Home > News & Commentary > Inverse Correlation between Jobless Claims and the S&P 500 (SPX, SPY)

Inverse Correlation between Jobless Claims and the S&P 500 (SPX, SPY)

The Pragmatic Capitalist blog has posted a chart that shows the high degree of correlation between the inverse of initial jobless claims and the S&P 500:

This is a highly interesting chart, as it shows just how important jobs (or the lack of jobs) have been to the market during this recession.

The correlation here is astonishing; frankly far higher then I would have expected given the recent reaction to jobs reports that the market has basically shrugged off.

I would expect this correlation to continue, as consumer confidence and jobs are the last remaining economic pedestal on which the bears can hang their hat, and if these initial jobless claims can continue their decline, we should see further upside in the market.

– AH

Disclosure: No stocks mentioned, but long the market.

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