The following commentary was originally sent to Action Alerts PLUS subscribers on Dec. 4, 2015, at 9:59 a.m. ET.
As we reiterated in last night, an outlier jobs report to the downside would be the only thing standing in the way of a December rate-hike announcement following the Federal Reserve's upcoming policy meeting (Dec. 15-16).
This morning's numbers put an end to any debate, with the economy adding 211,000 jobs in November (slightly above analyst estimates for roughly 200,000), an upward revision from October (to 298,000 jobs added from 271,000, making it the best month for job growth this year), and an unemployment rate holding steady at 5%. Fed officials had precisely projected a 5% unemployment by year-end, further greasing the fuel for the impending hike.
Gains in construction, health care, and professional and technical services boosted growth in November, as mining and information jobs were trimmed. Wage growth decelerated slightly, from 2.5% year-over-year growth in October to 2.3% in November.
We view the news as a positive, especially for Action Alerts PLUS financial names -- Wells Fargo (WFC) and Bank of America (BAC) -- which benefit from a rate increase; our retail/consumer names -- Costco (COST), Jack in the Box (JACK), Kraft Heinz (KHC), Mondelez (MDLZ), Panera (PNRA), Starbucks (SBUX), Starwood (HOT), Target (TGT) and Walgreens Boots Alliance (WBA) -- which benefit from job creation that ultimately flows down to demand and pricing power; and finally our recently initiated home improvement name, Stanley Black & Decker (SWK), which is levered to improving economic conditions, especially as it pertains to the housing market.