U.S. stocks advanced on Friday, with the S&P 500 closing at a record high after the Labor Department reported that nonfarm payrolls fell by 23,000 in July—well below economists’ expectations of an 80,000 gain. Previous months’ figures were also revised lower, while the unemployment rate edged down to 4.1 percent as some workers left the labor force.

The soft jobs numbers reduced market expectations for a Federal Reserve interest-rate increase at the September meeting, dropping the probability to around 44 percent from higher levels earlier in the week. The S&P 500 rose 0.62 percent to 7,757.64, the Nasdaq Composite climbed 1.30 percent, and the Dow Jones Industrial Average gained 0.28 percent. All three major indexes recorded their strongest weekly percentage gains since April.

Strong corporate earnings further supported the rally, with roughly 85 percent of reporting S&P 500 companies beating estimates. Standout performers included collaboration software firm Atlassian, which surged more than 35 percent after raising its revenue outlook, and Microchip Technology, which jumped nearly 14 percent. Other movers reflected a mix of positive and cautious guidance across sectors. Broader context included signs of progress toward de-escalation in the Iran conflict, which helped moderate oil prices and ease some inflation worries. Investors interpreted the labor-market cooling as reducing pressure on the Fed to tighten policy further.

Treasury yields declined in response. The data also highlighted ongoing adjustments in the economy, including lower participation and revised hiring trends. Market participants will continue monitoring upcoming economic indicators and geopolitical developments for clues on the path of monetary policy and corporate performance in the months ahead.