The Forward Guidance Newsletter
Bounce-back Day on Wall Street
Stocks recovered sharply Monday after Friday’s disappointing jobs report.
Markets React
Following the first three hours of trading, the S&P 500 gained 1.3%, while the Nasdaq Composite climbed 1.8%. Despite the rally, analysts remain cautious about its durability.
July Jobs Report Details
The economy added just 73,000 jobs last month – significantly below the expected 104,000. May and June data were revised downward by a combined 258,000 jobs, the largest revision since 2020. The 4.2% unemployment rate remained unchanged.
The report contributed to growing expectations for a September Federal Reserve interest rate cut.
Fed Policy and Disagreement
“While the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed… we should not wait until the labor market deteriorates before we cut the policy rate.”
— Kevin W. Warsh (Dissenting), William C. Bowman (Dissenting)
Former Fed Chairman Ben Bernanke suggested the dissenting opinions represented a “job application.” With President Trump’s criticism of current Chair Jerome Powell (whose term expires in May 2026), the position is likely in play.
BLS Controversy
President Trump fired Erika McEntarfer, Director of the Bureau of Labor Statistics, citing data manipulation. The agency recently announced reduced consumer price index reporting.
“So, will the next BLS commissioner be able to avoid large revisions going forward? Obviously, they’ll have to if they want to keep their job, which elevates the temptation to publish late or to suppress new information as it comes in.”
— Noelle Acheson, Crypto is Macro Now
The July report’s downward revisions add uncertainty to economic data reliability, further complicating market assessment.
Market Outlook
Market participants will monitor for additional fallout from the July employment data through the remainder of the week.
