We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wall Street has seen a somber start to September. Throughout last week, market volatility persisted. Despite initial gains, all three major indexes recorded significant weekly declines. The S&P 500 lost 4.3% last week. The Nasdaq Composite fell 5.8% last week and the Dow Jones declined 2.9%.
The U.S. market has been fluctuating as investors analyzed the jobs report and manufacturing report, gauging implications for an upcoming interest rate cut and the economy's strength. The U.S. economy added fewer jobs than expected in August while the unemployment rate ticked lower.
Data from the Bureau of Labor Statistics released Friday showed the labor market added 142,000 nonfarm payroll jobs in August, fewer additions than the 165,000 expected by economists, as quoted on Yahoo Finance. The previous month’s figures were also revised downward, indicating a sustained cooling in the labor market. Despite this, the unemployment rate edged down to 4.2%.
The S&P Global US Manufacturing PMI was revised slightly down to 47.9 in August from a preliminary reading of 48 and hints at the deterioration in the health of the U.S. manufacturing sector so far this year.
Production decreased for the first time in seven months as sales continued to decline amid increasing reports of demand weakness. A renewed reduction in employment was also recorded due to spare capacity in the sector.
Impact on Federal Reserve Policy
The report altered expectations regarding the Federal Reserve's upcoming policy decision. Traders, reflected in the CME FedWatch tool, now see a 50% probability of a 50-basis-point rate cut, up significantly from the earlier projections.
Time for Safe-Sector ETFs?
Investors can seek refuge in safe sectors like consumer staples, healthcare, real estate and utilities. Exchange-traded funds (ETFs) like US Consumer Goods iShares ETF (IYK - Free Report) , Nasdaq Food & Beverage ETF (FTXG - Free Report) and Consumer Staples ETF Vanguard (VDC - Free Report) have been hovering around a 52-week high lately.
Consumer Staples ETFs
Consumer staples ETFs are exchange-traded funds that focus on companies producing essential goods that consumers buy regularly, regardless of economic conditions. These typically include items like food, beverages, household goods, and personal care products. This sector and its related ETFs are non-cyclical in nature.
Healthcare ETFs
Healthcare ETFs are often considered a safe investment. Healthcare is a defensive sector, meaning it's less sensitive to economic cycles compared to other sectors. People need healthcare services regardless of the economic climate, which can lead to more stable performance. US Healthcare Providers iSharesETF (IHF - Free Report) is also hovering around a 52-week high.
Real Estate ETFs
The sector provides broad exposure to U.S. real estate investment trusts and real estate stocks. The sector fares better in a low-rate environment and yields high. With the Fed likely to cut rates in September, the sector should outperform. Vanguard Real Estate ETF (VNQ - Free Report) yields 3.75% annually and charges 13 bps in fees.
Utilities ETFs
The Utility sector tends to be stable and provides consistent dividends. Utilities Select Sector SPDR ETF (XLU - Free Report) , which charges 9 bps in fees and yields 2.86% annually. Fidelity Utilities MSCI ETF (FUTY - Free Report) , which yields 2.86% annually and charges 8 bps in fees, recently hit a 52-week high.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Economic Slowdown Ahead? Sector ETFs to Play
Wall Street has seen a somber start to September. Throughout last week, market volatility persisted. Despite initial gains, all three major indexes recorded significant weekly declines. The S&P 500 lost 4.3% last week. The Nasdaq Composite fell 5.8% last week and the Dow Jones declined 2.9%.
The U.S. market has been fluctuating as investors analyzed the jobs report and manufacturing report, gauging implications for an upcoming interest rate cut and the economy's strength. The U.S. economy added fewer jobs than expected in August while the unemployment rate ticked lower.
Data from the Bureau of Labor Statistics released Friday showed the labor market added 142,000 nonfarm payroll jobs in August, fewer additions than the 165,000 expected by economists, as quoted on Yahoo Finance. The previous month’s figures were also revised downward, indicating a sustained cooling in the labor market. Despite this, the unemployment rate edged down to 4.2%.
The S&P Global US Manufacturing PMI was revised slightly down to 47.9 in August from a preliminary reading of 48 and hints at the deterioration in the health of the U.S. manufacturing sector so far this year.
Production decreased for the first time in seven months as sales continued to decline amid increasing reports of demand weakness. A renewed reduction in employment was also recorded due to spare capacity in the sector.
Impact on Federal Reserve Policy
The report altered expectations regarding the Federal Reserve's upcoming policy decision. Traders, reflected in the CME FedWatch tool, now see a 50% probability of a 50-basis-point rate cut, up significantly from the earlier projections.
Time for Safe-Sector ETFs?
Investors can seek refuge in safe sectors like consumer staples, healthcare, real estate and utilities. Exchange-traded funds (ETFs) like US Consumer Goods iShares ETF (IYK - Free Report) , Nasdaq Food & Beverage ETF (FTXG - Free Report) and Consumer Staples ETF Vanguard (VDC - Free Report) have been hovering around a 52-week high lately.
Consumer Staples ETFs
Consumer staples ETFs are exchange-traded funds that focus on companies producing essential goods that consumers buy regularly, regardless of economic conditions. These typically include items like food, beverages, household goods, and personal care products. This sector and its related ETFs are non-cyclical in nature.
Healthcare ETFs
Healthcare ETFs are often considered a safe investment. Healthcare is a defensive sector, meaning it's less sensitive to economic cycles compared to other sectors. People need healthcare services regardless of the economic climate, which can lead to more stable performance. US Healthcare Providers iShares ETF (IHF - Free Report) is also hovering around a 52-week high.
Real Estate ETFs
The sector provides broad exposure to U.S. real estate investment trusts and real estate stocks. The sector fares better in a low-rate environment and yields high. With the Fed likely to cut rates in September, the sector should outperform. Vanguard Real Estate ETF (VNQ - Free Report) yields 3.75% annually and charges 13 bps in fees.
Utilities ETFs
The Utility sector tends to be stable and provides consistent dividends. Utilities Select Sector SPDR ETF (XLU - Free Report) , which charges 9 bps in fees and yields 2.86% annually. Fidelity Utilities MSCI ETF (FUTY - Free Report) , which yields 2.86% annually and charges 8 bps in fees, recently hit a 52-week high.