February Jobs Report: Better-Than-Feared Data Sparks Market Rebound

The February Nonfarm Payrolls (NFP) report showed a gain of 151,000 jobs, coming in below the 170,000 consensus estimate but improving from the downwardly revised 125,000 in January. The unemployment rate edged up to 4.1%, slightly higher than expectations, while hourly earnings increased 0.3% month-over-month and 4.0% year-over-year, meeting forecasts. The prior December payroll figure was revised higher by 16,000 to 323,000, while January’s figure was lowered by 18,000 to 125,000, resulting in a net 2,000-job downward revision over the past two months.

Despite weaker-than-expected job creation, markets reacted positively, with equities staging a relief rally as the numbers were better than feared. Concerns over economic slowing had weighed on sentiment in recent weeks, but the labor market’s resilience—particularly in key industries—helped ease some of those fears. The data also supports expectations that the Federal Reserve will remain patient with rate cuts, maintaining the possibility of mid-year policy easing without an immediate need for aggressive action.

Industry Breakdown: Where Jobs Were Gained and Lost

- Health care (+52,000): The sector continues to be a bright spot, with strong hiring in ambulatory health care services (+26,000), hospitals (+15,000), and nursing/residential care facilities (+12,000). Related tickers: UNH, CVS, HCA, THC, HUM.

- Financial activities (+21,000): Strong hiring in real estate, rental & leasing (+10,000) and insurance (+5,000) helped drive gains, while commercial banking lost 5,000 jobs. Related tickers: JPM, BAC, WFC, CB, AIG, SPG.

- Transportation & warehousing (+18,000): Gains were led by couriers and messengers (+24,000) and air transportation (+4,000), indicating continued strength in logistics. Related tickers: UPS, FDX, DAL, AAL, JBHT.

- Social assistance (+11,000): Hiring in individual and family services (+10,000) continues at a steady pace. Related tickers: EHC, AMED.

- Federal government (-10,000): The job losses are in line with ongoing efforts by the Trump administration’s Department of Government Efficiency to reduce the federal workforce.

Meanwhile, retail employment was flat (-6,000), with food and beverage retailers shedding 15,000 jobs due to strike activity, partially offset by gains in warehouse clubs, supercenters, and general merchandise retailers (+10,000). Related tickers: WMT, TGT, COST, KR.

Conclusion: What This Means for Markets and the Fed

The February jobs report reinforced the view that the labor market remains on solid footing, despite some moderation in job gains. Wage growth of 4.0% year-over-year suggests that inflationary pressures are contained, which may provide the Federal Reserve with room to cut rates later in the year without risking an overheating economy.

Markets breathed a sigh of relief, as the figures were not weak enough to signal imminent recession risks, nor strong enough to force the Fed to delay rate cuts further. Rate-sensitive sectors like tech and consumer discretionary rallied, while financial stocks reacted positively to wage growth, which could support loan demand.

Looking ahead, investors will monitor upcoming inflation data and any additional signals from Fed Chair Powell, as policymakers weigh the balance between slowing economic momentum and maintaining price stability. The March and April jobs reports will be critical in confirming whether the current labor market strength persists or begins to falter.