More Big Tech earnings and the jobs report are in the week ahead. US stocks notched their third straight week of gains on Friday.

Investors will digest the latest data from the July jobs report due next Friday. Market participants are not expecting any major surprises from this, which could continue to show solid results in an extra strong labor market.

Investors will be watching the wage numbers closely. Market bears worry that persistent wage growth could mean inflation will spiral higher, as in the 1970s and early 1980s. In those years, average wages typically jumped 7%, 8%, or 9% yearly.

Inflation showed further signs of cooling in June, according to a gauge released Friday that the Fed follows closely.

The personal consumption expenditures price index, excluding food and energy, increased by just 0.2% from the previous month, in line with the estimate. Core PCE rose 4.1% from a year ago, compared with the estimate of 4.2%. The annual rate was the lowest since September 2021 and marked a decrease from the 4.6% pace in May.

Headline PCE inflation, including food and energy costs, also increased 0.2% monthly and rose 3% annually. The yearly rate was the lowest since March 2021 and decreased from 3.8% in May.

Markets reacted positively to the report, with stock market futures pointing higher and Treasury yields headed lower. The data reaffirms the current market narrative that inflation is cooling and economic growth is continuing, a favorable environment for risk assets.

The Fed and investors will take comfort in these numbers as they suggest that the inflation threat is dissipating, and the Fed may now be able to go on vacation and assume an extended pause concerning future interest rate increases.

On the other side, the market is at about the halfway mark for the second-quarter earnings season, with results coming in stronger than anticipated. Of the 255 companies in the S&P 500, about 81% have posted positive surprises.

Earnings will continue to pour in this week, with crucial results from Big Tech companies Apple and Amazon on Thursday. Both companies, whose stocks are up more than 50% each year to date, will have to justify their valuations amid criticism that they have gotten too frothy.

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