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Mark Hulbert: Why low unemployment is a red flag for stocks

The bull market on Wall Street is vulnerable for a most-unlikely reason: U.S. unemployment is particularly low.

That’s certainly contrary to the widespread narrative that the low unemployment rate is good news, indicating that the economy is firing on all cylinders. But there’s no denying that the stock market in the past has struggled when the unemployment rate was as low as it is now.

Keep this history in mind as anticipation builds over the next two weeks for the next monthly report of the unemployment rate, due Friday, Nov. 2. The consensus expectation is that unemployment will stay at its current 3.7% rate — the lowest in 49 years.

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