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4 Sector ETFs & Stocks to Win Despite Soft December Jobs Data

Sanghamitra Saha

The U.S. jobs report for the month of December came in weaker than expected. The December non-farm payroll reading of 145,000 was well below the estimated 164,000 as well as the downwardly revised November’s reading of 256,000. For the whole of 2019, payroll employment growth came in at 2.1 million, the minimum since 2011.

“A later-than-normal Thanksgiving Day in 2019, which could have shifted hiring of seasonal workers, and a boost in November from the return of workers from a GM strike” are being held responsible for this downcast job data, per tradingeconomics.

Overall, the unemployment rate was 3.5% in the month, down from 3.9% recorded in the year-ago period. Average hourly earnings for all employees on private nonfarm payrolls increased 0.1% to $28.32, after an upwardly revised 0.3% gain in November and missing market estimates of a 0.3% gain. In a nutshell, subdued wage growth is a concern.

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.

Health Care

Per trading economics, health care added 28,000 jobs in the month. Health care employment increased by 399,000 in a year’s time. This is one of the sectors which have been adding jobs continuously. The December job gains occurred in ambulatory health care services (+23,000) and in hospitals (+9,000).

The fund iShares U.S. Healthcare Providers ETF IHF should thus benefit. The index of the fund looks to track stocks of health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes, etc. The Zacks Rank #3 (Hold) stock added about 0.2% on Jan 10 (read: 10 Top-Performing ETFs of the Past Decade).

Investors can also take a look at Zacks Rank #3 HCA Healthcare Inc. (HCA). The company is the largest non-governmental operator of acute care hospitals in the United States.


Last month, retail employment grew by 41,000, thanks mainly to a gain (+33,000) in clothing and accessories stores. Gain in retail positions during the peak of the holiday season, the best-selling period the sector, is understandable. It also paints a brighter picture of the brick-and-mortar retailing.Employment in retail trade did not change much in 2019 and 2018 (+9,000 and +14,000, respectively).

The data makes SPDR S&P Retail ETF (XRTa timely investment. The fund has a Zacks Rank #2 with a Medium risk outlook. Apparel retail takes the top spot in the fund with about 22.45% exposure (read: Iraq Attack: Sector ETF Winners and Losers). 

Our pick in this regard is Zacks Rank #2 Dillard's Inc. (DDS). The company’s primary product categories comprise women’s and children’s apparel, shoes and accessories.

Leisure & Hospitality

About 40,000 jobs were created in the sector in the month. The industry added 388,000 jobs in 2019, in line with 2018 (+359,000).

Obviously, such positive data makes us keep a close watch on Invesco Dynamic Leisure And Entertainment ETF (PEJ). The underlying Dynamic Leisure & Entertainment Intellidex Index comprises stocks of U.S. leisure and entertainment companies. The fund has a Zacks ETF Rank #3.

In this regard, one can have a look at the Zacks Rank #1 stock Marriot Vacations Worldwide Corporation VAC.


This sector created 20,000 jobs in December. The sector showed a slowdown in job growth. In the whole of last year, construction employment grew 151,000 compared with a gain of 307,000 in 2018. Invesco Dynamic Building & Construction ETF (PKBhas a Zacks Rank #3 (read: ETFs to Gain on Positive US New Home Sales Data).

Our stock pick is D.R. Horton Inc. DHI. This home building and construction company has a Zacks Rank #2.

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D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
Invesco Dynamic Building & Construction ETF (PKB): ETF Research Reports
SPDR S&P Retail ETF (XRT): ETF Research Reports
iShares U.S. Healthcare Providers ETF (IHF): ETF Research Reports
Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports
Marriot Vacations Worldwide Corporation (VAC) : Free Stock Analysis Report
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
Dillard's, Inc. (DDS) : Free Stock Analysis Report
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