S&P 500 vs. Jobless Claims
Thursday, June 17, 2010 at 09:44AM After a moderate rally in the pre-market futures, the market has given up all of its gains in early trading. The primary culprit for the reversal was the weaker than expected initial jobless claims report. At a level of 472K, claims for the week ending June 12th were 22K higher than expected. Based on the market's recent pattern, it will be hard for equities to rally if claims do not show some improvement. As James Paulsen of Wells Capital noted on CNBC this morning, there has been a strong inverse correlation between changes in jobless claims and the direction of the stock market. Below, we have recreated a chart that was highlighted this morning which overlays the four-week moving average in jobless claims (inverted) vs the S&P 500. While the two haven't exactly been joined at the hip, the relationship between the two has been pretty strong.
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