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Investing

Here's how to trade the big jobs report miss

Wall Street movement
Michael Nagle | Bloomberg | Getty Images

The May jobs report came in much worse than expected, shocking a market that was preparing for a possible Fed rate increase this summer. So how do you trade it?

The U.S. created 38,000 jobs in May, according to the Labor Department, vs. 162,000 expected. Using Kensho, CNBC Pro looked at all the times in the last decade when the nonfarm payrolls figure missed the consensus estimate from economists by 50,000 jobs or more. This has occurred more than 30 times.

On the day of the report, consumer discretionary and industrial stocks lead the way lower because of their highly cyclical nature and vulnerability to any whiff of an economic slowdown. Utilities and consumer staples were down the least.

The S&P 500 posted an average decline of 0.4 percent the day of a big jobs report miss.

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Don't look for the market to recover next week from this sour report. History shows that one week out, the market's losses accelerated after a big jobs miss, with the S&P 500 posting an average decline of 1.1 percent. A new loser emerged in bank stocks as the financial sector lost on average 1.8 percent five days later.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.