Amid the stock-selling turmoil driven by Trump’s tariffs, the U.S. reported strong March 2025 payroll data.
In March, nonfarm payrolls increased by 228,000, higher than the 117,000 increase in February. The healthcare sector added 54,000 jobs, while the retail sector added 24,000. When workers returned from a strike, it boosted the figure slightly.
Investors are not bullish on the retail sector. Costco Wholesale (COST), despite dropping by 15% from its 52-week high, trades at a P/E of 53.5 times. Walmart (WMT), which is 21% below its high, trades at a 34.55x multiple. They both trade at a premium, limiting their upside.
Investors are avoiding retail firms that face consumer spending declines. Best Buy (BBY) closed at a new 52-week low. Worries of boycotts against the U.S. sent Starbucks (SBUX) to close at $82.10. The stock’s premium, after it hired a Chipotle (CMG) executive as its CEO, is now gone. CMG stock also closed at a new low.
Last Friday, Fed Chair Powell commented on the strong job report. He contrasted the results to the higher-than-expected tariffs, which will slow the economy. If demand does not weaken from tariffs, it will cause inflation to rise.
Your Takeaway
The strong job report suggests that panicking investors drove the market selling. The U.S. economy is not weak enough for people to lose their jobs. This would give the S&P 500 a neutral rating.