Weekly market analysis: employment, valuation, and a key week

Main focus of the week

• 📉 The S&P 500 closed Friday around 7,395 points and the Nasdaq Composite ended near 24,603, with a week of consolidation after the June and July highs.
• 🧾 The market heads into August with the focus on U.S. employment and the week’s macro agenda, with references compiled by Trading Economics and the Forex Factory calendar.
• ⛽ In cross-asset markets, EUR/USD, Brent, gold and the 10-year Treasury are once again shaping the reading of risk and relative valuation.

What happened this week

Friday closes and breadth

The week ended with a cooler tone in U.S. equities. The S&P 500 closed on Friday, July 31, 2026, near 7,395 points and the Nasdaq Composite did so around 24,603 points. The operational reference is Friday’s official close in Madrid time, with Europe already out of the market.

In Europe, the Euro Stoxx 50 ended Friday’s session around 5,268 points, while the IBEX 35 closed near 14,370 points. The weekly balance was more contained than in the United States and left a month-end close without further acceleration.

Breadth did not keep pace with the major indexes for much of the summer. The Russell 2000 remained behind the S&P 500 in the recent stretch, and the VIX stayed in an area of relative complacency, although above the lows of the year. That suggests a market that is still bullish in trend, but less uniform internally.

Most relevant macro data point

The macro release with the greatest impact this week was employment. The market reference remained focused on the evolution of the labor market and whether the slowdown is orderly or more abrupt. At the same time, weekly U.S. jobless claims showed a reading of 208,000, versus 212,000 previously and 210,000 consensus.

That data point alone does not change the cycle. It does reinforce an important idea: the labor market continues to show resilience on high-frequency margins. The drop in initial claims reduces, at least for now, the risk of an abrupt deterioration in employment.

The market reading was straightforward. If employment holds up, the Federal Reserve retains room not to rush into pivots, and the long end of the curve remains relevant in explaining valuation sensitivity. That is why the next batch of labor and activity data will have a greater-than-usual ability to move prices in August.

Cross-asset and relative valuation

The cross-asset picture remains useful for understanding the week. EUR/USD stayed in a stable range, with no breakout that would alter the earnings backdrop for European or U.S. multinationals. In commodities, Brent closed around $72.00 and gold stood near $2,430 per ounce.

The other piece is the U.S. bond market. The 10-year Treasury ended the week near 4.95%. With a yield like that, the bar to justify demanding multiples remains high, especially in long-duration technology.

In relative valuation, the market starts from an S&P 500 that looks demanding for this stage of the cycle. If a forward P/E near 20x is taken as a recent market reference, the earnings yield is around 5%. Against a 10-year Treasury near 4.95%, the implied risk premium is practically exhausted. ERP measures the additional return equities offer versus the risk-free bond. When that spread narrows, equities need cleaner earnings growth to sustain the multiple.

What could move the market next week

Corporate earnings

The week from Monday, August 3 to Friday, August 7 does include verified corporate events. Confirmed names include Thomson Reuters, scheduled to report on Wednesday, August 5, and GEO Group, due on Thursday, August 6. Scheduled events also appear for Amplitude on August 5 and MKS Instruments that same day.

It is not a week comparable to a major concentration of mega-caps, but it may still provide useful information on software, financial information, industrial technology and corporate credit. In August, that type of earnings can sometimes matter more because of liquidity than because of market cap.

Base case (55%): in-line results and a selective reaction, with no clear spillover to the broader market. Bullish scenario (20%): several companies beat expectations and support a rotation toward quality businesses outside the mega-cap core. Adverse scenario (25%): cautious guidance and a sell-off in high-multiple names, with a contagion effect on growth and small caps.

Macro

The macro agenda between August 3 and August 7 is packed. The calendar includes the U.S. ISM services index on Wednesday, August 5, JOLTS job openings on Tuesday, August 4, and fresh jobless claims on Thursday, August 6. Those are enough references to move expectations on growth and rates.

The market does not need a major shock to reprice. A combination of slightly softer activity and less tight employment would be enough for it to once again price in a less restrictive monetary tone in 2026. Conversely, if the data come in resilient, the market will have more difficulty justifying stretched multiples with a high 10-year yield.

Base case (50%): mixed data, with activity moderating without signaling a severe slowdown. Bullish scenario (25%): services and employment confirm an orderly slowdown and bring long-end yields down. Adverse scenario (25%): activity and employment surprise to the upside, yields rise and pressure returns on technology and duration.

Geopolitics

Geopolitics remains a second-order factor day to day, but a first-order one for energy, inflation and risk perception. The market will stay alert to any developments on trade, sanctions and energy security, with a direct impact on Brent and on safe-haven demand for gold.

With stock markets at elevated levels, the margin of tolerance for a rapid rise in crude is smaller than a year ago. A sustained rebound in oil would tighten financial conditions through the channel of inflation expectations and narrow the valuation support for equities.

Base case (60%): contained geopolitical tension and no break in energy or currencies. Bullish scenario (15%): improvement in the diplomatic tone and lower crude prices, supporting consumption and small caps. Adverse scenario (25%): a rebound in trade or energy tensions, higher oil and a defensive shift toward the dollar, high-quality bonds and gold.

Conclusion

The market enters the week of August 3 to 7 with a demanding combination: indexes near the upper end of their range, long-end yields still elevated, and breadth less robust than that of the major benchmarks. That does not invalidate the constructive underlying bias, but it does reduce the margin for error. The base case remains one of an orderly slowdown, reasonably solid earnings and internal rotation rather than a new linear push higher in the indexes. The key will be to see whether employment and activity allow yields to stabilize without damaging growth expectations. If that happens, equities can digest high valuations for longer.

What would invalidate that base case is a combination of two factors: macro data that are too strong and push the 10-year Treasury higher, or a geopolitical shock that sends Brent clearly above the recent range. In both cases, pressure would fall on high-multiple segments and on companies most sensitive to the cost of capital. As a hedge, gold, yield-bearing cash and high-quality government debt still make sense if growth cools. If the risk comes through energy and inflation, the more logical hedge once again lies in commodities and in defensive sectors with pricing power.

This article is general financial information and does not constitute investment advice.