Bad jobs report, new Iran peace tease keep markets rolling

Investors celebrated reports of another potential peace deal with Iran, and bad employment data kept them bullish on hopes the Federal Reserve backs off interest rate hikes.MANHATTAN (CN) — Wall Street unleashed another wave of optimism as news the Trump administration could strike a deal with Iran to reopen the Strait of Hormuz.After news of yet another ceasefire earlier in the week, barrels of Brent crude oil started trading several dollars lower, and by the closing bell Friday barrels traded around $82.Even when no deal materialized by Friday, equities posted major gains for the week. The Dow Jones Industrial Average finished up 1,551 points for the week, while the S&P 500 and Nasdaq gained 268 points and 1,317 points, respectively.On Friday, bullish investors were not dissuaded after the July jobs report showed a surprising loss of 22,000 jobs in July, with investors hoping the employment miss staves off an interest rate hike next month.Calling the disappointing jobs report “a game changer,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said it could keep the Federal Reserve from raising interest rates at its meeting next month.“Before today, many were expecting that the Fed had no choice but to raise rates in order to fight stubbornly high inflation, because the job market was so strong,” he said. “This report shows that isn’t the case.”The Fed already has given mixed signals regarding whether it plans to raise rates to further combat inflation or keep them steady to avoid rattling the labor market.In a speech earlier this week, Federal Reserve Governor Lisa Cook said “the labor market appears to be stable, in a low-hire, low-fire environment” and that “inflation is too high.” Like Cook, fellow Fed official Neal Kashkari has said the central bank should start increasing interest rates.However, other Fed officials have recently said the current federal funds rate is restrictive, and during the Fed’s last meeting it voted 9-3 to keep rates steady.Other economic data this week support the Fed if it chooses to hold course on interest rates. A pair of reports from the Institute for Supply Management found the manufacturing and service industries continue to grow.ISM’s manufacturing index rose to a four-year high last month, increasing to 55.6 points mostly due to a 6-point jump in the production sub-index. However, the “prices paid” index remains high at 71.1 points, which experts say means inflation will not drop below 3% anytime soon.On the services side, the sector continues to gain momentum but prices also are increasing, with the headline index increasing slightly to 54.1 last month and the “prices paid” index nudging upwards by 2.6 points.Respondent companies noted the World Cup was the main reason for increased business activity and new orders, while the usual bogeymen of tariffs and the Iran war tapered off.“Tariff impacts and the Middle East conflict continued to be mentioned by respondents, but much less frequently than in prior reports,” ISM officials noted in a corresponding statement. “Overall, the U.S. services economy continues to be resilient.”Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads