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Update: US Equity Indexes Rise as Bets Favoring Fed Pause Rise After Nonfarm Payrolls Unexpectedly Decline

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(Updates with index/price moves, analyst comments and geopolitical news from the first paragraph.)

US equity indexes advanced after a surprise decline in nonfarm payrolls increased the odds for a monetary policy pause in September, while the Iran-Oman agreement on the Strait of Hormuz remained on the horizon.

The Nasdaq Composite climbed 1.3% to 26,690.62, with the S&P 500 up 0.6% to 7,757.64 and the Dow Jones Industrial Average rising 0.3% to 54,036.93 at the close Friday. Materials, consumer discretionary and technology topped gainers in a broadly positive market. Energy led decliners.

The July employment report showed nonfarm payrolls fell by 23,000, compared with the 80,000 jobs increase expected in a Bloomberg-compiled poll. Private payrolls rose by 30,000 in July, the same as in June but below the 82,000 expected. Government sector jobs decreased by 53,000.

The unemployment rate fell to 4.1% in July from 4.2% in June, compared with the 4.2% expected, after the labor force participation rate declined to 61.4% from 61.5% in June and the labor force contracted.

Looking past the government decline, the increase in private payrolls was below the lowest forecast, Jefferies Chief US Economist Thomas Simons said in a note. Large declines in leisure and hospitality, retail trade, and financial services offset strength in construction, healthcare and social assistance, Simons said, adding that the next move from the Federal Reserve is an interest rate cut, and most likely in December.

The probability of the Federal Reserve keeping its target rate unchanged at 3.5%-3.75% in September surged to 56% on Friday from 45% a day ago and 33% a week ago, according to the CME FedWatch tool.

US Treasury yields fell, with the 10-year yield down 2.7 basis points to 4.64% and the two-year lower by 4.8 basis points to 4.20%.

Gold futures jumped 2.5% to $4,407.8, and silver futures surged 3.7% to $63.91.

Iranian lawmakers are debating the wording of a proposed deal with Oman on the Strait of Hormuz, with US President Donald Trump insisting an agreement is getting closer, Bloomberg reported. Iran's Deputy Foreign Minister Kazem Gharibabadi said earlier this week that an understanding with Oman had been reached "in principle," and state TV cited one lawmaker on Friday as saying the final text and details of an agreement with Muscat will be announced "soon," according to the news report.

Iran's Parliament has been considering a law to bar US ships from the Strait as part of the Iran-Oman deal, according to a note from Macquarie. Other details of the agreement include a demand for compensation from "hostile countries," a proposed ban on cargo related to Israel, and a fee structure covering services such as insurance and environmental costs.

"None of this is likely to be to the US's liking, and therefore there remains the possibility that attacks on Iran will resume," Thierry Wizman, global foreign exchange and rates strategist at Macquarie, said in the note.

The Saudi crown prince, Turkish president, and Pakistani prime minister have signed a joint defense deal in Mecca stating that "any armed attack against any one of the three states shall be regarded as an attack against them all," Al Jazeera reported. Pakistan is one of the few countries in the world with nuclear weapons.

Saudi Arabia expects imminent coordinated attacks from Iraqi militias north of the Gulf state and from Yemen's Houthis from the south under the supervision of Iran's Islamic Revolutionary Guard Corps, a senior Saudi official told Reuters.

The front-month US West Texas Intermediate crude oil slipped 0.4% to $76.95 a barrel, and global benchmark North Sea Brent fell 0.6% to $81.99 a barrel.

In company news, Airbnb (ABNB) reported stronger Q2 bookings as product changes contributed to higher revenue, RBC Capital Markets said in a Friday note. Shares surged 17%, the biggest gainer on the S&P 500 and the Nasdaq.

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Update: US Equity Indexes Fall as Treasury Yields Jump With Crude Oil Ahead of Nonfarm Payrolls, Deal to Reopen Strait of Hormuz

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Update: US Equity Indexes Mixed as Chipmakers Help Lift Technology While Crude Oil Jumps With Treasury Yields

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Dow JonesNasdaq CompositeS&P 500$ARM$SNDK
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Exchange-Traded Funds Decline as US Equities Fall After Midday

Broad Market IndicatorsBroad-market exchange-traded funds IWM and IVV edged lower. Actively traded Invesco QQQ Trust (QQQ) eased 0.4%.US equity indexes fell, while both government bond yields and crude oil rose after midday Thursday.EnergyIShares US Energy ETF (IYE) and the State Street Energy Select Sector SPDR (XLE) each added about 1.3%.TechnologyThe State Street Technology Select Sector SPDR ETF (XLK) added 0.1%; iShares US Technology ETF (IYW) and iShares Expanded Tech Sector ETF (IGM) also increased.The State Street SPDR S&P Semiconductor (XSD) rose 2.7%, and iShares Semiconductor (SOXX) gained 0.9%.FinancialThe State Street Financial Select Sector SPDR (XLF) shed 0.3%. Direxion Daily Financial Bull 3X Shares (FAS) declined 1.1%, and its bearish counterpart, Direxion Daily Financial Bear 3X Shares (FAZ), advanced 1.1%.CommoditiesCrude oil rose 3.5%, and the United States Oil Fund (USO) gained 3.5%. Natural gas fell 1.5%, and the United States Natural Gas Fund (UNG) lost 0.6%.Gold on Comex eased 0.3%, and the State Street SPDR Gold Shares (GLD) fell 0.3%. Silver was down 1.4%, and iShares Silver Trust (SLV) dropped 1.3%.ConsumerThe State Street Consumer Staples Select Sector SPDR (XLP) was down 0.5%. The Vanguard Consumer Staples ETF (VDC) slipped 0.3%, and iShares Dow Jones US Consumer Goods (IYK) fell 0.8%.The State Street Consumer Discretionary Select Sector SPDR (XLY) was down 0.6%. VanEck Retail ETF (RTH) fell 0.5%, and the State Street SPDR S&P Retail (XRT) dropped 1.5%.HealthcareThe State Street Health Care Select Sector SPDR (XLV) declined 0.5%, iShares US Healthcare (IYH) fell 0.3%, and Vanguard Health Care ETF (VHT) shed 0.4%. IShares Biotechnology ETF (IBB) was up 0.1%.IndustrialThe State Street Industrial Select Sector SPDR (XLI) fell 0.3%. Vanguard Industrials Index Fund (VIS) and iShares US Industrials (IYJ) were also lower.CryptocurrencyIn midday activity, bitcoin (BTC-USD) dipped 0.2%. Among cryptocurrency ETFs, ProShares Bitcoin ETF (BITO) fell 0.3%, ProShares Ether ETF (EETH) was down 0.5%, and ProShares Bitcoin & Ether Market Cap Weight ETF (BETH) fell fractionally.

Dow Jones^EEM^EXI^FAS^FAZ^GLD^IBB^IGM^IGV^IPK^IVV^IWMNasdaq Composite^IYE^IYH^IYJ^IYK^IYW^PMR^QQQ^RTH^SOXXS&P 500^SPY^UNG^USO^VDC^VHT^VIS^XLE^XLF^XLI^XLK^XLP^XLV^XRT^XSD$BETH$BITO$EETH