The Jobs Report That Could Spark a Year-End Rally

The much-anticipated monthly jobs number was released before the opening bell this morning. During August, nonfarm payrolls increased by just 22K, well below the estimate of 75K. The prior month was revised slightly higher to 79K from 73K.

The unemployment rate ticked up to 4.3% – the highest in years.

In short, the numbers came in weaker than expected and continue to point to a cooling labor market. Yet stocks actually moved higher on the news. Why? Because in today’s strange world, not-so-great news is actually good news for many investors.

A weaker jobs market gives the Federal Reserve more cover to begin cutting interest rates at its next meeting. And sure enough, the odds of a 25-basis-point cut on September 17 now sit at 100%.

That part is no surprise. The real question is what happens after. There are two Fed meetings left this year – October and December. Heading into today’s report, the market was pricing in two cuts. Now traders expect a total of 75 basis points in cuts by year-end – one at each meeting.

Today’s jobs report doesn’t change the bigger picture. The bull market remains intact – in fact, the S&P 500 hit a fresh all-time high today.

That said, I still believe there’s a good chance we see a short-term pullback in the weeks ahead before what could turn into a powerful year-end rally fueled by lower rates.

That’s why my plan inside our research services is clear: continue to look for opportunities to buy great companies on temporary weakness, positioning for higher prices into year-end and beyond.

One name I’ve highlighted before is BWX Technologies (BWXT) – an industrial leader riding the nuclear energy renaissance. Since I first shared it, BWXT has trounced the market. Recently, the stock pulled back from its all-time high reached in August and is now bouncing off support. I like it here not only for the long-term, but also as a short-term swing trade.

If you want more ideas like BWXT – in megatrends like AI, Innovation, Electrification, and Rare Earths – you need to check out our entry-level research service, NXT Core.

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Here’s to the future, 

Matt McCall
Editor, Market Insights

PS: Remember – this is the only time we’ve ever discounted NXT Core. When the clock strikes midnight in 72 hours, the offer closes. No extensions. No second chances.