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U.S. stock market investors are preparing for another volatile week as the July jobs report, key corporate earnings, and Federal Reserve policy expectations shape market sentiment. While the S&P 500 ended the week higher, the benchmark index remains about 1.6% below its June 2 record high after experiencing sharp daily swings.
Markets continue to react to mixed earnings from major technology companies that have fueled the artificial intelligence rally. Microsoft shares surged after the company issued a strong cloud growth outlook, while Meta Platforms fell following a sharp decline in cash flow, highlighting investor sensitivity to AI-related spending and profitability.
The Federal Reserve also remains a central focus after holding interest rates steady in a hawkish decision. Investors are still assessing comments from Fed Chair Kevin Warsh, who reaffirmed the central bank's commitment to lowering inflation to its 2% target while offering less guidance on future policy moves. June core Personal Consumption Expenditures (PCE) inflation came in at 3.3% year over year, reinforcing concerns that interest rates could remain elevated.
Attention now shifts to the U.S. nonfarm payrolls report due on August 7. Economists surveyed by Reuters expect the economy to have added 83,000 jobs in July, while the unemployment rate is projected to edge up to 4.3%. A stronger-than-expected labor market could increase expectations for a Federal Reserve rate hike in September, with futures markets currently pricing in a 64% probability.
Corporate earnings will also dominate the week, with results expected from SpaceX, Eli Lilly, Advanced Micro Devices (AMD), Caterpillar, Palantir, and Merck. Investors will closely monitor these reports for signs of corporate strength and AI-related spending trends.
Despite recent volatility driven by geopolitical tensions, rising oil prices, and higher Treasury yields, the S&P 500 remains up more than 9% in 2026. Strong second-quarter earnings continue to provide support, with LSEG IBES data indicating S&P 500 profits are on track to increase 29.3% from a year earlier.
Market participants will be watching whether strong earnings and economic data can help stocks regain momentum or reinforce expectations for tighter monetary policy in the months ahead.
