S&P 500, Nasdaq fall Friday, but notch weekly gains after blowout July jobs report

Check here for real-time updates of the U.S. stock market.

We're in a great economy, but we're still in a hot inflationary environment, says New Street's Saporu
We're in a great economy, but we're still in a hot inflationary environment, says New Street's Saporu

Stocks wavered Friday in a volatile trading session after the July jobs report was much better than expected, as investors assessed what a strong labor market would mean for the Federal Reserve's rate tightening campaign.

The Dow Jones Industrial Average gained 76.65 points, or 0.23%, to end at 32,803.47. Even with Friday's gains, however, it fell on the week. The S&P 500 shed 0.16% to end at 4,145.19, and the Nasdaq Composite lost 0.50% Friday, falling to 12,657.56. Still, both the S&P 500 and the Nasdaq ended the first week of August higher.

Losses were offset by bank stocks, which rose on hopes that interest rate hikes will continue at a solid clip. Energy stocks also gained, but technology companies slumped.

The labor market added 528,000 jobs in July, easily beating a Dow Jones estimate of a 258,000 increase. The unemployment rate ticked down to 3.5%, below the 3.6% estimate. Wage growth also rose more than estimated, up 0.5% for the month and 5.2% higher than a year ago, signaling that high inflation is likely still a problem.

The Fed has not pivoted and will continue to raise interest rates, says Nuveen CIO
The Fed has not pivoted and will continue to raise interest rates, says Nuveen CIO

Stocks opened lower following the report, even as it seemed to indicate the economy was not currently in a recession. Job growth was expected to slow as the Fed continues to hike interest rates to tame inflation, but this report shows a labor market still running hot. That means the central bank may act more aggressively at its next meeting.

"Anybody that jumped on the 'Fed is going to pivot next year and start cutting rates' is going to have to get off at the next station, because that's not in the cards," said Art Hogan, chief market strategist at B. Riley Financial. "It is clearly a situation where the economy is not screeching or heading into a recession here and now."

Friday's jobs report is a crucial one as it's one of two the central bank will see before it decides how much to raise rates at its September meeting. Indeed, traders are already betting on a tougher stance from the Fed. Policy makers will have another jobs report and two more consumer price index numbers to weigh before the central bank makes its next rate decision.

Major averages posted their best month since 2020 in July on the hope the Fed would slow the pace of its hikes. The S&P 500 added 9.1% last month.

Lea la cobertura del mercado de hoy en español aquí.

CNBC in 5 minutes: Here are all the stock calls made on CNBC today

Warner Bros. Discovery, Chevron, and Disney are today's stocks: Pro Market Movers August 5
Chevron and Disney are some of today's stocks: Pro Market Movers August 5

Warner Brothers Discovery's first earnings report as a merged entity captured the attention of the pros on CNBC. Shares tumbled more than 16% Friday. On the horizon, Disney's quarterly results -- due Wednesday -- are also a major focal point for investors and analysts.

-Darla Mercado, Christina Falso

Dow gains, S&P 500 and Nasdaq fall after July jobs beat points to more aggressive Fed

Stocks ended the first week of August mixed after the better-than-expected July jobs print on Friday. The Dow Jones Industrial Average gained 76.65 points, or 0.23%, to end at 32,803.47. Even with Friday's gains, however, it fell on the week.

The S&P 500 shed 0.16% to end at 4,145.19 and the Nasdaq Composite lost 0.50% Friday, falling to 12,657.56.

Still, both the S&P 500 and the Nasdaq ended the first week of August higher.

—Carmen Reinicke

Bond market recession warning gets louder after strong jobs report

The gap between 2-year Treasury yields and 10-year Treasury yields snapped to the widest since the year 2000 in Friday trading.

Both yields rose after the strong July jobs report ignited worries the Federal Reserve would be more aggressive about hiking interest rates to combat inflation.

The two yields were about 40 basis points apart, with the 2-year higher than the 10-year. When the shorter duration yield is higher, it is viewed by Wall Street as a recession warning.

Loading chart...

"The last time it was this inverted in 2s/10s, you have to go back to 2000, and that was a much different overall rate environment," said Ian Lyngen, head of U.S. rates strategy at BMO. "We got as inverted as negative 56 during that episode."

Treasury yields, which move opposite price, rose sharply Friday after the government reported 528,000 jobs were added in July, more than double what was expected. The 10-year touched a high of 2.86% Friday, while the 2-year was briefly at a high of about 3.24%, according to FactSet.

 "My biggest take away from the depth of the inversion in the yield curve is the market is confident that the Fed's credibility is high. They will continue to hike rates. The risk is it creates a bigger economic headwind than the economy can handle and we end up tipping into a more significant recession," said Lyngen.

—Patti Domm

Oil posts worst week in months as recession fears weigh

Oil prices eked out a slight gain on Friday, but ended the week sharply lower as recession fears and concerns around a slowdown in demand weighs.

West Texas Intermediate crude futures, the U.S. oil benchmark, ended the week at $89.01 per barrel, for a gain of 0.53%. But for the week the contract tumbled 9.74% for the worst week since April 1. International benchmark Brent crude ended the week at $94.92 per barrel, for a weekly loss of 13.72%.

Loading chart...

— Pippa Stevens

Dow flat, S&P 500 and Nasdaq down heading into final hour of week

Heading into the last hour of trading in the first week of August the Dow Jones Industrial Average was flat, wavering between gains and losses. The S&P 500 shed about 0.48% and the Nasdaq was down about 0.90%. All three major averages are on track to fall on the week.

Stocks fell after the July jobs report came in much stronger than expected, signaling a more aggressive Fed going forward.

—Carmen Reinicke

Tesla stock slips after shareholder meeting

Shares of Tesla fell nearly 7% in intraday trading Friday after the company's annual shareholder meeting, which took place on Thursday. Shareholders approved a 3-for-1 stock split, which would make shares more affordable.

Tesla was the biggest laggard in the Nasdaq Composite in the afternoon.

—Carmen Reinicke

Unemployment inches higher for Black workers in July

Black workers saw unemployment inch slightly higher to 6% in July, while the broader job market saw that rate tick down to 3.5%, according to data from the Bureau of Labor Statistics released Friday.

Broken down by gender, unemployment rose to 5.7% among Black men and declined slightly among Black women (5.3%). Meanwhile, the labor force participation rate, which measures how many people are employed or looking for work, shrunk to 67.3% from 68.1% in June.

Black workers marked the only demographic group that saw the unemployment raise rise in July. While notable, it's difficult to decipher what contributed to these changes among Black workers, said Valerie Wilson, director of the Economic Policy Institute's program on race, ethnicity and the economy.

"I don't know how much of that is a signal of something really changing or just volatility of the data, because the longer term trend had been pretty positive, pretty strong," she said.

At the same time, women continued to make strides in jobs recovery, with the unemployment rate ticking down to 3.1% for those 20 and older. Hispanic women saw the largest decrease in unemployment, which fell to 3.2% from 4.5% in June.

— Samantha Subin

75% of S&P 500 companies beat earnings expectations

The second-quarter earnings season is winding down with 87% S&P 500 companies having reported results. Among those firms, 75% reported a positive EPS surprise, according to FactSet.

So far, the earnings growth for the S&P 500 is 6.7%. If 6.7% is the actual growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since the fourth quarter of 2020, according to FactSet.

— Yun Li

Jobs report points to more rate hikes ahead, MKM Partners says

Don't expect the Fed to slow down on its rate hiking path any time soon, especially after this latest jobs report, according MKM Partners' Michael Darda.

"The jobs and wage numbers seen in July are not what the Fed wants at a time when the economy has overshot its potential and inflation is running at more than 3x the Fed's target," the firm's chief economist and market strategist said. "Bottom line: The Fed will persist in moving the front end of the curve higher until growth momentum is broken and inflation infects lower."

Fred Imbert

Just 3 S&P 500 stocks hit 52-week highs

Just three S&P 500 names climbed to 52-week highs Friday, while an additional four stocks hit 52-week lows.

The highs

The lows

  • Baxter traded at lows not seen since June 2017.
  • Ball Corp reached lows not seen since March 2020.
  • Intel touched a low seen since September 2017.
  • Vornado Realty hit levels not seen since April 2009.

Fred Imbert, Gina Francolla

Carvana, Cloudflare surge on earnings reports

Shares of Carvana and Cloudflare both popped Friday after reporting quarterly earnings.

Cloudflare jumped more than 25% after its earnings beat Wall Street's expectations. The company also bumped up its full-year 2022 guidance, saying it now expects growth of 48%.

Carvana shares also gained more than 35% even though it reported earnings that fell short of analyst estimates. The company did maintain its full-year outlook, however, saying that current headwinds should turn into tailwinds.

—Carmen Reinicke

Fed has more reports to watch before September meeting

Even though the July jobs report signaled no sign of recession and that inflation is still running hot, it's not the last word on the U.S. economy. The Federal Reserve will have three more economic data releases to consider before their Sept. 20-21 meeting, when they're slated to raise interest rates again.

Here's the reports they'll be watching:

  • July consumer price index, due Aug. 10
  • August jobs, due Sept. 2
  • August consumer price index, due Sept. 13

—Carmen Reinicke

Stocks at midday: Dow, S&P 500 and Nasdaq down

Stocks were down midday Friday, though off session lows, as Wall Street digested the July jobs report. The report showed that twice as many jobs were added last month than economists expected, that the unemployment rate declined to 3.5% and that wage growth was stronger than forecast.

The Dow Jones Industrial Average was down 93 points, or 0.28%, while the S&P 500 shed 0.66%. The Nasdaq led losses, down 1.01%.

—Carmen Reinicke

Global Blood Therapeutics surges on potential Pfizer deal, trading halted

Shares of Global Blood Therapeutics jumped nearly 10% Friday after the Wall Street Journal reported that Pfizer is in advanced talks to buy the company for roughly $5 billion. The company makes a drug for sickle-cell disease which was approved in December.

The stock was halted for trading due to the surge.

—Carmen Reinicke

The S&P 500 is about to test the market's bear case, BTIG says

The S&P 500's bear case could be tested soon, if it closes above a certain level, according to BTIG technical analyst Jonathan Krinsky.

Investors have been debating for weeks whether up moves in the market are the result of a temporary bounce or a more lasting bottom. The three major averages just came off their best month since 2020, but there's been so much pain in the market this year that many people are hesitant to believe the worst is behind them.

If the index hits that key level, "we would have to assume that June was the low for this cycle," Krinsky said.

Read more on CNBC Pro.

— Tanaya Macheel

Lyft shares jump 14% after earnings beat

Shares of Lyft surged more than 14% Friday after the ride-hailing service posted better-than-expected earnings results Thursday. The company posted an unexpected quarterly profit, and saw ridership numbers jump back to levels not seen since before the pandemic.

Loading chart...

—Carmen Reinicke