Jobs Decline Boosts Markets to Record High and Our National Symbol

August 9, 2026

A DECLINE IN JOBS: In July, jobs in the U.S. declined by 23,000. There was an unusual drop of 50,000 government education workers in July. The unemployment rate decreased to 4.1%, but that was because over 260,000 people dropped out of the labor force, which is never a positive sign. Strict immigration enforcement and our aging population is going to slow growth without raising the unemployment rate, and July was a perfect example of that. Private payrolls increased including in construction and manufacturing. Average hourly earnings rose only 0.1% and are up only 3.2% for the year. While this report is generally weak, the markets loved it because they believe it gives the Fed more reasons to not raise interest rates.

PACE OF LAYOFFS IS SLOWING: In July, U.S. based employers announced 33,000 job cuts. That is the lowest monthly figure in two years. So far, 2026 layoffs have been 41% lower than 2025.

ANOTHER RECORD CLOSE: The S&P 500 closed out another strong week, and set another record high at Friday's close. The weak jobs report on Friday gave markets the last boost of the week. Markets have been pricing in at least one interest-rate hike by the Fed this year, but Friday's weak job report made investors second guess that prediction. The earnings report of Palantir encouraged investors, and its shares jumped by nearly 40%. Its commercial AI business has exploded, and it increased its future earnings guidance. For the second quarter so far, earnings growth is coming in at over 50%! The recent pullback of stocks in the tech sector, followed by continued strong earnings got investors to jump back into that sector in a big way. But the rally was broad with the NASDAQ up over 5% and the Russell 2000 (smaller company stocks) up about 4.5%.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

U.S. ECONOMIC ACTIVITY CONTINUES TO EXPAND ACCORDING TO ISM: According to the Institute for Supply Management (ISM), economic activity in both the manufacturing and services sectors continue to expand. The ISM Manufacturing Index increased to 55.6 (anything above 50.0 indicates growth) in July. That is the fastest pace for manufacturing in four years. July was the seventh consecutive month of expansion. Capital investment in AI, reshoring of production, and increased defense procurement are all supporting the manufacturing sector. Meanwhile, the ISM Services Index rose slightly from 54.0 (in June) to 54.1. Increased business activity from the World Cup helped.

EUROPE VERSUS THE U.S.: In 2006, the European economy was 110.5% the size of the U.S. economy. By 2008, the European economy grew to be 131% the size of the U.S. economy. It has declined relative to the U.S. since. In 2015, for the first time, it came in smaller than the U.S. economy at 90.8% the size of the U.S. economy. In 2026 that number was 71.1%. Several European countries struggled mightily to recover from the Great Recession resulting in bailouts and austerity measures. In 2016, Brexit happened. Finally, the U.S. has recovered much more robustly after the COVID-inspired lockdowns.

MORTGAGE RATES REACH YEAR-LONG HIGH: A realtor client of ours told us last week that she is dong fine this year, but it is much harder. Every transaction is hard work compared to other years. It will not get any easier if mortgage rates rise, which is exactly what they have been doing since March. The average 30-year mortgage hit 6.69% last week.

INNOVATION: I have recently been seeing encouraging articles about batteries. The current lithium battery industry has some problems. Lithium batteries catch fire. Production is environmentally troublesome. But a new battery that uses salt instead of lithium is beginning to take on market share. Of course, China is in the lead with production, but many U.S. companies are beginning to get into the innovation race. Sodium-based batteries are potentially cheaper, longer-lasting, safer and more reliable than lithium batteries. General Motors is currently designing its own sodium-based batteries. Morgan Stanley projects that within a decade, salt-based batteries will be one third of the battery market (currently 1%). I have lithium-based batteries that power my weed wacker, hedge trimmer, and blower. Due to stories about fires, I now leave these batteries in my shed (which is not attached to my house) instead of my garage. A cheaper technology that uses a more abundant, environmentally-friendly, and a less flammable substance sounds great.

INFLATION WILL BE FRONT AND CENTER THIS COMING WEEK: This coming week July's Consumer Price Index (CPI) will be announced along with the Producer Price Index and retail sales.

LIMELIGHT: I got to share the stage with some great people this past week.

A MAJESTIC SIGHT: I golfed at Applecross Country Club in Downingtown, PA this weekend. At one point, my fellow golfers told me to look up into a tree. I'm glad I did. I saw this beautiful, majestic, bald eagle.

Have a great week!

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Stonecrop Wealth Advisors, LLC

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"Calm seas never made a good sailor" Franklin D. Roosevelt*

"Warn those who are idle and disruptive, encourage the disheartened, help the weak, be patient with everyone. Make sure that nobody pays back wrong for wrong, but always strive to do what is good for each other and for everyone else.". I Thessalonians 5:14-15 (NIV)

*In commemoration of the 250th anniversary of the United States, I am finding a quote from a president each week, in order. This is the 32nd week, and Franklin D. Roosevelt was our 32nd president.

SOURCES:

ANOTHER RECORD CLOSE: https://www.wsj.com/finance/stocks/u-s-stocks-notch-fresh-record-after-jobs-report-eases-rate-hike-fears-339b687b?mod=stocks_news_article_pos3 AND https://myweeklystock.substack.com/p/weekly-market-recap-aug-3-7-patience?publication_id=697043&post_id=209964557&isFreemail=true&r=s86er&triedRedirect=true AND https://seekingalpha.com/news/4629310-trending-stocks-this-week-as-spacex-palantir-earnings-and-jobs-data-drive-markets

A DECLINE IN JOBS: https://www.ftportfolios.com/Commentary/EconomicResearch/2026/8/7/nonfarm-payrolls-declined-23,000-in-july

U.S. ECONOMIC ACTIVITY CONTINUES TO EXPAND ACCORDING TO ISM: https://www.ftportfolios.com/Commentary/EconomicResearch/2026/8/5/the-ism-non-manufacturing-index-rose-to-54.1-in-july AND https://www.ftportfolios.com/Commentary/EconomicResearch/2026/8/3/the-ism-manufacturing-index-increased-to-55.6-in-july

EUROPE VERSUS THE U.S. https://www.zerohedge.com/economics/europe-was-once-bigger-us-economy-what-happened

INNOVATION: https://www.wsj.com/business/energy-oil/china-free-batteries-made-from-salt-are-finally-here-cc1cd766?mod=Searchresults&pos=1&page=1 AND https://www.reuters.com/default/ai-energy-race-accelerates-sodium-battery-production--reeii-2026-06-29/

MORTGAGE RATES REACH YEAR-LONG HIGH: YCharts.com

PACE OF LAYOFFS IS SLOWING: https://www.wsj.com/economy/jobs/layoffs-2026-tracker-784ea69f?mod=economy_feat5_jobs_pos2

(c) 2026 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved

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SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.