Traders Hit The Buy Button On These 10 Stocks After Weak Jobs Report

The August jobs report sent a clear signal that the U.S. labor market is quickly losing steam—yet instead of panic, investors hit the buy button, betting that the Federal Reserve will be forced to cut rates this month and possibly again before year-end.

• VOO ETF is trading at record highs again. Check live chart here.

The U.S. economy added just 22,000 jobs in August, a steep drop from July’s revised 79,000 and far short of the 75,000 economists had expected.

Revisions to prior months deepened the gloom: June payrolls were revised down by 27,000, showing a net job loss of 13,000, the first monthly contraction since the pandemic.

This brings the three-month average for job creation down to just 29,000, a number that effectively signals stagnation in labor market momentum.

“The punch bowl could be ready to go as job growth grinds to a halt. Bad news for employment is good news for investors wanting lower rates,” said David Russell, global head of market strategy at TradeStation. “A September cut is a near certainty and October is increasingly in play.”

Nancy Vanden Houten, lead U.S. economist at Oxford Economics, weighed in.”On balance, the August jobs report was considerably weaker than expected, clearing the way for the Federal Reserve to cut interest rates at its September 17 meeting.”

According to the CME FedWatch Tool, markets are now assigning an 88% probability of a 25-basis-point cut at the Fed’s September 17 meeting, and a 12% chance of a larger 50-basis-point move. Looking further ahead, investors see an 80% probability of an additional cut at the October 29 meeting.

“The labor data is probably not weak enough for the Fed to cut by 50 basis points given inflation persistence, so as of now, our expectations are for a 25 basis point cut,” said Jeffrey Roach, chief economist for LPL Financial.

Stocks Rally On Cut Hopes

Markets wasted no time reacting. The Nasdaq 100 climbed 1% at the open on Friday, while the S&P 500 rose 0.5%, hitting new all-time highs as investors priced in the Fed pivot.

Rate-sensitive names and economically cyclical stocks were among the top performers.

As the Benzinga Pro platform shows, these are the 10 best-performing U.S.-listed large caps (market cap > $50 billion) in the 30 minutes following the August jobs report release:

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