The 10-year Treasury yield surged to 2.834% Friday morning following the July jobs report, which came in well above expectations and showed solid job growth in the month. Earlier this month, the 10-year Treasury yield hit 2.5%, its lowest since April, as the bond market worried about a potential recession.

At the same time, the yield on the 30-year Treasury rose to 3.078%. Yields are inverse to price.

—Carmen Reinicke

Bank of America economists added another quarter point of a rate hike into their forecast for Federal Reserve rate hikes this year, after July’s strong jobs report.

The firm’s economists had been expecting a 50 basis point hike in the fed funds rate for September, followed by a 25 basis point hike in November. They now expect a 50 basis point, or half point, hike in November as well. They left the forecast for a quarter point hike in December unchanged.

A basis point equals 0.01 of a percentage point. The Federal Reserve raised the fed funds target rate by 75 basis points in both June and July.

The fed funds futures market is also pricing in a 75 basis point hike for September, following the report that 528,000 jobs were added in July, more than double what was expected.

—Patti Domm

The much-stronger-than-expected July jobs report caught markets by surprise and has Fed watchers ratcheting up expectations for rate hikes.

The economy added 528,000 jobs in July, more than double expectations. Fed funds futures for October are now pricing in a 72% chance of a 75 basis point hike in September, up from 18% Thursday, according to Peter Boockvar, chief investment officer of Bleakley Advisory Group. (a basis point is 0.01 of a percentage point)

Boockvar said the market is also pricing out some of the rate cutting it expected for next year, and the June, 2023 futures were higher by 25 basis points, putting expectations for Fed funds at 3.54%.

“This is hot. For the Fed, this is another 75 basis point hike,” said Diane Swonk, chief economist at KPMG. She said the September rate hike could be 75 basis points now not 50 , based on the jobs report alone.”The Fed is dealing with strong demand in a supply constrained economy, and that demand extends to labor,” said Swonk.

—Patti Domm

Stocks fell at the opening bell Friday following a better-than-expected jobs report. The Dow Jones Industrial Average fell 217 points or 0.66%. The S&P 500 slipped 0.96% and the Nasdaq Composite shed 1.36%.

—Carmen Reinicke

The stronger-than-expected July jobs report means that the Federal Reserve will likely raise interest rates by three-quarters of a percentage point at its next meeting, as opposed to the half-percentage-point hike markets expected, Seema Shah, chief global strategist at Principal Global Investors, said.

“Today’s blow out number means that a 75bps hike in September is almost a done deal. Not only is the labor market undoubtedly still tight, but wage growth is uncomfortably strong,” Shah wrote in a Friday note. “The Fed has its work cut out for it to create sufficient slack that could ease price pressures.”

“All the jobs lost during the pandemic have now been regained. But while that is positive news, markets will take today’s number as a timely reminder that there is significantly more Fed hiking still to come,” she said. “Rates are going above 4% – today’s number should put to bed any doubters.”

—Carmen Reinicke

“This number is extraordinary. We’re a growth country. The rest of the world is not,” said Jim Cramer on CNBC’s “Squawk Box” after the strong report.

But Cramer cautioned about what it means for stock prices and explained why we are seeing the negative reaction in the futures.

“It means that obviously when they (the Fed) come back it stays hot they will do another three-quarters,” Cramer said. “That’s not what we thought. Remember we kind of bought this market on the idea that they are at 50 (basis points).”

After increasing rates by 0.75 percentage point for a second straight time last week, the central bank will next meet to decide on interest rates in September. Traders hoped they would slow the pace to a half point hike at that meeting. The S&P 500 is up 8% in the past one month through Thursday’s close.

—John Melloy

Stock futures fell Friday after the July jobs report came in much stronger than expected, showing more jobs added, a lower unemployment rate and higher wage growth than economists forecast.

Dow futures slipped 231 points, or 0.71%. Futures tied to the S&P 500 fell 1.08% and Nasdaq futures shed 1.33%.

—Carmen Reinicke

The U.S. economy added many more jobs than was expected last month. On Friday, the U.S. government said 528,000 jobs were added in July, easily beating a Dow Jones estimate of 258,000.

To be sure, average hourly earnings were up 5.2% year over year — well above expectations. This could be seen by the market as a sign that inflationary pressures remain strong.

Click here for the full story.

—Fred Imbert

Elon Musk said that he thinks we are past peak inflation, and predicts a mild, 18-month recession ahead.

Musk’s comments came at the Tesla 2022 shareholder meeting, held Aug. 4.

“We do get a fair bit of insight into where prices of things are going over time because when you’re making millions of cars, you have to purchase commodities many months in advance of when they’re needed,” he said.

—Carmen Reinicke

Amazon will acquire iRobot for $61.00 per share, the consumer robot company announced on Friday. The all-cash transaction is valued at approximately $1.7 billion, including iRobot’s net debt.

Shares of iRobot were halted on the news. The sale price of $61 per share is a 22% premium to Thursday’s close of $49.99. Amazon’s stock was up about .2% in pre-market trading.

—By Michelle Fox

Shares of DoorDash were up more than 10% in premarket trading Friday after the company reported quarterly results that beat expectations after market close Thursday. The food delivery service said orders grew 23% on the year last quarter, and revenue surged 30%.

The company does expect softer consumer spending in the second half of the year, it said.

—Carmen Reinicke

Oil prices were moderately lower during Friday morning trading on Wall Street and on track for steep weekly losses. Concerns around a slowdown in demand have sent prices tumbling in recent sessions.

West Texas Intermediate crude futures, the U.S. oil benchmark, is down 10.5% for the week, while international benchmark Brent crude has shed 14.5%.

— Pippa Stevens

Cryptocurrencies have slumped this week after a rough start to the month. Bitcoin and Ether are both down about 3% week to date and on pace to post their first negative week in five.

The performance would also be the worst weekly drop since July 1, when Bitcoin lost 8.71% and Ether shed 13%.

—Carmen Reinicke

Stifel’s Barry Bannister hiked his S&P 500 target for the second half to 4,400 from 4,200, noting he continues to prefer cyclical growth stocks in sectors such as software and media.

Here are two reasons Bannister gave for his target bump:

• The “S&P 500 sell-off in 1H22 is still being reversed.”
• “The S&P 500 also discounts negative y/y S&P 500 EPS in 2022, but we see 2022 EPS holding its own.”

Bannister’s new target implies 6% upside from Thursday’s close.

—Fred Imbert

European markets were flat on Friday morning as investors tracked corporate earnings and awaited the key U.S. jobs report.

The pan-European Stoxx 600 was little changed in early trade. Autos gained 0.8% while insurance stocks fell 0.8%.

Earnings continue to drive individual share price movement in Europe. Allianz, Deutsche Post, the London Stock Exchange Group and WPP were among the companies reporting before the bell on Friday.

– Elliot Smith

Markets in Asia-Pacific rose on Friday as investors shook off fears over China’s military exercises near Taiwan, which follow U.S. House Speaker Nancy Pelosi’s visit to the self-ruled island this week.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.74%. Mainland China’s Shanghai Composite gained 0.28% and the Shenzhen Component increased 0.64%.

The Taiex in Taiwan jumped more than 2%, with chipmaker TSMC rising 2.8%.

Official data show Taiwan depends more on China than the U.S. when it comes to trade. Slightly more than 22% of Taiwan’s imports in 2021 were from mainland China and Hong Kong, compared with 10% from the U.S.

Taiwan is a democratic, self-ruled island, but China sees it as a renegade province.

— Abigail Ng, Evelyn Cheng

If Friday’s jobs report shows the U.S. economy added fewer workers in July than the previous month, it is not necessarily a sign of economic weakness, according to Brad McMillan, CIO at Commonwealth Financial Network.

“If we do see a reduction in hiring, even at the expected number, it looks much more likely to be due to a shortage of workers, rather than a sudden shock to labor demand,” McMillan said in a note. “With demand strong, what matters here is labor availability.”

— Yun Li

The Fed’s commitment to bring down inflation as well as easing recession fears have sparked a relief rally in the market. The S&P 500 is now 14.2% above its 52-week intraday low of 3,636.87 from June 17. The benchmark index is also coming off its best month since November 2020, gaining more than 9% in July.

However, some on Wall Street are skeptical that the rally can sustain for much longer. Max Kettner, chief multi-asset strategist at HSBC Bank said the comeback is “wishful thinking,” and he would need to see further repricing of rate hike expectations and another sharp drop in real yields to believe it.

Widely followed Mike Wilson from Morgan Stanley also called this rally short-lived as corporate earnings are beginning to deteriorating.

Six out of the 11 S&P 500 sectors were in the green week to date, led by consumer discretionary, which has gained 2.9%.

The most negative sector this week has been energy, which has fallen more than 8% and is on track for its worst week since June 17. The decline in energy names came amid a drop in oil prices. WTI is down over 10% this week, on pace for its worst week since April.

— Yun Li