Undoubtedly, the monthly jobs report is one of the most widely followed U.S. economic data points. In a normal environment, stocks should rise when the report is surprisingly strong and decline when the jobs number disappoints.
If Friday’s market action is an accurate indication, the current climate may not qualify as “normal.” Before the bell, Labor Department said the U.S. economy added 224,000 jobs in June, easily thumping economists’ expectations for 165,000 new jobs.
Still, the Nasdaq Composite lost 0.1% and the S&P 500 fell 0.18% while the Dow Jones Industrial Average declined 0.16%.
Maybe it was a case of the devil being in the details, as the unemployment rate ticked up to 3.7% and year-over-year wage growth slowed to 3.1%, below expectations of 3.2% . In reality, what likely vexed markets today was the notion that the June jobs report was strong enough that the Federal Reserve can put off lowering interest rates, something many market participants were hoping would happen as soon as later this month .
Not A Lot Of Winners
Apparently, some traders were not feeling too patriotic today because in late trading, about two-thirds of the Dow Jones Industrial Average’s components were in the red and the winners were not big winners.
Nike (NYSE: NKE ), a name that has spent some time under the spotlight of political correctness in recent days, gained 0.72% today, indicating it is shaking off those headlines and investors are focusing on more pertinent matters, such as the stock’s leverage to the Women’s World Cup final tomorrow.
“Nike CEO Mark Parker said in the company’s fiscal fourth-quarter earnings call that the USA women’s home jersey became the best-selling soccer jersey, men’s or women’s, ever in one season on Nike.com,” reports Barron’s .
Finishing higher by 0.77%, but on no news, UnitedHealth (NYSE: UNH ) surpassed Nike today. But top honors go to Goldman Sachs (NYSE: GS ), which added 0.9%. JPMorgan Chase (NYSE: JPM ) nudged higher today, confirming, albeit modestly, some strength in bank stocks.
“The financials sector offers the most attractive forecast total yield over the next 12 months, compared to the other S&P 500 sectors,” according to Wells Fargo’s Scott Wren . “This is a particularly attractive feature in the current low-rate environment, in which the major stock indices are at (or near) what we consider to be ‘fair value.'”
Reflecting Friday’s slow action, indicating many investors opted for the long weekend than another day of trading today, the Dow’s four other winners gained 0.25% or less to close the week.
Bottom Line on the Dow Jones Today
Later this month, investors will be treated to an avalanche of second-quarter earnings reports, and the financial services sector usually gets that ball rolling. However, that is a domestically focused group and one with little sensitivity to the tariff wranglings that have been on investors’ minds for much of 2019.
Expectations are in place for the S&P 500 to deliver mostly flat second-quarter earnings with much of the same forecast for the third quarter followed by tepid 7% growth in the fourth quarter .
Risk-tolerant investors looking for some value may want to consider the energy patch. In the Dow, that means Exxon Mobil (NYSE: XOM ) and Chevron (NYSE: CVX ).
“Energy continues to rank as the most compelling sector from a valuation perspective, with oil prices ending the quarter roughly where they began,” according to Morningstar .
As of this writing, Todd Shriber did not own any of the aforementioned securities.
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