Stock Market Is All About Labor Even As the Fed Fights Inflation
- S&P 500 has tracked labor market momentum for three decades
- Fed shifts focus to inflation, retiring “transitory” word
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Equities investors should keep their eyes on the labor market even as traders and central bankers focus on inflation and the monetary policy that addresses it.
As today’s Chart of the Day shows, since the 1990s the stock market has traded in line with progress in the labor market as the U.S. economy transitioned away from manufacturing and toward services. The inverted unemployment rate largely mirrors moves in the S&P 500 Index.