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U.S. stocks head for best week since April as payrolls miss cool rate fears

Nonfarm payrolls fell 23,000 in July, versus an 80,000 increase expected, and CME FedWatch cut the chance of a September hike to 44.1%.

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U.S. stocks were poised to close out a week of strong gains on Friday after U.S. employment data came in weaker than expected, lowering expectations that the Federal Reserve would raise interest rates at its September meeting, according to Reuters.

The Labor Department said nonfarm payrolls decreased by 23,000 jobs last month, compared with economists expectations for an increase of 80,000, and prior months' job gains were revised sharply lower. The unemployment rate fell to 4.1% from 4.2% in June as workers left the labor force.

Market expectations for a Fed rate hike dropped to 44.1% from 55% in the prior session and 67% a week earlier, based on CME FedWatch. Reuters also linked the cooler outlook for inflation pressures to oil prices easing on signs of progress toward a possible Iran peace deal, which helped bring Treasury yields lower.

A strong earnings season further supported sentiment, with 85.1% of S&P 500 companies that had reported results through Friday morning beating analyst expectations, versus a 68% average since 1994, according to LSEG data. Earlier this week, the Dow and S&P 500 hit record highs, with the major indexes moving higher on Friday.

Latest closeS&P 500 7,709.96 ▼0.2%|Dow Jones 53,885.10 ▼0.8%

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