Morning in New York: Hiring Trends Will Put the Tech Rally to the Test

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Capital Markets Research at Freedom Broker.

The main event this Friday will be the July U.S. labor market report. The consensus forecast calls for nonfarm payrolls to increase by 80,000, following a gain of 57,000 the previous month. The private sector is expected to add 82,000 new jobs, compared with 49,000 in June. Average hourly earnings are forecast to rise by 0.3% month-over-month, while the unemployment rate is expected to remain at 4.2%. Changes in the labor force will be of particular importance to market participants. A rise in unemployment to 4.3% driven by an increase in labor force participation is more favorable for stocks than low unemployment amid a further contraction in labor supply. If the data for May and June are significantly revised downward, this would serve as an additional signal of a cooling labor market, even if the July result is close to the consensus. We consider the optimal scenario to be a combination of moderate employment growth, stable wages, and a slight increase in unemployment without signs of a sharp deterioration in labor demand. This would allow yields on debt instruments to decline without heightening fears of a recession.

The situation surrounding the Strait of Hormuz remains uncertain. Tehran has proposed restricting passage through the strait for U.S., Israeli, and other vessels deemed “hostile.” Washington insists on free transit without permits or fees. Negotiations between Iran and Oman have not yet led to a final agreement, and the current proposal appears difficult to implement due to sanctions and insurance restrictions. Against this backdrop, Brent and WTI prices have once again begun to rise.

The technology sector continues to show marked selectivity. The positive reaction to the earnings reports from Cloudflare (NET) and Atlassian (TEAM) confirms demand for infrastructure and application software, where AI is already driving revenue growth. Conversely, the sharp decline in Trade Desk (TTD) shares highlights the investment community’s high sensitivity to deteriorating fundamental forecasts from certain large companies.

Before the start of the main session, Vistra (VST), Take-Two Interactive (TTWO), Oklo (OKLO), PPL (PPL), Construction Partners (ROAD), and Wendy’s (WEN) will report their quarterly results.

S&P 500 futures are trading slightly higher. We assess the risk balance for the upcoming session as neutral amid heightened volatility. If the labor market report comes in slightly weaker or in line with forecasts, this will support bonds and growth stocks. Robust wage growth or a further reduction in the labor force would increase the likelihood of the Fed tightening monetary policy. Another spike in oil prices is heightening inflationary risks.

— Doximity (DOCS) shares soared by approximately 73% following the release of its quarterly earnings report and an upward revision to its full-year guidance. The company’s revenue increased by 7% year-over-year to $156.6 million, beating the consensus estimate of $151.7 million, while earnings per share (EPS) fell slightly short of market expectations. The company raised its revenue forecast for the fiscal year to $671–681 million. This growth is driven by increased physician engagement and active use of the Doximity Ask AI assistant. The number of queries in the AI search engine increased by 25% quarter-over-quarter.

— Atlassian (TEAM) shares are up about 29% on the back of strong fourth-quarter financial results and a forecast that exceeded expectations. The company’s revenue rose 28% year-over-year to $1.76 billion, adjusted EPS was $1.87, and revenue from orders (RPO) grew 44% to $4.82 billion. In its guidance for the first quarter of fiscal year 2027, the company projects revenue in the range of $1.705–1.715 billion.

— Cloudflare (NET) shares rose by about 15% following the release of its second-quarter earnings report. The company’s revenue rose 36% year-over-year to $696.1 million, and adjusted EPS came in at $0.29. The full-year guidance for these metrics has been raised to $2.86–2.87 billion and $1.25–1.26, respectively. Management noted stronger demand for infrastructure for AI agents and machine traffic.

— Airbnb (ABNB) shares are rising by about 8% following the release of its quarterly results. Its EPS came in at $1.37, beating the market consensus of $1.25; revenue reached $3.61 billion; and gross booking value increased 16% year-over-year to $27.2 billion. For the current quarter, the company forecasts revenue in the range of $4.69–4.77 billion, compared to a consensus estimate of $4.61 billion.

— Trade Desk (TTD) shares are falling by about 27%, as its revenue for April–June came in at $715.1 million, which is $36.4 million below consensus, and adjusted EPS was only $0.34, compared to average estimates of $0.4. The main factor weighing on the company’s stock price was its third-quarter guidance, which projects revenue of at least $650 million, compared with market expectations of around $805 million.

Trading on August 6 on U.S. stock exchanges ended with modest losses. The S&P 500 fell 0.18%, the Nasdaq 100 lost 0.39%, the Dow Jones dropped 0.85%, and the Russell 2000 declined 0.58%. Despite this, the major indices posted solid gains for the week. Mixed quarterly earnings reports and investors’ continued selectivity toward the technology sector—particularly semiconductor and software companies—weighed on stock prices.

Stocks in the “Magnificent Seven” traded in mixed directions. Against the backdrop of a rebound in oil prices, the energy sector emerged as the top performer (XLE: +1.48%). Raw materials and materials producers (XLB: -0.89%) lagged behind, influenced by negative trends in the metals and chemicals sectors.

Macroeconomic data generally confirmed the resilience of the U.S. economy. Initial jobless claims totaled 199,000, compared with a consensus estimate of 202,000. Continuing claims rose to 1.801 million, exceeding forecasts. Labor productivity in the nonfarm sector for the second quarter, according to preliminary estimates, increased by 1.4% year-over-year, compared to market expectations of 0.6%. Growth in unit labor costs slowed to 1.3%, which was below expectations. These statistics did not have a significant impact on market dynamics. Today’s July report from the U.S. Department of Labor is of greater significance to the investment community.

Treasury bond yields rose by 4–7 basis points following a Financial Times report that Fed Chair Kevin Warsh may maintain a hawkish tone and has not ruled out a rate hike in September if inflation accelerates. WTI crude oil rose 2.8% amid reports of new terms in the agreement between Iran and Oman regarding shipping through the Strait of Hormuz. However, market participants remain skeptical about the prospects for reaching long-term agreements.

— Insmed (INSM: +33.9%) reported second-quarter results that beat consensus estimates for earnings, revenue, and sales of its antibiotic Arikayce. The company’s new treatment for respiratory tract infections, Brinsupri, continues to see strong demand, and the revenue forecast for its sales through 2026 has been raised.

— SiTime (SITM: +26.6%) reported a 127% year-over-year increase in revenue for April–June. Investors viewed positively the demand from the AI infrastructure sector, the CED division’s tenth consecutive quarter of triple-digit revenue growth, and the strong demand for its products from partner companies, which is helping to improve the predictability of the backlog.

— Paycom Software’s (PAYC: +23.7%) quarterly results exceeded market expectations, allowing the company to raise its outlook for 2026. The results were driven by accelerated growth in cross-sales and booking volumes. Margins, free cash flow, and business automation all showed positive trends.

— Unity Software’s (U: +15.1%) revenue and adjusted EBITDA for the most recent quarter came in above consensus. The strongest growth was recorded in the Grow Solutions segment, driven by the continued success of Unity Vector AI. The company’s guidance for adjusted EBITDA for the current quarter exceeded the market consensus.

— Parker-Hannifin (PH: +7.4%) reported fourth-quarter revenue, earnings, and organic growth that exceeded consensus estimates. The company noted an acceleration in the recovery of the industrial segment in North America. The Aerospace Systems division posted double-digit growth across all key segments. The company’s own guidance for the new fiscal year regarding EPS and revenue has been revised upward.

This article was AI-translated and verified by a human editor