After a big week for tech earnings headlined by Nvidia’s quarterly update, the main focus for investors may turn back to economy data in the coming days.
We’ll get a fresh look at the labor market on Friday when the August jobs report lands. Economists were surprised when the U.S. economy lost 23,000 jobs in July, and officials revised the number of jobs added in June downward. Yet the unemployment rate came in better than expected at 4.1%, compared to 4.2% in June, as labor force participation approached a five-year low. The workforce is changing as employers anticipate widespread use of AI and adjust to evolving tariff, trade, and immigration policy. The portion of workers who are 55 or older has fallen to a two-decade low. Meanwhile, fewer college graduates and “prime-age” workers are finding jobs. The pool of people seeking work has shrunk because immigration has slowed, economists say, and because Americans may have given up on finding work or decided they have the funds to retire.
The August jobs report will be closely monitored by Federal Reserve policymakers, who have been concentrating on curbing inflation ahead of their second mandate: promoting maximum employment. Deterioration in the labor market could make a Fed rate hike less likely, since higher interest rates deter employers from undertaking major investments and expanding. Still, holding rates steady or cutting them could make it harder for the Fed to stop prices from rising. Fed Chair Kevin Warsh’s Friday speech was interpreted by markets as suggesting that the central bank would raise interest rates to combat inflation.
Investors will also hear this week from companies that rely on consumers having disposable income. Spirits giant Brown-Forman, discount retailer Five Below and apparel companies Lululemon and Victoria’s Secret are due to report in the coming days. Quarterly results are also coming from companies that make supplies for AI data centers, including Dell Technologies, Hewlett Packard Enterprises, and Broadcom.
What analysts are saying about U.S. equities
Evercore ISI: “2Q26 earnings have been extraordinary. At the headline level, demand visibility from tech (confirmed by NVDA) has catalyzed one of the best earnings seasons ever. 86% of companies beat 2Q26 EPS by a wide margin, as companies surprised consensus EPS by a near-record 24%.”
“The end of an extraordinary EPS season induces market chop typical in the periods following peaking year-over-year EPS growth (now ~50% for 2Q26). A challenged macro, the U.S. 10-year yield near the sensitive 4.75%, unresolved Iran conflict driving gas prices, and complacency ahead of fall seasonality catalyzed further by midterms keep the near-term setup defensive even within a positive long-term backdrop.”
Morgan Stanley: “If inflation moderation is not enough, the FOMC will hike, and Chair Warsh will not allow himself to be on the losing side of a vote. But his well-established desire to shrink the balance sheet and his view that the balance sheet is the driver of inflation could mean that the amount of policy done through rates is reduced. I do think a reduction of the balance sheet is coming, albeit with a very different view on how that outcome would feed through to the economy and ultimately to inflation. For markets, the need to consider both tools will force extra debate about how to price policy going forward.”
Bank of America: “The S&P 500 price-to-forward-earnings ratio compressed to 20x from 22x at the start of the year for a good reason: earnings outpaced price. But even this multiple is not enough to yield a bullish 10-year outlook—our long-term valuation model implies -3% annualized losses over the next ten years, with a better +3% return for the equal-weighted index. Note that we were never bearish on valuation alone and have argued that elevated multiples were justified by healthy balance sheets and superior earnings visibility. But earnings transparency and leverage have worsened from good to less good.”