Merryn's Blog

What the latest jobless data says about US stock markets

Keeping an eye on the US initial jobless claims numbers gives you a good guide to where the US economy - and the stockmarkets - are heading.

How can you tell where America's stock market is going?

Answer: keep a close eye on US initial jobless claims. We wrote about this last week: The one chart that tells you where the US economy is heading.

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In a nutshell, it's a good all-in-one guide to where both the US economy and the stock market are heading.

And the latest numbers are just out. The weekly figure showed a fall of 19,000 claims to 457,000. That may look like a big drop but the four-week moving average which smoothes out volatility is down by just 1,500.

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What does this mean? All becomes clear when you look at the chart below. The red line is the four-week moving average of initial jobless claims. This has been inverted when it rises on the chart, US dole queues are getting shorter, and vice versa. The green line is the S&P 500 index.


In short, the latest figure is broadly neutral for the stock market. But we'll be watching it closely. If the picture changes, we'll let you know.




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