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“If your work is so smart that only smart people get it, it’s not that smart.” – Chris Rock
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Whether it’s earnings season or the non-stop whirlwind of activity coming out of Washington, it doesn’t seem like there has been nearly as much attention being placed on this month’s employment report as other recent reports. Last month’s report was a major thud on the market as the S&P 500 declined 1.5%, but did mark a short-term low as the change in non-farm payrolls came in 91K stronger than expected.
The stronger-than-expected labor market last month raised fears among investors that the economy was too strong and would cause the Fed to ratchet back the pace of rate cuts in 2025. The ironic part about this scenario is that just four and five months earlier, weaker-than-expected employment reports in August and September spooked the market on concerns that the economy was sliding into a recession. On 8/2, the S&P 500 fell 1.8% when non-farm payrolls came in 61K below forecasts, and on 9/6, the S&P 500 fell 1.7% when payrolls were 21K weaker than expected.
Like many Americans towards the end of the year, the Health Care sector came down with a case of something around the holidays. We didn’t know if it was a cold, Covid, the flu, RSV, or whatever else was floating around, but not many of us were feeling 100%. For the Health Care sector, things were going around too – sentiment towards the insurance companies, the incoming Trump Administration, RFK being nominated as the HHS secretary, being a defensive sector during a market rally, etc. – and the result was a sharp Q4 decline. From its September high to its December low, the sector was down over 13% during a period in which the S&P 500 was up!
Since that low in December, the sector has been on the mend rallying more than 8%, and its YTD gain of just under 7% ranks as the third best-performing sector of the year behind Communication Services and Financials. A look at the chart of the Health Care sector shows that after moving above resistance levels in the last couple of weeks, the sector has been consolidating just above its 50-DMA and levels that had acted as resistance in the first half of 2024 and most recently late last year.
