Likely ETF & Stock Winners From July Jobs Report

Nonfarm payrolls fell by a seasonally adjusted 23,000 in July, compared with a downwardly revised 20,000 in June. The Dow Jones consensus forecast had been looking for a gain of 83,000, as quoted on CNBC.

The unemployment rate dipped to 4.1% as the labor force participation rate dropped further to 61.4%, its lowest in more than five years, another indication that fewer Americans were working or looking for jobs.

In addition to the weak June and July figures, May’s final payroll count was revised down to 63,000, or 66,000 lower than the previous estimate. The revisions brought the 12-month average down to just 34,000.

In July, average hourly earnings rose by just $0.02 to $37.62. Over the year, average hourly earnings increased by 3.2%.

Winning ETF Areas in Focus

Health Care

Health care employment has been an area of strength. Health care employment added 22,000 jobs in July. However, job growth slowed from the average monthly gain over the prior 12 months (+36,000). Employment in ambulatory health care services continued to increase during the month.

Health Care Select Sector SPDR ETF XLV can be played to tap the moderate momentum. The fund has 37% exposure to the pharma industry, followed by 18.8% exposure to the health care equipment & supplies, about 18.4% focus on biotechnology, 16.65% exposure to the healthcare providers & services industry, and 8.8% focus on the life sciences tools & services.

Surgery Partners SGRY is a healthcare services company. The company's outpatient delivery model is focused on providing solutions for surgical and related ancillary care to patients and physicians. Its operating segments include Surgical Facility Services, Ancillary Services, and Optical Services.

Sporting Goods, Hobby, Musical Instrument

Sporting goods, hobby, musical instrument, book, and miscellaneous retailers added 10,000 jobs in July. Retail trade employment has shown little net change over the past year. Apart from the sporting goods and hobbies industry, overall retail trade employment lost 19,000 jobs in July.

State Street SPDR S&P Retail ETF XRT as some exposure to stocks from the sporting goods, hobby, musical instrument, book, and miscellaneous retailing industries. The fund has gained about 4.5% over the past month.

Zacks Rank #3 (Hold)DICK'S Sporting Goods DKS operates as a major omnichannel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf, water sports, and more.

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This article originally published on Zacks Investment Research (zacks.com).

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