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January U.S. Job Data Mixed: Time to Buy These ETFs?
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January job data bears yet another testimony to the steady progress growth path that the U.S. economy is on. A better-than-expected job report hit the market on February 3, 2017. As many as 227,000 new jobs were created in January, up from the consensus estimate of 180,000 and 157,000 job additions in December.
However, the report indicated a lower-than-expected rise in wages in January. Average hourly wage rose just 0.1%. Average hourly earnings rose 2.5% year over year, the feeblest since August. The unemployment rate ticked up to 4.8% in January 2017 from 4.7% in the previous month and ahead of the market expectation of 4.7% due to a rise in the labor participation rate.
Sectors including construction, retail, finance and professional services registered solid job gains in January. The 36,000 jump in construction payrolls was the highest since March. Thus, overall the job report can be plainly called mixed.
What Do These Numbers Suggest?
The data indicates that the U.S. labor market is definitely tightening, but not enough to survive the steady rise in inflation or speedier Fed policy tightening. In any case, experts don’t see a rate hike from the Fed in its next meeting in March. Many have now shifted the timeline to June.
As per a poll of primary dealers – 23 banks that are into direct business with the Fed – hinted at no hike to happen until the second quarter and two hikes this year, though the Fed guided for three initially (read: Fed Meeting No Shocker: Time for High Dividend ETFs?).
The greenback declined responding to the mixed job numbers. PowerShares DB US Dollar Bullish ETF (UUP - Free Report) was down 0.04% on February 3, 2016. However, key equity gauges performed well with the S&P 500-based ETF SPY adding about 0.7%, Dow Jones-based ETF DIA advancing about 0.9% and Nasdaq 100-based QQQ tacking on 0.3% gains.
President Donald Trump’s course of action with deregulation has probably favored the markets. He has signed executive orders targeted at withdrawing financial regulations, some of which were executed after the 2008 financial crisis. Banking shares notched higher gains on February 3, 2017 with Financial Select Sector SPDR ETF (XLF - Free Report) adding over 2% gains.
With Trump and the still-accommodative Fed helping the markets to remain charged-up through his policies, investors can reap benefits out of the S&P 500. Plus, large-cap stocks perform well in a weaker dollar environment as these stocks are considerable foreign exposure. However, given such mixed job report, it is better to bet on value stocks and ETFs (read: 4 Low P/E Value ETFs & Stocks to Wait Out Uncertainty).
Financial stocks are on a tear now with deregulation plans. So, a look at financial EF makes a prudent chioce. And nothing could be better than coupling the high dividend nature with a financial ETF. Investors should note that KBWD yields over 7% annually. The fund has a Zacks Rank #2 (Buy) with a Medium risk outlook (read: 9 Winning ETF Ways for Those Who Fears Rising Yields).
PowerShares Dynamic Building & Construction ETF(PKB - Free Report)
Since the construction sector witnessed solid job growth in the month, the sector hints at increased activities. This puts PKB – made up of the U.S. building and construction companies – in watch. The fund has a Zacks ETF Rank #2 with a High risk outlook (read: What Will Impact Housing ETFs: Strong Earnings or Soft Sales?).
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
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January U.S. Job Data Mixed: Time to Buy These ETFs?
January job data bears yet another testimony to the steady progress growth path that the U.S. economy is on. A better-than-expected job report hit the market on February 3, 2017. As many as 227,000 new jobs were created in January, up from the consensus estimate of 180,000 and 157,000 job additions in December.
However, the report indicated a lower-than-expected rise in wages in January. Average hourly wage rose just 0.1%. Average hourly earnings rose 2.5% year over year, the feeblest since August. The unemployment rate ticked up to 4.8% in January 2017 from 4.7% in the previous month and ahead of the market expectation of 4.7% due to a rise in the labor participation rate.
Sectors including construction, retail, finance and professional services registered solid job gains in January. The 36,000 jump in construction payrolls was the highest since March. Thus, overall the job report can be plainly called mixed.
What Do These Numbers Suggest?
The data indicates that the U.S. labor market is definitely tightening, but not enough to survive the steady rise in inflation or speedier Fed policy tightening. In any case, experts don’t see a rate hike from the Fed in its next meeting in March. Many have now shifted the timeline to June.
As per a poll of primary dealers – 23 banks that are into direct business with the Fed – hinted at no hike to happen until the second quarter and two hikes this year, though the Fed guided for three initially (read: Fed Meeting No Shocker: Time for High Dividend ETFs?).
The greenback declined responding to the mixed job numbers. PowerShares DB US Dollar Bullish ETF (UUP - Free Report) was down 0.04% on February 3, 2016. However, key equity gauges performed well with the S&P 500-based ETF SPY adding about 0.7%, Dow Jones-based ETF DIA advancing about 0.9% and Nasdaq 100-based QQQ tacking on 0.3% gains.
President Donald Trump’s course of action with deregulation has probably favored the markets. He has signed executive orders targeted at withdrawing financial regulations, some of which were executed after the 2008 financial crisis. Banking shares notched higher gains on February 3, 2017 with Financial Select Sector SPDR ETF (XLF - Free Report) adding over 2% gains.
ETFs to Buy
Guggenheim S&P 500 Pure Value ETF (RPV - Free Report)
With Trump and the still-accommodative Fed helping the markets to remain charged-up through his policies, investors can reap benefits out of the S&P 500. Plus, large-cap stocks perform well in a weaker dollar environment as these stocks are considerable foreign exposure. However, given such mixed job report, it is better to bet on value stocks and ETFs (read: 4 Low P/E Value ETFs & Stocks to Wait Out Uncertainty).
PowerShares KBW High Dividend Yield Financial Portfolio ETF (KBWD - Free Report)
Financial stocks are on a tear now with deregulation plans. So, a look at financial EF makes a prudent chioce. And nothing could be better than coupling the high dividend nature with a financial ETF. Investors should note that KBWD yields over 7% annually. The fund has a Zacks Rank #2 (Buy) with a Medium risk outlook (read: 9 Winning ETF Ways for Those Who Fears Rising Yields).
PowerShares Dynamic Building & Construction ETF(PKB - Free Report)
Since the construction sector witnessed solid job growth in the month, the sector hints at increased activities. This puts PKB – made up of the U.S. building and construction companies – in watch. The fund has a Zacks ETF Rank #2 with a High risk outlook (read: What Will Impact Housing ETFs: Strong Earnings or Soft Sales?).
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>