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Bespoke Investment Group provides some of the most original content and intuitive thinking on the Street. Founded by Paul Hickey and Justin Walters, formerly of Birinyi Associates and creators of the acclaimed TickerSense blog, Bespoke offers multiple products that allow anyone, from ... more

July Employment Report Preview

Date: Thursday, August 2, 2018 7:40 PM EDT

Heading into Friday’s Non-Farm Payrolls (NFP) report for July, economists are expecting an increase in payrolls of 192K, which would be a decline from June’s solid reading of 213K.  In the private sector, economists are expecting an increase of 190K.  The unemployment rate is expected to tick down to 3.9% after unexpectedly ticking up to 4.0% last month.  Last month’s jump to 4% was taken as a signal to economists that workers were entering the workforce, so this will be an added area of focus again.  Any increase in the unemployment rate without a surprisingly weak headline number will indicate a continuation of that trend and should help to keep wages from rising too fast.

 

Ahead of the report, we just published our eleven-page preview of the July jobs report.  This report contains a ton of analysis related to how the equity market has historically reacted to the monthly jobs report, as well as how secondary employment-related indicators we track looked in July.  We also include a breakdown of how the initial reading for July typically comes in relative to expectations and how that ranks versus other months.

One topic we cover in each month’s report is the S&P 500 stocks that do best and worst from the open to close on the day of the employment report based on whether or not the report comes in stronger or weaker than expected. In other words, which stocks should you buy, and which should you avoid?  The table below highlights the best-performing stocks in the S&P 500 from the open to close on days when the Non-Farm Payrolls report has been better than expected over the last two years.

Of the 25 top performing stocks on days when the NFP beats expectations, seven sectors are represented, and Consumer Discretionary leads the way with nine.  Vornado (VNO) has been the best performing stock with an average open to close gain of 2.54%.  VNO is followed by nine other stocks that have been up 1%+.  In terms of consistency, Urban Outfitters (URBN), CH Robinson (CHRW), and Michael Kors (KORS) have all been positive 90% of the time.

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