Global Stock Markets Respond to Greece, Shifting Confidence

Consumer stocks fall as jobless claims rise in the US

Consumer stocks Coty (COTY), Apple (AAPL), and Proctor & Gamble (PG), fell by 4.7%, 2.04%, 0.41%, and 2.1%, respectively, in the week ending July 3, 2015. The same week saw jobless claims rise. An increase in jobless claims indicates declining household income. This means lower consumer spending.

Meanwhile, the Consumer Discretionary Select Sector SPDR Fund (XLY) rose by 0.42% and the SPDR S&P 500 ETF Trust (SPY) rose by 0.18%. The underlying strength of the US labor market is keeping investors upbeat.

Jobless claims at 297,000

In the week ending July 3, there were 297,000 new claims for unemployment insurance, according to a U.S. Department of Labor report released on Thursday, July 9. The figure came in above the consensus estimate of ~276,000 and higher than the 282,000 from the previous week. Applications for unemployment benefits increased by 15,000.

Having said that, the four-week moving average for jobless claims rose for the second week in a row to 279,500. In March, this figure was nearly 20,000 above the current level.

Rising jobless claims hurt the consumer discretionary sector

Initial jobless claims show the number of individuals who have filed for unemployment insurance for the first time. The U.S. Department of Labor’s Employment and Training Administration reports on these claims weekly. The report is a good indicator of labor market conditions in the US (SPY) (IVV).

Investors in the consumer discretionary sector are among the first to gain on positive reports from the US labor market. A decrease in jobless claims bodes well for the labor market. It also boosts consumer spending, as you can see reflected in the chart above.

So, a rise in jobless claims concerns consumer sector investors. Adding to those concerns, another recently released indicator also signals weakening consumer comfort in the US.

Continue to Next Part

Browse this series on Market Realist:

• Part 2 - US Consumer Comfort Eases in the US—KOHL -2.96%, GAP -1.56%

• Part 3 - Greek Debt Crisis Lends to Volatility in Global Stock Markets

• Part 4 - Over 25% Unemployment in Debt-Afflicted Greece—Yet GREK +6.51%