Why Stocks Fell After Jobs Report

Last Friday, the Bureau of Labor Statistics posted non-farm payrolls. The U.S. economy created a slower rate of job growth. Still, the healthy labor market will deter the Federal Reserve from cutting interest rates.In January, the economy added 143,000 jobs. Investors should factor in the BLS revising job growth in November and December 2024 up by 100,000 jobs.The Dow, Nasdaq (QQQ), and S&P 500 (IVV) all closed lower on the day in response. Markets needed the hope of rate cuts to continue their rally. The bond market traded mostly flat, as the 7-10 Year Treasury Bond ETF (IEF) found support at $93.14.RisksInvestors should not read much into the healthy 4.0% unemployment rate. Full-time jobs could be replaced with part-time jobs, which paints a less robust job market. For example, Uber (UBER) and DoorDash (DASH) are counted the same as full-time jobs.The Trump Administration acted quickly to pause hiring in the Federal government. Job cuts started and will only accelerate in the coming weeks. Though government job cuts will hurt future NFP reports, expect spending in healthcare and the military to continue.Shares of UnitedHealth (UNH), Cigna (CI), and Elevance (ELV) all priced in moderate healthcare spending this year. In the military sector, Lockheed Martin (LMT) is trading at 28% below its 52-week high, closing at $444.39. L3Harris (LHX) is 3% above its 52-week low.