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4 Winning Sector ETFs & Stocks Post June Jobs Data

Sanghamitra Saha

U.S. employers added 224,000 new jobs in June, after a downwardly revised 72,000 in May. The number breezed past market expectations of 160,000. However, the unemployment rate rose to 3.7% last month. Average hourly earnings rose by 6 cents (or 0.2%) to $27.90, after gaining 0.3% in May. Over the year, average hourly earnings grew 3.1%.

Job growth averaged 172,000 per month in the first half. Job additions have slowed from an average of 223,000 jobs per month in 2018. The momentum, however, remains pretty higher than roughly 100,000 needed to sustain the growth in the working age population, per an article published on fxstreet.com.  The pace of wage growth has also cooled down from what we saw in 2018.

Winning Sector ETFs

Against this backdrop, investors should bet on ETFs and stocks that are the largest beneficiaries of the June jobs data. Below we have highlighted some of these that will likely see smooth trading in the days ahead.

Health Care

Jobs in the health care sector grew by 35,000 in the month, wherein ambulatory health care services and hospitals added 19,000 and 11,000, respectively. Per tradingeconomics, health care employment rose 403,000 over the past year.

This trend puts the spotlight on Health Care Select Sector SPDR Fund (XLV). The 62-stock fund is heavy on Pharmaceuticals (32.61%), Health Care Equipment & Supplies (24.79%), Health Care Providers & Services (18.74%) and Biotechnology (15.37%). The fund charges 13 bps in fees. The fund has a Zacks Rank #2 (Buy) (read: 4 ETFs to Bet on Global Aging Population).

HCA Healthcare Inc. HCA — a Zacks Rank #2 on-governmental hospital in the United States providing health care and related services — is also a good pick in this regard. The stock comes from a top-ranked Zacks industry (top 15%).

Construction

As per tradingeconomics, about 21,000 jobs were created in the construction sector in the month, in line with its average monthly gain over the prior 12 months.

Such decent data makes us keep a watch on Invesco Dynamic Building & Construction ETF PKB. The underlying index of the fund picks building and construction stocks on the basis of factors like price momentum, earnings momentum, quality, management action and value. The fund has a Zacks Rank #3 (Hold).

Construction Partners Inc. ROAD is a Zacks Rank #1 (Strong Buy) infrastructure and road construction company. It belongs to a top-ranked Zacks industry (top 14%).

Transportation

Transportation and warehousing created 24,000 jobs in June and added 158,000 over the past 12 months. In June, considerable job gains were noted among couriers and messengers (+7,000) and in air transportation (+3,000).

Due to jobs gains in air transportation, investors may have a look at U.S. Global Jets ETF JETS, a Zacks Rank #3 fund. The fundtracks the performance of Airline Companies across the globe with an emphasis on domestic passenger airlines (read: 5 ETFs to Profit From July Fourth Celebrations)

JetBlue Airways Corporation JBLU is a low-fare, low-cost passenger airline. The Zacks Rank #2 stock hails from a top-ranked Zacks industry (top 19%).

Manufacturing

Last month, manufacturing employment grew by 17,000. In the first half of 2019, job growth in the industry averaged 8,000 per month compared with an average of 22,000 per month in 2018. In June, employment rose in computer and electronic products (+7,000) and in plastics and rubber products (+4,000), per tradingeconomics.

All these factors make Invesco S&P SmallCap Industrials Portfolio PSCI a timely investment. The fund has a Zacks Rank #3 (Hold). The fund targets small-cap companies from industrial products and services, including engineering, heavy machinery, construction, electrical equipment, aerospace and defense and general manufacturing (read: Small-Cap Q1 Earnings Dull: 5 Better-Performing Sector ETFs).

Immersion Corporation IMMR develops hardware and software technologies that enable users to interact with computers using their sense of touch. The stock has a Zacks Rank #2.

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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
Immersion Corporation (IMMR) : Free Stock Analysis Report
 
U.S. Global Jets ETF (JETS): ETF Research Reports
 
Invesco S&P SmallCap Industrials ETF (PSCI): ETF Research Reports
 
Invesco Dynamic Building & Construction ETF (PKB): ETF Research Reports
 
Health Care Select Sector SPDR Fund (XLV): ETF Research Reports
 
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
 
Construction Partners, Inc. (ROAD) : Free Stock Analysis Report
 
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