facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause

Weekly Update 08/07/2026: Earnings Season Continues

Insights
  • Payrolls unexpectedly decilne
  • Qnity powered by semiconductor demand
  • Disney sells out Super Bowl
  • BorgWarner boosts buyback
  • CACI stock soars on solid earnings

Employment

The Jobs Openings and Labor Turnover Survey was released by the Bureau of Labor Statistics (BLS) earlier this week, which showed openings edged down in June but hiring picked up. The fall in openings was driven by a decline in healthcare, leisure and hospitality and wholesale trade and business services. Hiring rose thanks to construction jobs. There is about one vacancy per unemployed worker, which is broadly consistent with a steady labor market. Back in 2022 when the nation was recovering from the depths of the pandemic, that metric climbed to 2 to 1. The so-called quits rate, which measures the percentage of people voluntarily leaving their jobs each month, was unchanged at 2%. 

Today, the BLS released its highly anticipated monthly payroll report for July. Employers surprisingly cut jobs and hiring in the prior two months was revised lower. Nonfarm payrolls fell 23,000 last month following a combined 103,000 downward revision to the May and June figures. The unemployment rate, which is derived from a survey of households as opposed to businesses, fell to 4.1%. Cuts in jobs at governments, leisure and hospitality and retail establishments fueled the decline in payrolls, with local governments shedding nearly 60,000 jobs, almost entirely in education. Leisure and hospitality employment declined to the lowest level in almost a year, suggesting the expected boost from the World Cup hosted by the U.S. was not as profound as originally thought. On the other hand, manufacturing and construction jobs continued to thrive thanks to data-center buildouts, even as homebuilding continues to be restrained by high mortgage rates.

The share of the population that is working or looking for work, known as the participation rate, fell to 61.4%, which excluding the pandemic was the lowest since the 1970s. Additionally, average hourly earnings rose 3.2% from a year earlier, marking the slowest pace in more than five years. The mosaic which is being painted is that the labor market may be starting to finally falter amid rising prices and uncertainty about the Middle East conflict. 

The Fed is looking vatic for keeping its benchmark interest rate unchanged at its last meeting, even in the face of negative feedback from the markets. Odds of a rate hike at the September 16 meeting are hovering around 44%, down from 72% just one week ago. Between now and then, the Federal Open Market Committee will get two more reports on consumer prices—including data for July next week—and one more monthly jobs report, which will be released on September 4 in addition to weekly unemployment claims. This week the Labor Department reported that initial claims inched up to 199,000 in the week ended August 1, slightly ahead of the 198,000 in the week prior. 

The Fed is in an interesting spot. The three month average of payrolls fell to only 20,000 from 77,000 prior to today's report. That is a steep drop from figures that were closer to 100,000 jobs created in the spring. Will state and local governments resume the usual pattern of more hiring in the fall as students return to schools? Or have dwindling funds due to lower tax revenues and smaller federal funds break that trend? While companies boast of data-center demand, some state and local authorities have already enacted bans on further building, which could curtail the need for construction workers. The drop in the participation rate is notable because it could signal workers throwing in the towel on the "low hire, low fire" environment leading to further cost of living pressures for many families, just as midterm elections arrive in three months. Historically, the Fed has done poorly in these "times of transition" when the economy shifts gears as it adjusts to new realities. Chairman Kevin Warsh will speak at the central bank symposium in Wyoming later this month and also chair the next Fed meeting, giving him two chances to rebound from a shaky start at the helm in terms of communicating with the markets. We will keep you updated as these events unfold, so being a regular reader of these reports is informative!

Company Events

SGK writes additional weekly commentary for clients of the firm detailing recent events and earnings of core equity holdings.

Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Steigerwald, Gordon & Koch, Inc. [“SGK”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from SGK. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. SGK is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the SGK’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.sgkwealthadvisors.com. Please Note: SGK does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to SGK’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a SGK client, please contact SGK, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.