👋 ICYMI
The U.S. economy lost 23,000 jobs in July. The stock market responded by rallying to a new all-time high. Welcome to the "bad news is good news" regime.
Friday's July payrolls report was a shock — nonfarm payrolls contracted by 23,000, far below the 83,000 consensus, the first job losses in over three years. Unemployment dipped to 4.1% from 4.2%, and labour force participation slipped to 61.4%. Rather than panicking, the market celebrated: the weak data convinced traders the Fed won't need to raise rates, effectively killing the September rate hike consensus that had weighed on equities for months.
The S&P 500 surged to a record close of 7,757.64 — up 3.6% on the week, its best weekly performance since April. The Nasdaq jumped 5.2% to 26,690 — its strongest week since May — with semiconductor stocks leading the charge, the SOXX ETF gaining over 5%. The Dow closed at 54,037.
Gold had its best week in seven months, surging 7.5% to $4,348 as the collapsing rate hike narrative drove investors into precious metals.
Monday had set the tone for the week. The Dow hit a new record close of 53,178 — up 693 points — as oil slid on renewed Iran peace talk reports and Treasury yields fell 6 basis points. The S&P 500 gained 1.48% and the Nasdaq rose 2.1%.
But the star of the week was Palantir $PLTR ( ▲ 10.32% ). The company reported Q2 revenue of $1.94 billion — up 93% year over year — with U.S. commercial revenue climbing 149%. Full-year revenue guidance was raised to $8.15 billion. CEO Alex Karp called the results "otherworldly." The stock surged roughly 29% on Tuesday, approaching its best single-day gain ever.
🔁 Market Movers
💼 July Payrolls: -23,000 — First Job Losses in Over Three Years
The economy shed 23,000 jobs in July, versus expectations for 83,000 added. It's the first negative payrolls print since early 2023. Unemployment dipped to 4.1% as the participation rate fell, suggesting some workers are leaving the labour force rather than being fired. Prior months were also revised lower. The data landed like a permission slip for the Fed to hold — and the market traded accordingly, with rate hike probabilities for September collapsing from 64% to below 20%.
📈 S&P 500 Hits Record 7,758 — Best Week Since April
The S&P 500's 3.6% weekly gain — closing at an all-time high of 7,757.64 — was its strongest week in nearly four months. The rally was broad: semis led with the SOXX up 5%, but healthcare, industrials, and financials all participated. Salesforce $CRM ( ▲ 3.2% ) (+2.47%), Nvidia $NVDA ( ▲ 2.27% ) (+2.33%), and Honeywell $HON ( ▲ 2.27% ) (+2.28%) were the Dow's top performers on Friday. The Nasdaq's 5.2% gain was its best since May.
🤖 Palantir: "Otherworldly" — Revenue +93%, Stock +29%
Palantir's Q2 report was the earnings event of the week. Revenue of $1.94 billion (+93% YoY), U.S. commercial revenue up 149%, GAAP operating margin expanding, and full-year guidance raised to $8.15 billion. CEO Karp said: "We have managed to build something wholly unique." The stock's 29% single-day surge on Tuesday sent its market cap past $350 billion and confirmed Palantir as the premier pure-play AI software platform. Unlike Meta's $META ( ▲ 0.37% ) free cash flow collapse, Palantir is growing and generating cash simultaneously.
🥇 Gold Surges 7.5% — Best Week in Seven Months
Gold rallied to $4,348 — up 7.5% on the week — its strongest weekly performance since January. The collapse in rate hike expectations, combined with weakening labour data and geopolitical uncertainty, reignited the safe-haven bid. Gold had been in a downtrend since April when the peace deal first sparked a risk-on rotation. The July payrolls report may have marked its turning point.
📊 Q2 GDP: 1.5% — Economy Cooling Beneath the Surface
Q2 GDP growth came in at 1.5%, down from 2.1% in Q1, confirming the economy is decelerating. However, private domestic final sales rose 3.9%, suggesting underlying demand remains resilient even as headline growth slows. The combination of slowing growth, negative payrolls, and strong corporate earnings creates an unusual environment — one where the economy is cooling but businesses are still generating record profits.
👀 Signals I'm Watching
🏛 The Rate Hike Is Dead — For Now
Friday’s payrolls report effectively killed the September rate hike. Futures now price a less than 20% chance of any hike this year — down from 67% just six weeks ago. If the August CPI report (due September 10) shows inflation continuing to decline alongside oil, the conversation could shift entirely from hikes to holds — and eventually, to the first cut since the war began. New Chair Warsh’s next FOMC meeting on September 16–17 will be the test.📈Tom Lee: S&P 500 to 7,900–8,000 This Month
Fundstrat’s Tom Lee — one of the most accurate strategists of 2024–2025 — told CNBC he expects the S&P 500 to reach 7,900–8,000 by month-end. That would represent roughly 2–3% upside from current levels. His reasoning: negative payrolls remove the rate hike risk, corporate earnings are growing 25%+, and the AI trade has broadened enough to sustain the rally even if a few names pause.🤖Palantir vs Meta: The AI Software Divide Is Widening
In the same earnings season, Palantir grew revenue 93% with expanding margins while Meta saw EPS decline 14% with free cash flow collapsing. Both are “AI stocks.” Both are spending heavily. The difference is that Palantir is monetising AI through government and enterprise contracts with direct ROI, while Meta is still building infrastructure with no clear near-term return. The market is aggressively pricing this distinction — Palantir is up nearly 70% since its Q1 report while Meta has fallen roughly 25% from its spring highs.🥇Gold’s Reversal Could Signal a Regime Shift
Gold’s 7.5% weekly surge — its best since January — came alongside record equity highs, which is unusual. Normally, gold and stocks move inversely. When both rally simultaneously, it typically signals that markets are pricing in both growth (stocks) and uncertainty (gold). If gold continues to rally from here, it could indicate that the “bad news is good news” trade has a shorter shelf life than the market thinks — because eventually, bad economic news becomes just… bad.
$AXTI return over the past five days
💡In my most recent deep dive, I analyzed AXT Inc. ($AXTI) — one of my favorite under-the-radar AI stocks in the market right now. It has quickly become one of my biggest and best-performing positions.
Investment Club members were the first to know about this new addition — with full access to the deep dive, my thesis, and my price target.
If you'd like to follow along in real time, you can join us here.
George
⚠️ Red Flag to Note
The Economy Lost Jobs. The Market Hit a Record. Something Doesn’t Add Up.
The S&P 500 closing at an all-time high on the same day the economy reports its first job losses in over three years is a disconnect that deserves careful thought. The market’s logic is clear: weak jobs means no rate hike, which means lower discount rates, which means higher stock prices. But that logic has limits. If July’s job losses are the start of a trend — not a one-off distortion — then the earnings growth that has powered this entire rally is at risk. Companies can’t keep growing revenue at 25% if consumers are losing jobs and pulling back spending. The next two payrolls reports (August and September) will determine whether July was an anomaly or a warning. For now, the market is betting on anomaly. If it’s wrong, the repricing could be severe.
🔍 Insider Transactions I’m Watching
Ticker | Insider | Action | Value | Why It Matters |
|---|---|---|---|---|
HF Direct — Beneficial Owner | Buy | ~$50M | The beneficial owner of Westrock Coffee purchased 5 million shares at $10 per share on August 4 — one of the largest single insider purchases of 2026. A $50M buy in a mid-cap coffee company suggests the acquirer sees a significantly undervalued business or is positioning ahead of a strategic event. | |
Christopher Shackelton — Chairman | Buy | ~$15.6M | The ModivCare chairman purchased 435,893 shares at $35.74. The stock has already rallied 14% since the purchase. A chairman deploying $15.6M into his own healthcare services company — down 34% over six months — during the week the economy reported job losses is a powerful contrarian signal. | |
Kathleen E. Johnson — CEO & Director | Buy | ~$613K | The Lumen Technologies CEO purchased 100,000 shares at $6.07–$6.18 on August 6 — the day before the jobs report. The telecom stock is down 24% year to date despite a 59% gain over the past year. A CEO buying six figures into her own company the day before a potentially market-moving data release signals confidence that the business can weather the macro storm. |
📬 Closing Note
The economy lost jobs. The stock market hit a record. Gold had its best week in seven months. And Palantir’s CEO called his quarter “otherworldly.” If that doesn’t capture the contradictions of 2026, nothing does.
The market’s logic this week was clear and internally consistent: weak jobs kill the rate hike, which lowers the cost of capital, which makes future earnings worth more today. It’s a perfectly rational trade — as long as the weakness stays contained.
But here’s the question nobody on Wall Street wants to ask: what if the job losses aren’t a one-off? What if July is the beginning of a real cooling in the labour market, not just a statistical blip? If that’s the case, the 25% earnings growth rate that has powered this entire rally is at risk — because you can’t have record corporate profits forever in an economy where people are losing their jobs.
For now, the data says this is a soft landing. GDP growth of 1.5% is slow but positive. Private demand is still growing at 3.9%. And corporate earnings — led by Palantir’s 93% revenue growth and Microsoft’s $678 billion backlog — are as strong as they’ve ever been.
But the margin for error is thinner than it’s been all year. The S&P 500 at 21x forward earnings needs everything to go right. The next payrolls report, the next CPI report, and the next Fed meeting will determine whether this is the start of a new leg higher — or the top.
Stay patient. Stay selective. And let the data guide the story.
Until next Sunday —
