U.S. Stocks Hit Fresh Highs as Payrolls Miss, Gold and Silver Rally Together

Market Overview

U.S. financial markets rallied sharply after July's employment report delivered a significant downside surprise. Nonfarm payrolls unexpectedly fell by 23,000, compared with market expectations for an 80,000 increase, while combined revisions to May and June payrolls erased an additional 103,000 jobs. The weaker-than-expected labor data prompted traders to significantly reduce expectations for further Federal Reserve rate hikes in 2026.

All three major U.S. equity indexes advanced, posting their strongest weekly gains in more than three months. The S&P 500 rose 0.62% to 7,757.64, while the Dow Jones Industrial Average gained 0.28% to 54,036.93, with both indexes closing at new record highs. The Nasdaq Composite outperformed, climbing 1.30% to 26,690.62.

The U.S. Dollar Index fell to a six-week low of 99.60. Spot gold surged 2.33% on the day to $4,341 per ounce, extending its weekly gain to 7.2%, while silver advanced 3.08%. The benchmark 10-year Treasury yield declined to 4.65%, and the CBOE Volatility Index (VIX) eased to 14.90, reflecting improving market sentiment.

Market OutlookCooling Labor Market Reshapes the Fed Narrative

July's payroll report marked the weakest employment reading of the year, and when combined with the 103,000 downward revision to the prior two months, it reinforces the view that labor market cooling is becoming a sustained trend rather than a temporary anomaly.

Although the unemployment rate declined to 4.1%, its lowest level in more than a year, the improvement was largely driven by a lower labor force participation rate rather than stronger hiring demand.

Following the data release, the 2-year Treasury yield fell 5.02 basis points to 4.1952%, while the 10-year yield declined 3.24 basis points to 4.6454%. The U.S. dollar weakened further as markets priced in a more dovish monetary policy outlook.

Meanwhile, President Donald Trump restarted efforts to remove Federal Reserve Governor Lisa Cook, once again putting the Fed's independence under intense market scrutiny.

Optical Networking Takes the Lead as Memory Stocks Lose Momentum

The AI infrastructure trade broadened beyond semiconductors into optical networking after Applied Optoelectronics (AAOI) reported an 86% year-over-year increase in second-quarter revenue, with its data center business surpassing $100 million in quarterly sales for the first time.

The strong earnings sparked broad gains across the optical communications sector, lifting companies including Lumentum Holdings, Corning, and Coherent, with Coherent soaring more than 40% over the week.

Strength across AI infrastructure also propelled the Philadelphia Semiconductor Index more than 9% higher for the week. NVIDIA gained over 10%, while SpaceX climbed more than 20% in just two trading sessions.

In contrast, memory-related stocks lagged. SanDisk and Western Digital both declined nearly 4% as investors increasingly expect memory pricing to peak within the next two quarters, highlighting widening performance divergence across the semiconductor industry.

Berkshire Hathaway Ends a Three-Year Net Selling Streak

Berkshire Hathaway reported that second-quarter net profit more than doubled. More importantly, the company shifted from being a net seller of equities to a net buyer, purchasing approximately $20 billion in stocks during the quarter and ending Warren Buffett's net-selling streak that had lasted for more than three years.

Berkshire also repurchased $4.527 billion of its own shares, marking its largest buyback in five years, while its cash holdings declined to $365.5 billion.

The company further strengthened its offensive positioning by acquiring homebuilder Taylor Morrison for $6.8 billion, while Alphabet (Google) entered Berkshire's top five equity holdings, signaling a notable shift toward a more growth-oriented investment strategy.

Key Events to Watch

• Today: Unitree Robotics begins its IPO subscription with an issue price of RMB 150.80 per share. A successful subscription allocation requires approximately RMB 75,400 in capital.

• Today: Middle East tensions escalate after Saudi Aramco's Jazan refinery came under attack again, while Iran announced six conditions for reopening the Strait.

• ChangXin Memory Technologies could be added to the VanEck Semiconductor ETF as early as late September, with an expected meaningful portfolio weighting.

• Moore Threads is preparing for a Hong Kong IPO after reporting 147% revenue growth in the first half of the year, while narrowing its net loss by 95.73% to RMB 11.56 million.

• SK Hynix is reportedly planning a $71 billion shareholder return program, with 40% allocated to share repurchases.

• President Donald Trump has restarted proceedings to remove Federal Reserve Governor Lisa Cook, renewing concerns over the central bank's institutional independence.