Weekly Market Review | August 3-7, 2026

Financial Markets Outlook for the Coming Week: Jobs, Bond Yields and the Next Earnings Wave

Financial markets enter the first week of August following an impressive recovery, but underlying tension remains elevated. The S&P 500 gained approximately 1.1% last week, the Nasdaq added roughly 1.6% and the Dow Jones rose around 1%. On Friday alone, the S&P 500 climbed 0.7% to 7,489, the Nasdaq advanced 1% and the Dow added 0.5%. Amazon led the gains after strong results restored some confidence that massive investments in artificial intelligence and data centers may be beginning to generate tangible returns. Apple’s sharp decline, however, demonstrated how selective investors have become and how quickly a stock can be punished when guidance fails to meet expectations.

The broader picture is more complicated. Although the major indexes recovered, July ended with significant weakness in technology and semiconductor shares, while the equal-weighted S&P 500 performed considerably better. This suggests that money is not necessarily leaving equities, but is rotating away from a narrow group of expensive momentum stocks and toward sectors and companies that previously lagged. Broader participation could make the rally more durable, but it also shows that investors are no longer prepared to treat every dollar of AI spending as an automatic promise of future growth.

The U.S. labor market will dominate the economic calendar. Monday brings the ISM Manufacturing PMI, after the index showed continued expansion at 53.3 in June. Tuesday features the JOLTS job-openings report and the U.S. trade balance. Wednesday brings ADP private-payroll figures and the ISM Services PMI, which stood at 54 in June. Weekly jobless claims arrive on Thursday, followed by the week’s most important release on Friday: the July employment report.

Economists expect approximately 83,000 jobs to have been added in July, with the unemployment rate edging up from 4.2% to 4.3%. The U.S. economy created just 57,000 jobs in June, so the new report should help determine whether that weakness was temporary or the beginning of a clearer slowdown. An exceptionally strong report could weigh on equities by increasing expectations for another Federal Reserve rate hike. A moderately soft figure could lower Treasury yields and support stocks, while an extremely weak report could trigger concerns that slower growth is beginning to threaten corporate earnings.

The Federal Reserve left its target rate unchanged last week at 3.5%–3.75%, but the decision passed by a 9–3 vote, with an unusually large number of policymakers favoring a more restrictive stance. At the same time, U.S. economic growth slowed to an annualized 1.5% in the second quarter from 2.1% in the first. The combination of moderating growth, annual CPI inflation of 3.5%, elevated energy prices and a gradually cooling labor market leaves the Fed in a difficult position. Raising rates could deepen the slowdown, but waiting too long could damage confidence in its commitment to controlling inflation.

The bond market is already delivering a clear warning. The 10-year Treasury yield ended July near 4.74%, the two-year yield near 4.29% and the 30-year yield around 5.27%, its highest level in approximately 19 years. Rising long-term yields reflect concerns about inflation, large government deficits, heavy Treasury issuance and the Fed’s credibility. As long as long-dated yields remain elevated, they will continue to compete with equities and place particular pressure on growth companies whose valuations depend heavily on profits expected far into the future.

Earnings season will also continue to generate sharp, company-specific moves, with more than one-quarter of the S&P 500 expected to report during the week. Palantir reports after Monday’s close, followed by AMD after the bell on Tuesday. AMD’s results will be an important test of demand for AI accelerators and its ability to narrow Nvidia’s lead. Disney reports before Wednesday’s opening bell, while Eli Lilly also releases results that day. Investors will focus on Palantir’s commercial growth, AMD’s data-center outlook, Disney’s streaming and parks businesses, and demand for Eli Lilly’s diabetes and weight-loss treatments.

Corporate profitability is still providing fundamental support. According to LSEG data, second-quarter S&P 500 earnings are tracking approximately 29% above a year earlier, although a large share of that growth remains concentrated in AI-related companies. The index trades at roughly 20 times expected earnings, slightly above its 10-year average of 19. The market is therefore not inexpensive, but valuations are less extreme following the recent technology selloff. Further gains will require more than headline earnings beats: investors will also demand credible guidance, strong cash generation and greater discipline in capital spending.

Oil remains the most significant macroeconomic risk. Brent crude ended the week near $90 a barrel, while WTI settled at approximately $84.70. Brent gained around 24% in July and WTI rose roughly 21%, reflecting disruptions to tanker traffic and fears surrounding supply through the Strait of Hormuz and other regional shipping routes. Any renewed escalation could rapidly push prices higher, lift inflation expectations and pressure both bonds and equities. Diplomatic progress, in contrast, could remove part of the geopolitical premium and provide markets with meaningful relief.

Gold is trading close to $4,050 an ounce but has struggled to advance despite geopolitical uncertainty. Higher real yields and the possibility of tighter monetary policy reduce the relative attraction of an asset that pays no interest. Gold is therefore caught between two opposing forces: geopolitical and fiscal uncertainty on one side, and high bond yields and a relatively firm dollar on the other.

Bitcoin was trading near $63,400 over the weekend, with Ether around $1,625. High yields, reduced liquidity and limited demand for speculative risk continue to weigh on digital assets. A meaningful improvement in momentum would probably require Treasury yields to stabilize, the dollar to weaken and capital to return more broadly to risk assets.

In Israel, the TA-35 ended Thursday 1.32% higher at 4,149.5, while the TA-125 gained approximately 1.25%. The Bank of Israel’s representative dollar exchange rate was set at NIS 3.057. No interest-rate decision is scheduled this week, although the central bank will release its July foreign-exchange reserve figures on Thursday. The local market will continue to respond primarily to security developments, energy prices, the shekel and the direction of Wall Street. A stronger shekel and a lower domestic risk premium could support Israeli bonds and locally focused companies, while renewed regional escalation or another rise in oil prices could quickly restore volatility.

The coming week is therefore more than another earnings-season test. It is a test of the relationship between economic growth, inflation and the bond market. As long as corporate profits continue to expand and the labor market cools gradually rather than collapsing, equities can continue to recover. However, a 30-year Treasury yield above 5% and oil near $90 are not background noise. They raise the required return on stocks and leave investors with a much smaller margin for error.