Heading into Friday’s Non Farm Payrolls (NFP) report for February, economists are expecting an increase in payrolls of 205K, which would be a slight increase from January’s reading of 200K.  In the private sector, economists are also expecting the same increase of 205K.  With these increases, the unemployment rate is expected to fall to 4.0%.  The big area of focus, however, will come from average hourly earnings.  You may recall that in last month’s report, we saw a larger than expected increase, and that helped to exacerbate what was at the time a modest sell-off in equity prices.  With that in mind, look for any signs of strength in wages to have an adverse impact on stock prices.

Ahead of the report, we just published our eleven-page monthly preview of the February 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 February.  We also include a breakdown of how the initial reading for February 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 weaker than expected over the last two years.

When the NFP report is weaker than expected, all of the 25 best-performing stocks in the S&P 500 have seen average open-close gains of more than 1%.  NRG Energy (NRG) is the best performing stock in the S&P 500 with an average gain of 1.9% and gains 85% of the time.  In terms of consistency, it doesn’t get any better than Sysco (SYY) which has been up from the open to close every time the NFP report has been weaker than expected.

For anyone with more than a passing interest in how equities are impacted by economic data, this report is a must-read.  To see the report, sign up for a monthly Bespoke Premium membership now!

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