July NFP Falls 23,000, May-June Revised Down 103,000 Combined — S&P 500 Hits Record Close as Fed Hike Odds Tumble

BLS reported nonfarm payrolls fell by 23,000 in July, far short of the roughly 83,000 gain expected, while May and June payrolls were revised down by a combined 103,000. The unemployment rate edged down to 4.1% from 4.2%, largely on a further decline in labor-force participation. Rather than sparking a selloff, markets rallied on reduced hike risk: the S&P 500 closed at a record 7,757.64 (+0.62%), the Dow rose 0.28% to 54,036.93, and the Nasdaq gained 1.3% to 26,690.62. The 10-year Treasury yield fell about 7 basis points to roughly 4.6%. Fed funds futures showed the odds of a September rate hike — which had surged to roughly 82% after the July 23 oil shock — collapsing after the report, a sharp reversal of the hawkish repricing seen two weeks earlier.