Global equities headed for their strongest weekly gain since May as U.S. stock futures rose ahead of July nonfarm payrolls. Markets digested strong corporate earnings, climbing oil prices, and shifting interest rate expectations ahead of a crucial U.S. employment report that could dictate future Federal Reserve policy.
Tech Earnings and Earnings Optimism Drive Markets
Global stock markets headed toward their strongest weekly gain in three months, supported by robust corporate earnings and enthusiasm surrounding artificial intelligence. MSCI’s All-World index rose 2.4% over the week. In Europe, shares in drugmakers and technology companies lifted the STOXX 600 index by 0.6% on the day and 2% for the week, according to Reuters.
U.S. stocks also advanced as strong quarterly reports from major technology firms drew investors back into the AI trade. Microsoft forecast strong cash generation through fiscal 2027, while Amazon reported its strongest cloud growth in more than four years. Those results helped alleviate lingering doubts about heavy corporate spending in the sector.
“There were worries that Amazon’s spending was just moonshot spending, that it’s irresponsible spending, and (CEO) Andy Jassy just put those fears to bed.”
Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma
The positive momentum extended across multiple bourses. The Dow Jones Industrial Average rose 0.53 per cent to 52,485.74, the S&P 500 gained 0.70 per cent to 7,489.81, and the Nasdaq Composite ended up 1.00 per cent at 25,373.85, the Hindu Business Line reported. Gains were tempered by a more than 7 per cent drop in Apple shares after a disappointing forecast indicated the iPhone maker was struggling to secure components amid supply chain pressures from the AI-driven data-centre boom.
Jobs Data and Fed Rate Speculation
Attention turned squarely to the U.S. nonfarm payrolls report for July. Forecasts centered on a rise of 80,000 to 83,000 jobs, following a gain of 57,000 in June, with the unemployment rate expected to hold steady at 4.2%. Money markets showed traders split on whether the Federal Reserve would raise interest rates at its upcoming meeting, placing heightened importance on the employment figures.
Feroli added that a strong jobs number would reinforce higher-for-longer pricing and push up rates, whereas a soft report could cause yields to ease and shift policy expectations toward a dovish path. Analysts noted that because Federal Reserve leadership has offered limited forward guidance, the employment data carries unusual weight in determining market direction.
Bond Yields Hit Multi-Year Highs Amid Inflation Concerns
Longer-dated U.S. Treasury yields climbed after three Federal Reserve policymakers who dissented in favor of a rate hike at the week’s meeting made public cases for higher rates. The yield on benchmark U.S. 10-year notes rose 4.51 basis points to 4.708 per cent and reached 4.747 per cent, marking the highest level since January 2025, noted in market coverage. Meanwhile, the 30-year bond yield gained 4.39 basis points to 5.2509 per cent, hitting its highest level since mid-2007. Traders subsequently priced in 69 per cent odds of a rate increase at the central bank’s September meeting.
Oil prices also influenced market sentiment, closing higher and finishing July with their largest monthly gains since March. West Texas Intermediate futures for September delivery rose 0.8% to $77.91, while Brent crude climbed 1.1% to $83.40 before later easing to around $82 a barrel, CNBC reported. Rising energy costs stoked inflation worries, though investors remained hopeful that potential diplomatic developments regarding the Strait of Hormuz could eventually ease supply pressures.
Central Bank Actions and Currency Markets
In currency markets, the Japanese yen held steady at around 158.3 to the dollar after intervention by Japan and the U.S. sparked a sharp rally.
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