Heading into Friday’s Non-Farm Payrolls (NFP) report for February, economists are expecting an increase in payrolls of 181K, which would be a decline from January’s monster report which came in above expectations at 304K.  In the private sector, economists are expecting an increase of 180K, which would imply a similar decline versus January as the headline reading.  The unemployment rate is expected to tick back down to 3.9% from last month’s reading of 4.0%.  Average hourly earnings are expected to grow at a rate of 0.3% versus the 0.1% reading last month.  Higher wage growth is probably not something this market wants to see, but given last month’s weaker than expected reading, a move back to 0.3% would likely not be too problematic.  Finally, average weekly hours are expected to be unchanged at 34.5.

Ahead of the report, we just published our eleven-page 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 better than expected over the last two years.

Of the top performing stocks on days when NFP beats expectations, nine sectors are represented, but Consumer Discretionary leads the way with eight.  Mattel (MAT) has been the best performing stock with an average open to close gain of 2.46%, but another seven have seen average open to close gains of more than 1%.  In terms of consistency, Cognizant Technology (CTSH) leads the way with open to close gains 85% of the time.

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

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