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.
Two back-to-back hurricanes, Harvey and Irma, hurt the September job report. Non-farm employment in the United States declined by 33 thousand last month, after an upwardly revised 169 thousand rise in August. September data markedly fell shy of market expectations of 90 thousand gains. It is the first decline in payrolls since September 2010. The unemployment rate fell to a new business-cycle low of 4.2%, as per an article published on Wall Street Journal.
Wage growth picked up 2.9% year over year, which was the strongest growth since 2009. Average hourly earnings rose 12 cents to $26.55 sequentially. There was sharp drop in employment in food services and drinking places thanks to hurricanes. However, payroll gains were noted in the health care, transportation and warehousing industries.
Market Impact
Whatever the case, market watchers see this dip as transitory. Traders’ bets on a Fed hike in December are still alive and kicking. Probability for December rate hike went up to above 90% from 77% on Thursday and 40% a month ago. The benchmark 10-Year U.S. Treasury yield was 2.37% on Oct 6, post the release of job data. This was 2 bps higher than what we saw the day before.
Against such a backdrop, several ETFs are expected to show their strength ahead. Below we have highlighted these options.
SPDR Health Care Select Sector SPDR Fund (XLV - Free Report)
As per trading economics, health care added 23,000 jobs in the month, with employment specifically rising in ambulatory health care services (added 25,000 jobs). The index of the fund looks to track stocks of pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology companies.
Employment in transportation and warehousing activities rose by 22,000 in September. The transportation sector is best positioned to take advantage of falling crude also (read: 5 Sector ETFs for Revenue Growth Play).
Employment in financial activities rose by 10,000 in September. Job additions in insurance carriers and allied activities (+11,000) mainly hinted at ‘hurricane-recovery efforts’, as per trading economics. The sector is enjoying the dual benefits of job growth and a rising rate environment (read: Insurance ETFs Back On Track Post Hurricane Irma).
With both the United States and global economy on the rise, it is time to play mid-cap growth ETFs like IVOG. Mid-caps have moderate exposure to both domestic and international economies.
Investors with slight confusion about the recent plunge in job data may want to look abroad which is flying high. Plus, rising U.S. bond yields may translate into higher greenback eventually. This will go against large-cap stocks with greater foreign exposure. But through mid-cap growth ETFs, investors can mitigate the adverse impact of a rising dollar while tap the surge in the global economy.
Though the S&P 500 and the Dow Jones slipped in response to weak job data, the tech-heavy NASDAQ Composite stayed steady. Overall, tech shares performed better in recent trading. So, investors can definitely look past the weak U.S. job data and target tech ETF plays (read: Invest in FANG Stocks With These ETFs).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
ETFs to Buy After Weak Jobs Report
Two back-to-back hurricanes, Harvey and Irma, hurt the September job report. Non-farm employment in the United States declined by 33 thousand last month, after an upwardly revised 169 thousand rise in August. September data markedly fell shy of market expectations of 90 thousand gains. It is the first decline in payrolls since September 2010. The unemployment rate fell to a new business-cycle low of 4.2%, as per an article published on Wall Street Journal.
Wage growth picked up 2.9% year over year, which was the strongest growth since 2009. Average hourly earnings rose 12 cents to $26.55 sequentially. There was sharp drop in employment in food services and drinking places thanks to hurricanes. However, payroll gains were noted in the health care, transportation and warehousing industries.
Market Impact
Whatever the case, market watchers see this dip as transitory. Traders’ bets on a Fed hike in December are still alive and kicking. Probability for December rate hike went up to above 90% from 77% on Thursday and 40% a month ago. The benchmark 10-Year U.S. Treasury yield was 2.37% on Oct 6, post the release of job data. This was 2 bps higher than what we saw the day before.
Against such a backdrop, several ETFs are expected to show their strength ahead. Below we have highlighted these options.
SPDR Health Care Select Sector SPDR Fund (XLV - Free Report)
As per trading economics, health care added 23,000 jobs in the month, with employment specifically rising in ambulatory health care services (added 25,000 jobs). The index of the fund looks to track stocks of pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology companies.
SPDR S&P Transportation ETF (XTN - Free Report)
Employment in transportation and warehousing activities rose by 22,000 in September. The transportation sector is best positioned to take advantage of falling crude also (read: 5 Sector ETFs for Revenue Growth Play).
SPDR S&P Insurance ETF (KIE - Free Report)
Employment in financial activities rose by 10,000 in September. Job additions in insurance carriers and allied activities (+11,000) mainly hinted at ‘hurricane-recovery efforts’, as per trading economics. The sector is enjoying the dual benefits of job growth and a rising rate environment (read: Insurance ETFs Back On Track Post Hurricane Irma).
S&P Midcap 400 Growth ETF Vanguard (IVOG - Free Report)
With both the United States and global economy on the rise, it is time to play mid-cap growth ETFs like IVOG. Mid-caps have moderate exposure to both domestic and international economies.
Investors with slight confusion about the recent plunge in job data may want to look abroad which is flying high. Plus, rising U.S. bond yields may translate into higher greenback eventually. This will go against large-cap stocks with greater foreign exposure. But through mid-cap growth ETFs, investors can mitigate the adverse impact of a rising dollar while tap the surge in the global economy.
Technology Alphadex First Trust (FXL - Free Report)
Though the S&P 500 and the Dow Jones slipped in response to weak job data, the tech-heavy NASDAQ Composite stayed steady. Overall, tech shares performed better in recent trading. So, investors can definitely look past the weak U.S. job data and target tech ETF plays (read: Invest in FANG Stocks With These ETFs).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>