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Mixed U.S. Job Data Put These ETFs in Focus

Probably reflecting the fact that the U.S. economy – once a star ─ has been losing steam from the latter part of 2015, a weaker-than-expected job report hit the market on May 6, 2016. The April non-farm payroll reading of 160,000 was below the estimated 205,000 and the prior-month reading of 208,000 (revised down from the originally reported reading of 215,000 jobs) (read: Global Growth Worries Loom: ETFs to Play).

This was the smallest job growth since September and came below the average job growth of 200,000 seen in the first quarter. However, the unemployment rate was unmoved at 5%. Other key indicators including workweek and average hourly earnings showed increases. Hourly earnings in April rose 0.3% month over month and 2.5% year over year.

Sectors including professional and business services, health care and financial services registered job gains. The job report can be plainly touted as mixed. Yes, an estimate miss might bother market watchers, but the 5% unemployment rate and positive momentum in average wage growth hints at a not-so-downbeat scenario.

June Rate Hike or Not?

With this, market watchers have almost ruled out the possibility of a rate hike in June. Many have now shifted the timeline to September. Among the renowned organizations, Goldman Sachs is supportive of this speculation.

The immediate reaction to this data was somber as some financial institutions started to bet on just one Fed rate hike this year against its indicated two. The greenback at first declined responding to the dull job number, but soon reversed its downing trend following New York Federal Reserve President William Dudley’s comment that ‘two rate hikes this year were still a "reasonable expectation". PowerShares DB US Dollar Bullish ETF (UUP) was up over 0.1% on May 6, 2016 (read: ETFs that Won & Lost Post Fed Meet).
ETFs in Watch

Among the ETFs, top U.S. equities ETFs SPDR S&P 500 ETF (SPY), Dow Jones Industrial Average ETF (DIA) and PowerShares QQQ Trust (QQQ) deserve special mention. The funds SPY, DIA, QQQ were up about 0.4%, 0.5% and over 0.5% respectively on May 6.

Treasury bond ETFs like iShares 20+ Year Treasury Bond ETF (TLT) lost over 0.4% on May 6, 2016. This was because of a tick-up in long-term U.S. Treasury bond yields on the same day. As of May 6, 2016, yield on 10-year U.S. Treasury was 1.79% (read: Bull Market for Bond ETFs Coming to an End?).

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PWRSH-DB US$ BU (UUP): ETF Research Reports
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
NASDAQ-100 SHRS (QQQ): ETF Research Reports
 
SPDR-DJ IND AVG (DIA): ETF Research Reports
 
ISHARS-20+YTB (TLT): ETF Research Reports
 
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