The stakes for next week’s inflation data just got higher, now that Friday’s jobs report introduced a new wrinkle to the interest rate outlook. Stocks were higher Friday, capping off a strong start to the month after the latest nonfarm payrolls report showed a surprising loss of jobs in July. Nonfarm payrolls fell by a seasonally adjusted 23,000 last month, while the unemployment rate edged lower to 4.1%, the Bureau of Labor Statistics reported. The shocking report was nevertheless cheered by investors, who took the weakness in the labor market as a sign that the Federal Reserve won’t hike rates in September. That fear had been growing on the Street in recent weeks, after three dissenters at the last central bank meeting in July voted to raise rates. On Friday, the odds of the Fed raising rates by a quarter point at next month’s meeting fell to 42%, from 55% the day before. Treasury yields retreated, with the yield on the 2-year Treasury, which closely tracks expectations for Federal Reserve policy, falling to around 4.2% — another boon for equities. Raising the ante That ups the ante for next week’s consumer and producer price index numbers for July. The Fed has been alert to the dangers of higher inflation, and has expressed confidence in the labor market. But the horrible jobs data suggests the central bank may have to think about weakening consumer spending as well. “They’re going to have to pay attention to both of their mandates, both full employment and stable prices,” said Art Hogan, chief market strategist at B. Riley Wealth. Friday’s labor report “thrust a lot more importance on what has become [the] most important pieces of economic data: CPI, PPI, and PCE. And next week, we’ll get two of those.” Economists aren’t expecting much relief on the inflation front. The July consumer price index is expected to rise 3.4% compared to the same month a year ago, according to FactSet consensus estimates. That’s a hair softer than the 3.5% increase in June, but still far above the Fed’s 2% inflation target. The worst potential outcome would be an unexpectedly hot report that suggests the U.S. is headed for stagflation, marked by stubborn inflation and sluggish growth, forcing the Fed to raise rates at the same time as consumers deal with both a weaker economy and higher prices. By contrast, investors hope for a softer inflation report that will let the Fed stay on hold in September. In recent weeks, some economists and investors have argued that pricing pressures aren’t as bad as feared, especially if easing U.S.-Iran hostilities mean oil prices can also come down. Many are confident that a peace deal is in the works to reopen the Strait of Hormuz, even if there is no definite timeline. In such an environment, Fundstrat’s Tom Lee has argued that the S & P 500 can climb to 8,000 over the next few weeks, a level that is not too unreasonable given that the broader index was last trading just below 7,750 — only 3% away. For now, it’s clear there’s no shortage of exuberance in the market. On Friday, stocks were headed for a second straight winning week, with semiconductors coming back in a big way from July’s rout. Investors are hopeful that the last month’s artificial intelligence unwind skimmed enough of the froth from the market, so that stocks can continue to climb for another few weeks at least. The S & P 500 twice breached fresh all-time highs this week, on Monday and Tuesday. The Nasdaq Composite is about to end the week nearly 5% higher than last Friday. But with investors parsing over every data point in hopes of determining what the Fed might do next, at a time when the central bank itself is releasing less communication, the potential for volatility is high. “It is a picture that gets more complicated for the Federal Reserve,” Hogan said, “and what they do with monetary policy.” Week ahead calendar All times ET. Monday, Aug. 10 Earnings: Simon Property Group Tuesday, Aug. 11 8:15 a.m. ADP Weekly Employment change (07/25) 10:00 a.m. Existing Home Sales (July) Earnings: Super Micro Computer , Lumentum Holdings , Cardinal Health Wednesday, Aug. 12 8:30 a.m. Consumer Price Index (July) 8:30 a.m. Hourly Earnings (July) 8:30 a.m. Average Workweek final (July) 2:00 p.m. Treasury Budget (July) Earnings: Coherent Thursday, Aug. 13 8:30 a.m. Initial Jobless Benefit Claims (08/08) 8:30 a.m. Producer Price Index (July) Earnings: Applied Materials , Tapestry Friday, Aug. 14 8:30 a.m. Retail Sales (July) 10:00 a.m. Business Inventories (June) 10:00 a.m. Michigan Sentiment preliminary (August)
The stakes for next week’s inflation data just got higher. Here’s what’s ahead
Aug 7, 2026
