Job Openings and the Stock Market

I saw a version of this chart floating around the other day and I wanted to highlight something that really caught my eye.

The chart shows Job Openings (in blue on the left scale) and SPY, the S&P 500 ETF (in green on the right scale.) Job Openings are employers looking for people to hire. The two lines generally move in the same direction, which makes sense. Because if the economy is doing well, there will be more job openings (businesses expanding.) At the same time, the stock market should also be doing well.

So for the most part, on this chart that goes back to 2001, both lines move together, except for two stretches, which I circled.

The first time job openings and the market diverged substantially was in 2018-2019. And ultimately what happened was that in early 2020 when COVID hit, stock prices caught up to (or should I say down to) the decline in jobs suffering one of their worst declines in years. After the COVID crash, jobs and stock prices went back to moving together.

Fast forward to the end of 2022. Job Openings and stock prices started moving persistently in different directions again (circled in red.) This situation hasn’t resolved yet, but if it does as it did in 2020, the stock market could be in for a rough spell.