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♦ Waterloo Capital ♦
Last Week
on Wall Street
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S&P 500
7,756
▲ +3.6% WK
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DOW JONES
54,036
▲ +3.0% WK
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NASDAQ
26,691
▲ +5.2% WK
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10-YR YIELD
4.65%
▼ -6 BPS WK
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LEAD Markets & Macro
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The week opened with Washington calling off strikes on Iran and closed with a jobs report showing the economy shed workers. The market treated both as reasons to buy, and all three indexes posted their strongest week since April.
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The S&P 500 closed Friday at a record 7,756, its second record of the week. The Dow crossed 54,000 for the first time on Tuesday and kept most of the ground. The Nasdaq climbed more than 5% for the week as chip stocks strung together their best four-day rally since 2020. The starting gun was a headline rather than a data release: over the weekend, President Trump called off planned strikes on Iran and said talks to reopen the Strait of Hormuz would begin Monday. Crude dropped more than 5% that session, and the indexes went straight to records.
The peace trade wobbled midweek. Iranian state media threw cold water on the Oman framework, a draft plan surfaced that would keep U.S. and Israeli ships out of the strait, and a vessel was struck off the coast of Yemen. Oil clawed back most of Monday's decline, and by Thursday the conversation on trading desks had swung back to whether the Federal Reserve might need to raise rates as soon as September. Then Friday morning's July jobs report printed with a minus sign in front of it, and investors decided that question had just answered itself. More on that below.
For diversified portfolios, the week was a study in owning more than one story at a time. The gains came from two directions with little connection to each other: a war premium draining out of the oil market at the start of the week, and a rate scare draining out of the bond market at the end of it. A portfolio holding broad equities alongside duration collected on both moves without having to predict either one, which is roughly the point of holding both.
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BOTTOM LINE
The best week since April ran on two exits: a war premium leaving the oil market on Monday and a rate-hike premium leaving the bond market on Friday. Balanced portfolios were positioned for both without having to call either.
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By the Numbers
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Best week since April for all three major averages: S&P 500 +3.6%, Nasdaq +5.2%, Dow +3.0% |
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Dow above 54,000: Tuesday's close at 54,349 was the first finish above the mark in the index's history |
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Chip rebound: semiconductors posted their best four-day rally since 2020 early in the week; the sector ETF gained about 7% over the five days |
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Oil round trip: WTI fell 5.2% Monday to $80.25 after the strikes were called off, then settled near $77 Friday as the Hormuz talks wobbled |
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10-year yield: closed the week near 4.65%, down 6 bps after topping 4.7% the prior Friday, its highest level since January 2025 |
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ISM surveys: services at 54.1 and manufacturing at 55.6, both comfortably in expansion territory |
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· Two Stories That Moved the Tape ·
The Week's Defining Headlines
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STORY 01 Macro · Labor Market
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The key takeaway,
Wall Street expected 83,000 new jobs. The economy shed 23,000 instead, and revisions erased another 103,000 from May and June. Stocks rallied anyway, because the number the market was really trading was the odds of a September rate hike, and those collapsed on the print.
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Markets walked into Friday pricing a better-than-even chance that Kevin Warsh's Federal Reserve would raise rates in September, after a rebound in oil pushed the 10-year Treasury yield above 4.7% last week for the first time since January 2025. Then 8:30 a.m. arrived and the Bureau of Labor Statistics reported that nonfarm payrolls fell by 23,000 in July, against a Dow Jones consensus calling for 83,000 added. The unemployment rate ticked down to 4.1%, wages were essentially flat on the month, and the revisions did as much damage as the headline: May was cut from 129,000 to 63,000 and June from 57,000 to 20,000, a combined 103,000 jobs that turned out never to exist.
A shrinking payroll count is a bad sign on its own terms, and it still is. But with inflation worries and hike talk dominating the summer, investors read the report as the data point that pushes a September rate increase off the table, and market-implied odds of a hike fell from roughly 55% before the release to about one in five after it. The 2-year Treasury yield, the maturity most sensitive to Fed policy, fell on the news, and rate-sensitive growth stocks led the rally, with the Nasdaq outpacing the Dow by a full percentage point. Whether the Fed reads July the same way is a question for the September meeting, with two inflation prints between now and then; the report itself is a reminder that the case for easier policy and the case for a healthy economy are not the same case.
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DATA THAT DROVE THE STORY
| ■ | July nonfarm payrolls: -23,000 vs. Dow Jones consensus of +83,000 |
| ■ | Revisions: May cut to +63,000 from +129,000, June to +20,000 from +57,000; 103,000 fewer jobs combined |
| ■ | Unemployment rate: ticked down to 4.1%; economists had expected 4.2% |
| ■ | Wages: average hourly earnings roughly flat on the month at $37.62, up 3.2% year over year |
| ■ | Sector detail: health care kept adding jobs; local government education and retail trade declined |
| ■ | Rate repricing: market-implied odds of a September hike fell from roughly 55% to about 20% on the print, per CME FedWatch data |
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Source: BLS: The Employment Situation, July 2026 →
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STORY 02 Aerospace · First Earnings
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The key takeaway,
Eight weeks after the largest IPO on record, SpaceX delivered its first quarterly report as a public company: $7.8 billion in revenue against an expected $6.81 billion, with adjusted EBITDA nearly double the forecast. The satellite business, not the rockets, drove the beat.
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SpaceX reported Tuesday afternoon that revenue reached $7.8 billion in the second quarter, well ahead of the $6.81 billion analysts expected, with adjusted EBITDA of $3.5 billion against a forecast near $2.0 billion. Starlink, the satellite connectivity business, supplied the strength, while capital spending and the losses in the company's AI segment both declined. The backlog stood at $47.5 billion. The numbers arrived at a low moment for the stock: after pricing its June IPO at $135 in the largest offering on record and running past $225 in its first days of trading, the shares had surrendered more than $500 billion in market value during the summer's chip slump.
The report reset the conversation. Shares rallied sharply midweek, helped along when Elon Musk said SpaceX would build its future AI computing infrastructure exclusively on Nvidia processors, a comment that lifted the chipmaker as well. Thursday brought a sterner test: the first post-IPO lockup expired, freeing more than 900 million shares to trade, and the stock absorbed the new supply without giving back the week's recovery. For a company that spent its first eight public weeks as a referendum on hype, the Starbase, Texas operation now has an earnings record, a disclosed backlog, and a float that looks something like its real ownership.
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DATA THAT DROVE THE STORY
| ■ | Q2 revenue: $7.8 billion vs. $6.81 billion expected, a record for the company, led by Starlink connectivity |
| ■ | Adjusted EBITDA: $3.5 billion vs. a forecast near $2.0 billion |
| ■ | Backlog: $47.5 billion; capex and the AI segment's loss both declined in the quarter |
| ■ | IPO context: priced at $135 on June 12 in the largest IPO on record; shares topped $225 before shedding over $500 billion in market value in the summer slump |
| ■ | Nvidia commitment: Musk said future SpaceX AI infrastructure will run exclusively on Nvidia processors |
| ■ | Lockup test: the first post-IPO lockup expired Thursday, freeing more than 900 million shares to trade |
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Source: TheStreet: SpaceX and AMD report earnings →
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· Other Things Worth Knowing ·
Around the Water Cooler
Six stories from this week worth your morning coffee.
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EARNINGS · SOFTWARE
Palantir posts a blockbuster quarter and raises its full-year outlook
The results landed Monday night and the stock surged, giving the week its proof point that AI demand is reaching the software layer.
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M&A · PHARMA
AstraZeneca and Bristol Myers Squibb discussed a merger, per the FT
A combination would be worth roughly $400 billion and rank among the largest pharmaceutical deals ever attempted. Neither side has confirmed.
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TEXAS · POWER
Irving's Vistra reports as AI power demand strains the grid
Data centers use about 6% of U.S. electricity today and could approach a fifth by 2035, with Texas expected to run above the average.
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COMMODITIES · GOLD
Gold jumps toward $4,400 an ounce as rate fears fade
The metal gained roughly 3% Friday after the jobs report knocked down hike odds; falling rate expectations remain gold's favorite fuel.
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LABOR · LAYOFFS
Challenger layoffs hit a two-year low, muddying the labor picture
Employers announced 33,429 July job cuts, down 46% from a year ago, an odd companion to a payrolls month that went negative.
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MARKETS · STREET TALK
The S&P 8,000 chorus gets louder
CFRA lifted its year-end target to 8,050, Fundstrat's Tom Lee called for 8,000 this month, and prediction-market traders now price an 8,000 print in 2026 as likely. Forecasts, all of them.
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Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.
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