A week that ended at records, and what sits behind the rally

It is Sunday, with markets closed, so let's look back at the week. The S&P 500 gained 3.6%, its best week since April, and it joined the Dow in closing at a record. Palantir and SpaceX earnings, plus Friday's jobs report, all landed in the same week, and the market took them in stride.

The irony is that bad news finished the job. July payrolls fell by 23,000, which pushed back fears of a September rate hike, and that relief lifted stocks. But the unemployment rate dropped because fewer people were looking for work, which is hardly cause for celebration. With inflation above the Fed's target for nearly five years, a hike has not been ruled out either.

Two shadows showed up late in the week. One is the Strait of Hormuz. An Iranian official laid out tough conditions for reopening it, including a U.S. troop pullout, and the UAE said one of its ships was hit by an Iranian missile. Oil and stocks had moved on hopes of an imminent deal, but none came on the promised day. The other is President Trump's renewed push to fire Fed Governor Lisa Cook. It raised questions about Fed independence, though markets barely reacted.

Next week brings the July CPI report. A hot number could quickly drain the relief from this rally, making it the first real test of whether the record run continues.