Dow slips as Nasdaq jumps after weak jobs data cools Fed rate hike bets

US stocks were mixed on Friday after a weaker-than-expected July jobs report sharply reduced expectations of a Federal Reserve interest rate hike in September.

The Dow Jones index fell about 0.11% or 60 points, while the S&P 500 gained 0.37%.

The Nasdaq Composite led the advance, climbing more than 1.06% as semiconductor and software stocks rallied following upbeat corporate earnings and guidance.

The gains came after Wall Street ended Thursday's session lower, when higher oil prices and corporate earnings weighed on sentiment.

Weak payrolls reshape Fed expectations

The Labor Department reported that the US economy unexpectedly lost 23,000 jobs in July, compared with economists' expectations for job growth of about 80,000.

The unemployment rate eased to 4.1% from 4.2% in June, while annual average hourly earnings increased 3.2%, below expectations of 3.5%.

The weaker labor market data prompted traders to sharply reduce expectations for a September rate hike.

Money market pricing showed the probability of a rate increase falling to around 20%, down from roughly 55% before the employment report.

Futures markets also increasingly reflected expectations that the Federal Reserve would leave its benchmark interest rate unchanged at its next policy meeting.

The employment figures arrive at a time when investors are paying close attention to economic data under Federal Reserve Chair Kevin Warsh, whose limited forward guidance has made incoming macroeconomic indicators increasingly important for monetary policy expectations.

The major US indexes were also on track for solid weekly gains.

If Friday's advances hold, the S&P 500 and Dow Jones Industrial Average would record their strongest weekly performance since April, while the Nasdaq would post its best week since May after rebounding from a recent pullback.

AI-linked technology stocks lead market gains

Technology shares outperformed in trading following another round of earnings reports.

Atlassian surged more than 36% after forecasting quarterly revenue above Wall Street expectations.

Microchip Technology also climbed over 11% after issuing stronger-than-expected revenue guidance, helping lift the broader semiconductor sector.

Micron Technology fell 0.2%, while Marvell Technology advanced 3.44%.

Software stocks also traded higher, with ServiceNow rising 5.3%.

Cloudflare jumped more than 11% after raising its full-year revenue forecast above analyst estimates, highlighting continued demand tied to artificial intelligence infrastructure.

Elsewhere, Airbnb gained around 14% after reporting second-quarter revenue that exceeded expectations.

Not all earnings reactions were positive.

Trade Desk tumbled nearly 25% after forecasting third-quarter revenue below Wall Street estimates.

Trade measures and Middle East remain in focus

The White House announced new measures aimed at supporting domestic production by imposing price floors and a 15% tariff on products made from polysilicon, a key material used in semiconductors and solar panels that is primarily produced in China.

The move boosted solar stocks, with First Solar rising about 9% and SolarEdge gaining more than 5% in trading.

Meanwhile, geopolitical tensions continued to attract attention after reports that Iran was reviewing legislation that could restrict US, Israeli and other vessels deemed hostile from transiting the Strait of Hormuz while imposing substantial penalties for violations.

Separately, Iran-backed Houthi forces launched attacks on Saudi Arabia, keeping investors alert to potential disruptions in global energy markets.

Oil prices eased modestly on Friday after surging in the previous session, with Brent crude slipping below $82 per barrel and US West Texas Intermediate trading below $77 per barrel as markets continued to assess the evolving geopolitical situation.