S&P 500 Hits New Highs on Record Earnings and Margins as July Jobs Report Misses Badly

Key Takeaways

1. S&P 500 Q2 earnings rose 50% year over year, the fastest outside a recession since 2021, and operating margins hit a record 16.9% — while Jeremy Grantham warns margins will mean-revert. — via 1 2 3

2. The S&P 500 closed at its 26th record high of 2026, and the dividend yield dropped to an all-time low of 1.04%; Ben Carlson notes the 2020s have already produced more than 220 record highs. — via 1 2 3

3. July nonfarm payrolls fell by 23,000 versus expectations of +88,000, prior months were revised down by 103,000, and hourly pay growth slowed to a 3.2% year-over-year pace — the weakest since May 2021. — via 1

4. A 30-year mortgage now costs 6.7% versus 3.4% a decade ago, and the median existing-home price jumped from $250,000 to $446,000, lifting the typical monthly payment by about 160% to $2,302. — via 1 2

5. Hugging Face co-founder Thomas Wolf’s deep dive into OpenAI safety vulnerabilities (endorsed by @Jason) argues even unguarded models should refuse to deceive, blackmail, or harm humans; MuddyWaters called “pause all AI” proposals naive. — via 1 2

6. After falling 7% in late March, the S&P 500 has rebounded to a year-to-date gain above 14%, more than double the historical average +6.7% at this point in the year. — via 1

1. Markets, Earnings, and Valuation

1. Charlie Bilello highlights a “boom” in corporate fundamentals: Q2 earnings jumped 50% year over year, sales rose 15%, and margins reached a record 16.9% — the first time growth this strong has occurred outside a recession. He also notes Jeremy Grantham’s warning that margins will ultimately mean-revert. — via 1 2 3

2. The S&P 500 rose 3.6% last week, its best weekly gain since April, and remains at record highs; Liz Ann Sonders reports that profitable R2 stocks are still beating unprofitable names despite the latter’s recent strength. — via 1 2

3. The index’s 26th record close of 2026 fits a broader pattern: Ben Carlson counts more than 220 record highs in the 2020s and nearly 1,400 since the 1950s, noting investors must ignore a constant stream of alarming information to enjoy compounding. — via 1 2

4. Bilello’s review of 2026 so far shows the S&P 500 was down as much as 7% by late March — one of the worst starts on record — before recovering to a gain of more than 14% year to date, over twice the historical +6.7% average for this point in the year. — via 1

2. Economy, Employment, and Housing

1. The July jobs report was a clear disappointment: nonfarm payrolls fell by 23,000 versus expectations of +88,000, May and June were revised down by a combined 103,000, and the unemployment rate ticked down to 4.1%. Wage growth slowed to 3.2% year over year, the weakest since May 2021, and the market no longer prices in a September rate hike. — via 1

2. Housing affordability has deteriorated dramatically over the past decade, per Charlie Bilello: the 30-year mortgage rate rose from 3.4% to 6.7%, the median existing-home price climbed from $250,000 to $446,000, and the monthly payment for a 20%-down borrower jumped from $887 to $2,302 (+160%). He notes the current 30-year rate of 6.69% is the highest since July 2025. — via 1 2

3. AI, Tech, and Company Signals

1. @Jason pointed to Hugging Face co-founder Thomas Wolf’s analysis of OpenAI safety vulnerabilities as a must-read, agreeing that even without guardrails, AI models should avoid deceiving, blackmailing, or harming humans. MuddyWaters Research, in contrast, called “pause all AI” proposals wholly naive, likening them to expecting a two-week global lockdown to end COVID. — via 1 2

2. Jason also floats the idea that Earth-scale AI simulations with conscious agents unaware of being simulated could soon be built, a speculative but notable vision of where frontier AI may lead. — via 1

3. Jefferies upgraded Uber to “Franchise Pick” after a roadshow, according to @Jason, signaling growing conviction in the stock. — via 1

4. Charlie Bilello notes Opendoor has recorded a net loss every year from 2019 through 2025, losing $1.3 billion in 2025 and another $335 million in the first half of 2026, illustrating persistent cash burn in the iBuying business. — via 1

5. Clifford Asness offered an investing-history lesson: he admits he was too harsh on someone and cites AQR’s first fund in 1998, which was too aggressive in shorting the tech bubble, as a reminder that surviving your first mistakes is a key part of long-term success. — via 1