Weak jobs data came out hours before President Donald Trump fired the head of labor statistics. A report on gross domestic product indicated a slowdown of growth over the first half of the year. A sweeping round of tariffs hit nearly 70 countries.
These events — all since last week — prompted some analysts to warn of a recession and others to raise concerns about the political independence of gold-standard U.S. economic data.
The stock market, however, hardly blinked.
The tech-heavy Nasdaq has ticked up 0.4% since the end of trading last Tuesday, a day before the GDP report marked the first in a series of major developments. Over that same period, the S&P 500 has dropped 0.6%, while the Dow Jones Industrial Average has fallen 1.4%.
Despite mixed results, the indexes remain well above where they stood three months ago. The Nasdaq has surged 20% since May, while the S&P 500 has jumped 13%. The Dow has climbed 7% over that period.
Analysts who spoke to ABC News attributed investor optimism to robust corporate profits, the prospect of interest rate cuts at the Federal Reserve and an abiding expectation that Trump will not return to the steep tariffs initially rolled out in April.
The resilient stock market has generated a momentum of its own, some analysts added.
“The mindset of the market is to embrace risk because that brings rewards rather than losses — keep shrugging it off,” Steve Sosnick, chief strategist at trading firm Interactive Brokers, told ABC News. “That can paper over a lot of concerns.”
The economy added an average of about 35,000 jobs over three months ending in July, which marks a major slowdown from roughly 128,000 jobs added monthly over the prior three months, U.S. Bureau of Labor Statistics data on Friday showed. Employers are hiring at their slowest pace since 2020.
Two days earlier, fresh GDP data indicated average annualized growth of 1.2% over the first half of 2025, well below 2.8% growth last year.
Hours after the release of the jobs report on Friday, Trump fired BLS Commissioner Erika McEntarfer, an appointee of former President Joe Biden who was confirmed by a bipartisan vote in the Senate in 2024.
In a social media post, Trump volleyed sharp criticism and baseless accusations at McEntarfer, claiming without evidence that the data had been “manipulated.” The jobs report featured revisions of previous months’ data, which is a routine practice.
“Trump touted his economic performance in a social media post: “The Economy is BOOMING under ‘TRUMP’ despite a Fed that also plays games, this time with Interest Rates.”
McEntarfer did not immediately reply to ABC News’ request for comment.
“It has been the honor of my life to serve as Commissioner of BLS alongside the many dedicated civil servants tasked with measuring a vast and dynamic economy,” McEntarfer said in a social media post after her dismissal. “It is vital and important work and I thank them for their service to this nation.”
President Donald Trump speaks with reporters at Lehigh Valley International Airport, Aug. 3, 2025, in Allentown, Pa.
Brendan Smialowski/AFP via Getty Images
The major stock indexes fell markedly last Friday, suggesting concern among traders about the weak jobs report. Within days, however, stocks had largely recovered the losses.
Alongside mixed signals from the economy, a series of major companies have released strong earnings, indicating a resilient corporate bottom line. The list of high-performers includes tech giants like Meta and Microsoft, which account for a disproportionately large share of the S&P 500.
“The markets like to focus on earnings,” Ed Yardeni, the president of market advisory firm Yardeni Research and former chief investment strategist at Deutsche Bank’s U.S. equities division, told ABC News. “They’ve been pretty impressive considering some of the economic data has looked soft of late.”
The outlook for the economy remains uncertain, leaving open the possibility of continued growth and soaring stocks, some analysts said. The economy has largely averted the type of widespread job losses that often accompany a recession. Consumer spending, which accounts for about two-thirds of economic activity, ticked higher over three months ending in June.
If the economy sours, the Federal Reserve will likely move forward with interest rate cuts, buoying the market, Sosnick said.
“There’s a belief that there’s nothing better for the market than a rate cut,” Sosick added.
Still, the combination of elevated tariffs and sluggish hiring could hurtle the U.S. toward an economic double-whammy known as “stagflation,” in which the economy slows while prices rise.
Potential stagflation poses difficulty for the Fed. If the Fed raises interest rates as a means of protecting against tariff-induced inflation under such a scenario, it risks stifling borrowing and slowing the economy further. On the other hand, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to boost spending and worsen inflation.
“There’s definitely a possibility the market is getting it wrong on inflation,” Jay Ritter, a professor of finance at the University of Florida, told ABC News.
For now, markets remain opportunistic about current gains, rather than wary of possible headwinds that may emerge in the coming weeks or months, Sosnick said.
“This market is preferring to deal with the here and now than deal with the conceptual,” Sosnick added.
