Prolonged war is raising costs for U.S. companies and weighing on hiring, with a surprising drop in jobs in July helping lift Wall Street on expectations that the Federal Reserve may not need to keep raising interest rates.
The U.S. Labor Department said nonfarm payrolls fell by 23,000 in July, far below expectations for a gain of 83,000. Retail trade shed 19,000 jobs and the financial sector lost 14,000 as weaker consumer spending spread through the economy.
The war’s impact also hit corporate results. Trade Desk, the country’s largest custom ad-buying service company, reported second-quarter results below forecasts as advertisers pulled back amid greater economic uncertainty, and its stock plunged 21.9%.
Still, rate pressures remain in focus as oil prices stay unsettled by the situation in the Strait of Hormuz and inflation risks linger. Ben McMillan, chief investment officer at IDX Advisors, said market expectations have shifted from rate cuts early in the year to even the possibility of rate hikes.
Federal Reserve Governor Lisa Cook said she is prepared to raise rates if needed to address inflation risks. President Donald Trump, who has been pressing for rate cuts, has renewed his fight with the Fed by again raising mortgage fraud allegations and attacking the Supreme Court’s earlier intervention.
