The latest U.S. jobs report has removed any lingering doubts about whether the Federal Reserve will hike rates at its Mar 14-15 FOMC meeting. With the U.S. economy generating jobs at a steady clip in February, unemployment rate dipping and annual wage growth increasing, it’s a certainty that the central bank will push the cost of borrowing by a quarter of a point this month. The feeling is that two more rate hikes this year can be expected.

Fed policy makers will also look at this jobs data and conclude that inflationary pressures are in line with expectations as the economy approaches full employment. With rate hikes round the corner, investing in banks, insurance and brokerage houses will be prudent as the possibility of an increase in rates bodes well for these sectors.

Solid Job Gains in Trump’s First Full Month

U.S. employers added 235,000 new jobs in February in the first full month of the Trump White House, smashing expectations of 191,000. Payroll gains were driven by construction and manufacturing, while wage growth picked up as the labor market continued its steady improvement, indicating a resilient economy.

Employment in weather sensitive industries got a big boost from the second warmest February on record. Construction jobs, which can fluctuate depending on the weather, increased by 58,000 and marked the biggest rise since the recovery that began in mid-2009. Manufacturing payrolls gained 28,000, matching the most since Aug 2013. Health-care providers also added jobs significantly, as did white-collar firms and educational organizations.

Private employment, in the meantime, which excludes government agencies rose by 227,000 in February after a 221,000 increase in the prior month. Job additions were, in fact, broad-based with the lone exception of retailers. They shed 26,000 jobs, the most in four years. Nevertheless, a healthy February jobs data followed a 238,000 increase in January, the best back-to-back rise since July, according to the Labor Department.

The unemployment rate dipped to 4.7% from 4.8% as more people entered the labor force in search of work, while fewer gave up searching for jobs. Wages for American workers, meanwhile, went up 0.2% last month to $26.09 an hour. Hourly wages grew 2.8% from Feb 2016 (read more: 235K New Jobs Remove Last Stop from Fed Rate Hike).

Layoffs Lowest Since Vietnam War

Number of people losing jobs is also at its lowest level than any time since the Vietnam War. Jobless claims, a proxy of layoffs, came in at 243,000 in early March. However, such claims remain below the key threshold of 300,000 for 105 straight weeks, the longest stretch since 1973.

The low level of layoffs is quite astonishing. In the past 50 years, the only time layoffs were low for a longer period was during a three-year stretch from 1967 to 1970 that encompassed 160 weeks. The diagram below shows long periods of low layoffs:

Strong Figures Pave Way for Fed Rate Hike

Solid job additions at an above-average pace for the second month in February, a drop in unemployment rate and a rebound in wage growth bolstered confidence in the economy. This has cleared the path for the Fed to raise interest rates at its meeting this week.

Fed Chairwoman Janet Yellen had already said, citing an improving economy and solid labor market, that waiting too long to hike rates would be imprudent as it might hamper the broader financial markets and dampen economic growth. Yellen indicated that a rate hike is in the offing this month with more slated to follow later this year, while Vice Chairman Stanley Fischer said, "There is almost no economic indicator which has come in badly in the last three months.” He added that “if there has been a conscious effort” to boost expectations of a rate rise, I'm about to join it.”

Traders view on a March rate hike, as measured by interest rate futures, jumped to 100% from as low as 8% in the beginning of February in reaction to a barrage of hawkish rhetoric from policymakers. Wall Street bankers are also unanimous on a rate hike following solid U.S. jobs data. Banking-behemoth, The Goldman Sachs Group, Inc. (GS Quick QuoteGS - Free Report) now expects an increase in rates in March, June and September.

5 Biggest Winners from a Looming Rate Hike

Strong U.S. jobs report made a rate hike this week a near certainty. This call for investing in banks, as such institutions will see increased profits with a hike in interest rate. Higher longer-term interest rates can boost bank profits as they increase the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities.

The spread between long-term and short-term rates also expands during interest rate hikes because long-term rates tend to rise faster than short-term rates (read more: 5 Bank Stocks to Buy as Fed Hints at a Rate Hike in March).

Non-banking financial institutions including insurance companies, asset managers and brokerage firms also benefit from a rate hike. A rise in rates will enable insurance firms to invest in higher yielding government securities, thereby leading to greater returns, while brokerage firms and asset managers benefit immensely from rising-rate environments since an increase in rates generally concur with periods of economic strength and investor enthusiasm (read more: Which Investments Could Benefit From Rising Interest Rates?).

Given the above-mentioned positives, we have selected five sturdy stocks from these areas that boast a solid Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM score of ‘A’ or ‘B.’ Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.

Goldman Sachs Group operates as an investment banking, securities, and investment management company. Goldman Sachs has a Zacks Rank #2 and a VGM score of ‘B.’ Goldman Sachs has outperformed the Financial - Investment Bank industry over the last one year (+61.9% vs. +53.8%). The company’s estimated growth rate for this year is 18.7%, more than the industry’s increase of 10.3%.

Primerica, Inc. (PRI Quick QuotePRI - Free Report) distributes financial products to middle income households. The company operates in three segments: Term Life Insurance; Investment and Savings Products; and Corporate and Other Distributed Products. Primerica has a Zacks Rank #2 and a VGM score of ‘B.’ Primerica has outperformed the Insurance - Life Insurance industry over the last one year (+83.3% vs. +27.9%). The company’s estimated growth rate for this year is 15.9%, more than the industry’s increase of 7.3%.

Health Insurance Innovations, Inc. operates as a developer, distributor, and administrator of cloud-based individual health and family insurance plans, and supplemental products. Health Insurance Innovations has a Zacks Rank #1 and a VGM score of ‘A.’ Health Insurance Innovations has outperformed the Insurance - Life Insurance industry over the last one year (+150.3% vs. +27.8%). The company’s estimated growth rate for this year is 31.3%, more than the industry’s increase of 7.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

NewStar Financial, Inc. operates as a commercial finance company. The company operates through two segments, Commercial Lending and Asset Management. NewStar Financial has a Zacks Rank #2 and a VGM score of ‘A.’ NewStar Financial has outperformed the Financial - SBIC & Commercial industry over the last one year (+26.6% vs. +19.8%). The company’s estimated growth rate for this year is 29.5%; in contrast the industry is projected to give a negative return of 2.3%.

OM Asset Management plc is a privately owned asset management holding company. OM Asset Management has a Zacks Rank #2 and a VGM score of ‘B.' OM Asset Management has outperformed the Financial - Investment Management industry over the last year (+24.6% vs. +14.5%). The company’s estimated growth rate for this year is 20.9%, more than the industry’s increase of 4.7%.

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