ETF Diet Leans Defensive — Less Froth, More Safety As Jobless Rate Hits 2021 High

Core Insights - The latest jobs report indicates a rising unemployment rate of 4.4%, the highest since October 2021, leading to a shift in investor sentiment towards defensive ETFs as rate-cut odds diminish to 28% [1][9] - The mixed labor data suggests a cooling labor market, prompting investors to consider low-beta ETFs to mitigate risks associated with economic uncertainties [1][7] ETF Market Dynamics - SPDR S&P 500 ETF (SPY) and Invesco QQQ Trust (QQQ) initially rallied due to strong performances from companies like NVIDIA, but closed lower by 1.5% and 2.4% respectively, reflecting the impact of the higher jobless rate [2] - The shift towards safety-first ETFs is reinforced by the instinct to reduce market froth amid rising unemployment [2][9] Low-Beta ETF Recommendations - iShares MSCI USA Min Vol Factor ETF (USMV) has a beta of 0.76 and an expense ratio of 0.15%, designed for smoother returns during volatile macro conditions [3] - Invesco S&P 500 Low Volatility ETF (SPLV) features a beta of 0.61 and an expense ratio of 0.25%, providing a cushion during market fluctuations [3] - SPDR Select Sector Fund – Consumer Staples (XLP) has a beta of 0.58 and a low expense ratio of 0.08%, focusing on companies with stable demand [4] - SPDR Select Sector Fund – Utilities (XLU) also has a beta of 0.57 and an expense ratio of 0.08%, appealing to investors seeking stable cash flows [5] Market Sentiment and Economic Indicators - The September jobs report showed a gain of 119,000 jobs, but the rising unemployment rate has shifted the market's tone from celebratory to cautious [7] - Economists highlight a broader cooling trend in the labor market, with significant downward revisions to previous payroll figures [8] - Bank of America economists predict a "dovish hold" at the upcoming Fed meeting due to the higher jobless rate, indicating less room for monetary easing and increased market volatility [9]