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3 Sector ETFs & Stocks to Sizzle Despite Downbeat Job Data

The U.S. job report for the month of December came in weaker than expected. The December non-farm payroll reading of 148,000 was well-below the estimated 190,000 as well as the upwardly-revised November's reading of 252,000. In the whole of 2017, payroll employment growth came in at 2.1 million compared with a gain of 2.2 million in 2016.

Job cuts in the retail sector are being held responsible for this downcast job data. There was a startling loss of 20,000 retail positions during the holiday season. The unemployment rate for blacks declined to 6.8% , the lowest ever, as per CNBC. This job loss in the retail sector in the peak of the holiday season, the best-selling period the sector, was shocking and once again reinforced the pain of brick-and mortar retailing.

Overall, the unemployment rate was 4.1% in the month. Average hourly earnings increased slightly to the same 2.5% annualized gain we noticed in November. In a nutshell, unemployment met the Fed's target but wage growth is yet to take momentum.

Still, there are some corners in this downbeat job report that are sizzling. As a result, investors should bet on stocks and ETFs that are the largest beneficiaries of job gains. Below, we have highlighted some of these that will likely see smooth trading in the days ahead.

HealthCare

Jobs in health care increased by 31,000 in December. Ambulatory health care services (+15,000) and hospitals (+12,000) deserve special mention in terms of job gains. Also, health care added 300,000 jobs in 2017 compared with a gain of 379,000 jobs in 2016. iShares US Healthcare Providers ETF IHF is thus in a sweet spot. The fund has a Zacks Rank #3 (Hold) with a Medium risk outlook.

Investors can also take a look at Zacks Rank #1 Centene CorporationCNC . The company provides multi-line managed care programs and operates through two segments, Managed Care & Specialty Services.

Construction

This sector created 30,000 jobs in December, with most of the increase (24,000) seen among specialty trade contractors.In the whole of last year, construction employment grew 210,000, compared with a gain of 155,000 in 2016. PowerShares Dynamic Building & Construction Portfolio PKB has a Zacks Rank #2 (Buy) with a High risk outlook.

Our stock pick is Century Communities Inc. CCS .This home building and construction company has a Zacks Rank #1 (Strong Buy) and belongs to a Zacks Industry Rank is in the top 26%.

Manufacturing

Last month, manufacturing employment grew by 25,000, thanks to a gain (21,000) in durable goods industries. This was quite expected as the U.S. manufacturing sector closed 2017 on a high note as gains in orders and output was the best for factories in 13 years. The sector grew in December at the quickest clip in three months (read: ETFs to Buy as U.S. Manufacturing Hits 13-Year High ).

Though the Fed is sounding hawkish, interest rates are still at moderate levels. Notably, a low interest rate environment favors the industry as the sector depends on interest rates for its operations (read: What Do Fed Minutes Mean for the ETF World? ).

Plus, the Trump administration is now eyeing infrastructure reform. All these factors make Industrial Select Sector SPDR ETF XLI a timely investment. The fund has a Zacks Rank #3 with a Medium risk outlook (read: Industrials ETFs Head to Head: XLI vs. IYJ ).

Our pick in this regard is Zacks Rank #1 Houston Wire & Cable Company HWCC . The company is one of the largest distributors of specialty wire and cable and related services in the U.S. electrical distribution market.

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Houston Wire & Cable Company (HWCC): Free Stock Analysis Report

Century Communities, Inc. (CCS): Free Stock Analysis Report

SPDR-INDU SELS (XLI): ETF Research Reports

PWRSH-DYN BLDG (PKB): ETF Research Reports

ISHARS-US H C P (IHF): ETF Research Reports

Centene Corporation (CNC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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