With Upbeat Jobs Report, Fed Expected to Remain Hawkish | ETF Trends

The more than half a million new jobs added to the U.S. economy have many investors and analysts thinking that the Federal Reserve will continue its aggressive rate hike plan to fight inflation.

The U.S. labor market added 528,000 jobs in July, more than double what Dow Jones estimated (258,000 more jobs). Unemployment also dropped to 3.5%, below the 3.6% estimate. Wage growth also went up 0.5% for the month and 5.2% higher than a year ago.

This suggests that high inflation isn’t going anywhere. With its plan to raise rates to tame surging inflation, the Fed is expecting job growth to slow. But that’s not the case if this job report is anything to go by. The report will be one of two the U.S. central bank will see before deciding how much to raise rates at its September meeting.

“Anybody that jumped on the ‘Fed is going to pivot next year and start cutting rates’ is going to have to get off at the next station, because that’s not in the cards,” Art Hogan, chief market strategist at B. Riley Financial, told CNBC. “It is clearly a situation where the economy is not screeching or heading into a recession here and now.”

Diane Swonk, chief economist at KPMG, said that, based on the jobs report alone, the September rate hike could now be 75 basis points, not 50, before adding: “The Fed is dealing with strong demand in a supply-constrained economy, and that demand extends to labor.”

Following the release of the jobs report, stock futures fell on Friday, with the Dow Jones Industrial Average dropping 222 points, or 0.68%, while the S&P 500 futures declined 1.05% and the Nasdaq 100 futures lost 1.43%.

With industry observers expecting the Fed to continue on its hawkish path to curb inflation, investors may want a more active approach to their portfolio. That’s where actively managed equities ETFs can play a part.

“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.

As part of its lineup of active exchange traded funds, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP), the T. Rowe Price Dividend Growth ETF (TDVG), the T. Rowe Price Equity Income ETF (TEQI), the T. Rowe Price Growth Stock ETF (TGRW), and the T. Rowe Price US Equity Research ETF (TSPA).

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