Market Commentary: Back to Your Regularly Scheduled Bull Market, Even as Payrolls Wobble

The bull market remains healthy and may continue because strong earnings, broad participation, and a resilient labor market outweigh the weakness in July payrolls.

• The S&P 500 gained more than 3.5% and the Nasdaq more than 5% last week, both reaching record highs; Q2 S&P 500 earnings growth reached 50.4% versus an initial 23% estimate, and 86% of reporting companies beat expectations.
• After a 16% S&P 500 rally in April and May, the index moved sideways for 11 weeks before breaking higher; leadership also rotated from technology and semiconductor stocks toward banks, supporting a diversified rather than momentum-only approach.
• Market breadth remains constructive: the S&P 500 advance/decline line reached new highs even as several high-flying stocks weakened in July.
• The bull market is 3.8 years old, and all five bull markets in the past 50 years that survived their third year also lasted at least five years, although the sample is small.
• July payrolls fell by 23,000, while June was revised from 57,000 to 20,000 and May from 172,000 to 63,000; nevertheless, healthcare added 22,600 jobs, construction added 22,000, unemployment fell to 4.1%, prime-age employment reached 80.4%, and layoffs remained low at 1.77 million with a 1.1% rate.

Takeaway: Investors should treat the weak payroll headline as noisy rather than recessionary, remain diversified, and recognize that slow but stable employment growth, low layoffs, and broad market participation support further gains, while the earnings outlook and limited historical bull-market sample remain caveats.