May's Jobs Report Was OK, but What's Next for Investors?

NEW YORK ( Real Money) -- The stock market may have not liked the May employment report's strength, as equities futures dropped on the news and tumbled at the open.

It makes sense: The market has consistently shown during the recovery that it trades on interpretations of Federal Reserve actions rather than corporate fundamentals. I expected the weakness at the open, as the prospect of a Fed rate hike has been jacked up. The employment report comes just days before the next Fed announcement, so investors -- who were led to believe the rate hike would come in the fall -- have to adjust. I suspect the jobs numbers we received today were known in the bond market earlier in the week. (It was routed.)

While it is not wise to fight the market (if you are not a long-term investor), I see this jobs report as a positive signal that should be appreciated by investors. The first interest-rate hike may not be a big deal if the economy is creating 300,000 jobs this summer and wages range higher (taking a page from Fed Vice Chair Stanley Fischer's book).

You may want to buy your favorite stocks on weakness. This jobs report has the feel of one that could spur optimism on Wall Street once the initial selling is out of the way. We should be rooting for a stronger economy, ladies and gentleman. In fact, this morning I interviewed Dunkin' Brands (DNKN) CEO Nigel Travis and he sounded rather optimistic on sales trends in the business, driven by economic improvement. Specifically, consumers are splurging on premium-priced doughnuts and egg sandwiches. Further, they are returning in the afternoon for coffee fill-ups and sandwiches.

Pay careful attention to the consumer-discretionary sector today. If there is a decent amount of buying (or no large-scale rout), it could be an early sign the market is willing to embrace a stronger economy that triggers at a least one rate hike before year's end.

This article was originally published at 10:05 a.m., June 5, on Real Money.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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