On July 2, the Bureau of Labor Statistics reported job growth of 57,000. This is half the consensus estimate of 114,000. In May, the U.S. economy added 129,000 jobs.
Fewer people looked for jobs, lowering the unemployment rate by 10 bps to 4.2%.
Investors might continue to build their position in the health care sector, where jobs increased. AbbVie (ABBV) and Moderna (MRNA) shares are attractive holdings.
The leisure and hospitality sector lost 61,000 jobs. FIFA soccer games in the U.S. end this month. That would put pressure on Marriott (MAR) revenues. Hilton (HLT) and Hyatt (H) might give up their stock gains in the last year.
The weak job report makes the Federal Reserve’s rate decision later this month easier. It will neither cut rates nor hike them. The neutral policy decision would send bank stocks like JPMorgan Chase (JPM) higher. Banks benefit from a growing economy.
Bonds are attractive rebound plays. The long-term TLT ETF might rally back to between $88 and $91 this summer.
Weak wage growth is bad news for consumer stocks. Avoid Procter & Gamble (PG). In addition, expect the downtrend in restaurant stocks to continue. Domino’s Pizza (DPZ), McDonald’s (MCD), Starbucks (SBUX), and Shake Shack (SHAK) will need to spend more on ads to attract customers.
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