Lazard to explore a potential sale after receiving inbound takeover interest, Bloomberg reported Friday, citing people familiar with the matter. The move follows a settlement with activist investor Ancora, which had been pushing the company to pursue a strategic transaction. Ashland's shares rose roughly 6% on the report.
Palantir Technologies reported second-quarter 2026 revenue of $1.94 billion, up 93% year over year, with U.S. commercial revenue surging 149% to $764 million. The company raised its full-year revenue guidance to $8.15 billion and lifted its U.S. commercial revenue target to more than $3.42 billion. CEO Alex Karp called the quarter 'otherworldly' and cited demand for AI sovereignty as the driver, adding that the momentum looks likely to continue for at least another 18 months.
New 50% additional tariffs on a wide range of Canadian imports u2014 covering motor vehicles, dairy, alcohol, furniture, cement, plywood, seeds, clothing, and other products u2014 take effect at 12:01 a.m. Eastern on August 19, 2026. Invoking Section 338 of the Tariff Act of 1930 for the first time, the three proclamations signed July 20 apply even to USMCA-compliant goods and stack on top of existing duties. The U.S. Trade Representative estimates total covered imports at nearly $20 billion annually.
With 97% of U.S. importing firms classified as small businesses, the layered tariff environment of 2026 falls disproportionately on smaller operators. The Commerce Department's figure underscores how much of the duty burden lands on firms with the least capacity to absorb it. Businesses sourcing from Canada face an immediate August 19 deadline; those using foreign trade zones must secure privileged foreign status for goods before that date or face the new duty at consumption entry.
The jobs miss is a mixed signal for operators. Weaker hiring data lowers the probability of a near-term rate hike, which eases borrowing costs for businesses carrying variable-rate debt or planning capital expenditures. But the same report reveals a shrinking labor force, rising temporary layoffs, and concentrated cuts in retail and local government u2014 sectors that overlap with many small-business customer bases. Operators should not interpret a stock market rally as a signal that conditions on Main Street are improving.
The August 19 Section 338 tariff deadline is the most actionable item this weekend. Any business importing Canadian-origin goods u2014 including categories well beyond the headline auto, dairy, and alcohol coverage, such as furniture, plywood, seeds, and clothing u2014 needs to complete its harmonized tariff schedule review, model landed-cost increases, and decide on procurement timing before that date. USMCA status does not exempt goods from the additional 50% duty, and there is no grace period for goods in transit.