Weekly Market Navigator

Week of August 10, 2026

Published every Monday: Get a detailed snapshot of what moved the markets last week—and what to watch this week.

Stocks posted strong gains across the globe last week.

Strong earnings and no further escalation of the Middle East conflict fueled the rally. The Nasdaq Composite was the strongest U.S. index, rising more than 5 percent. The 30-year Treasury yield declined from levels last seen 19 years ago, and fixed income moved higher as a result.

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Weekly Quick Hits

Beyond the Headlines

The July employment report complicates the Federal Reserve (Fed) outlook.

Report Releases

Negative job creation and downward revisions to previous reports indicate a weaker labor market.

Financial Market Data

Technology led a stock-market rally, with the Nasdaq Composite up more than 5 percent.

Looking Ahead

Updates on consumer and producer prices are the key reports this week.

BEYOND THE HEADLINES:

July Employment Report Complicates Fed Outlook

Although the Federal Open Market Committee (FOMC) made no changes to interest rate policy at its July meeting, three members dissented and recommended raising rates because of concerns about persistent inflation. The market expects the Fed to raise rates at its next meeting in September. To do so with confidence, however, the central bank would need employment, the other side of its dual mandate, to remain on solid footing. The July employment report has called that stability into question—and potentially created challenges for the Fed.

Job Creation Turns Negative
After rebounding in the spring, the labor market seems to have weakened. The employment report showed that nonfarm payrolls unexpectedly declined by 23,000 jobs in July, well below expectations for an increase of 80,000 jobs. In addition, the U.S. Department of Labor revised May and June payroll figures downward by a combined 103,000 jobs, reducing the three-month job creation average to 20,000.

This marks the third consecutive summer of labor market weakness. In the previous two years, job creation eventually stabilized. Headwinds such as tariffs, higher energy prices, and AI adoption certainly exist and could weigh on future job growth. At the same time, this weakness may prove to be part of the same seasonal pattern.

The Fed’s Next Move Is Unclear
The primary issue is that employment weakness is emerging while inflation remains above the central bank’s 2 percent target. Addressing these issues requires different policy responses. If the Fed wanted to focus on a weakening job market, it would reduce interest rates. Conversely, if it wanted to tame inflation, it would increase interest rates.

The problem? Lower rates might exacerbate inflation, and higher rates could lead to more labor weakness. This leaves the central bank between a rock and a hard place. Fed officials must determine whether the employment weakness is the start of a slowdown or merely a blip. Their decision will likely depend on upcoming inflation reports, the first of which is expected this week, and the August employment report.

Follow the Data
Because of the weaker-than-expected employment report, market participants have unwound their expectations for a September rate increase. The consensus now is that the Fed will stand pat before potentially cutting rates in October. No one knows exactly how the Fed will interpret the data, so waiting for the next several reports remains the best course of action.

“Lower rates might exacerbate inflation, and higher rates could lead to more labor weakness. This leaves the central bank between a rock and a hard place.”

Report Releases: August 3–7, 2026

Institute for Supply Management (ISM) Manufacturing Index:
July (Monday)

Manufacturer confidence exceeded economists’ estimates last month, driven primarily by faster-than-expected hiring.

Expected/prior month ISM Manufacturing index: 53.9/53.3
Actual ISM Manufacturing index: 55.6

ISM Services Index:
July (Wednesday)

Service sector confidence improved modestly last month but missed expectations. The index remains in expansionary territory, however.

Expected/prior month ISM Services index: 51.5/50.8
Actual ISM Services index: 50.1

Employment Report:
July (Friday)

The July employment report showed a net loss of 23,000 jobs, far below expectations. May and June payroll reports were revised downward by a combined 103,000 jobs. This trend indicates weakness in the labor market.

Expected/prior change in nonfarm payrolls: +80,000/+20,000
Actual change in nonfarm payrolls: –23,000

The Takeaway

Data was mixed. The manufacturing sector showed more strength than expected, but the services sector missed expectations.
The July employment report showed job losses, and the previous two reports were revised downward.

Financial Market Data

Equity

Strong earnings reports, no further escalation of the Middle East conflict, and a weak employment report helped stocks rally. The Nasdaq Composite led the way, rising more than 5 percent. The S&P 500 and the Russell 2000 each rose more than 3.5 percent, and the Dow Jones Industrial Average increased almost 3 percent. Technology was the strongest sector, rising more than 7 percent, while materials increased 5.5 percent. With oil prices down nearly 8 percent, energy declined more than 3 percent. International developed markets rose more than 2 percent, but emerging markets dropped modestly.

Fixed Income

Bonds also rallied as the employment report led to lower Treasury yields across the curve. The 30-year Treasury yield pulled back from the previous week’s high-water mark, and the 10-year Treasury yield dropped back to 4.65 percent. Core bonds, Treasuries, and mortgages were higher. The municipal market also showed strength, rising 0.68 percent.

The Takeaway

Stocks rallied across the globe. Earnings and lower bond yields drove the rally, with the Nasdaq Composite rising more than 5 percent.
Fixed income markets were also higher. The 30-year Treasury yield pulled back from the previous week’s 19-year high.

Looking Ahead

It will be another busy week of economic reports, highlighted by updates on consumer and producer prices.

The week kicks off on Wednesday with the Consumer Price Index report for July. Consumer prices are expected to tick up modestly after declining in June.
On Thursday, we’ll see the Producer Price Index report for July. Producer prices are expected to rise for the month but decline on a year-over-year basis.
Lastly, on Friday, we’ll receive an update on advance retail sales for July and the preliminary University of Michigan consumer confidence survey for August. Retail sales are expected to improve, in part due to World Cup–related spending. Consumer confidence, however, is expected to decline after two months of improvement.

Disclosure: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved. Please contact your financial professional for more information specific to your situation.

Bonds are subject to availability and market conditions; some have call features that may affect income. Bond prices and yields are inversely related: when the price goes up, the yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Authored by the Investment Research team at Commonwealth Financial Network^®.

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