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Briefing.com Summary:

*The July employment report was not good economically speaking, but it was good for the interest rate outlook.

*Oil prices are remaining calm despite concerns surrounding Iran's draft plan for the Strait of Hormuz.

*The probability of a 25-basis point hike at the September FOMC meeting is back under 50.0%.

The past few sessions have seen a consolidation trade that, so far, has held support at the 7,700 level for the S&P 500. The consolidation activity has not put this week's gains at any real risk of being reclaimed.

Entering today, the S&P 500 is up 2.9% for the week. The Nasdaq Composite is up 3.8%, the Dow Jones Industrial Average is up 2.7%, the Russell 2000 is up 2.4%, and the S&P MidCap 400 is up 2.0%.

Yes, it has been a good week for the stock market, which has been bolstered by earnings optimism, sliding oil prices, lower bond yields, and momentum trading. It will be further bolstered this morning by the July employment report, which has helped temper rate-hike expectations.

Ironically, this report falls into the domain of "bad news is good news." Participants are recognizing that nonfarm payroll growth was weak (actually, there was no growth), that wage inflation disinflated, and that the labor force participation rate continues to dwindle.

The key takeaway from the report is that it was soft enough, presumably, to keep Fed officials in a wait-and-see mode, such that they could see a better case now for not raising the target range for the fed funds rate at the September FOMC meeting.

The 2-yr note yield, at 4.22% just before the report, is at 4.16% now, down nine basis points from yesterday's settlement. The 10-yr note yield, at 4.67% just before the report, is at 4.61%, down six basis points from yesterday's settlement.

The equity futures market, which had been signaling a flattish start, has been energized by the drop in yields and the prospect of the Fed holding off on any tightening. The S&P 500 futures are up 42 points and are trading 0.4% above fair value, the Nasdaq 100 futures are up 365 points and are trading 1.0% above fair value, and the Dow Jones Industrial Average futures are up 174 points and are trading 0.2% above fair value.

According to the CME FedWatch Tool, the probability of a 25-basis point hike at the September meeting has been reduced to 42.1% from 55.0% yesterday.

Notable headlines from the July Employment Situation Report:

• July nonfarm payrolls decreased by 23,000 (Briefing.com consensus: 86,000). The 3-month average for total nonfarm payrolls decreased to 20,000 from 77,000. June nonfarm payrolls revised to 20,000 from 57,000. May nonfarm payrolls revised to 63,000 from 129,000.

• July private sector payrolls increased by 30,000 (Briefing.com consensus: 69,000). June private sector payrolls revised to 30,000 from 49,000. May private sector payrolls revised to 61,000 from 97,000.

• July unemployment rate was 4.1% (Briefing.com consensus: 4.2%) versus 4.2% in June. Persons unemployed for 27 weeks or more accounted for 25.5% of the unemployed versus 27.3% in June. The U6 unemployment rate, which accounts for unemployed and underemployed workers, held steady at 7.9%.

• July average hourly earnings were up 0.1% (Briefing.com consensus: 0.3%) on the heels of a 0.3% increase in June. Over the last 12 months, average hourly earnings have risen 3.2% versus 3.4% for the 12 months ending in June.

• The average workweek in July was 34.3 hours (Briefing.com consensus: 34.3) versus 34.3 hours in June. The manufacturing workweek was unchanged at 40.4 hours. Factory overtime edged down 0.1 hour to 3.1 hours.

• The labor force participation rate decreased to 61.4% from 61.5% in June.

• The employment-population ratio decreased to 58.9% from 59.0% in June.

Separately, there has been some added attention on reports this morning that a draft plan from Iran for reopening the Strait of Hormuz bars vessels from the U.S. and Israel and any other "hostile countries" that have not paid Iran.

The oil market has maintained a sense of calm amid the reports. WTI crude futures are down 0.6% to $76.86/bbl, and Brent crude futures are down 0.9% to $81.74/bbl.

The U.S.-Iran situation is a tenuous one, yet the market continues to offer an allowance for cooler heads prevailing. In the meantime, stocks are warming up with interest rates cooling down.

--Patrick J. O'Hare, Briefing.com