As a barometer of the economy, the stock market is closely related to some economic indicators. If we want to analyze the trend of US stocks, we need to pay attention to the five most important economic data in the United States: employment report, consumer price index, consumer confidence index, retail sales and FOMC federal funds target interest rate. Therefore, economic indicators can be used as leading indicators to measure market risks, and hedging measures can be taken accordingly.
The trend of the stock market is closely related to the economic cycle and the monetary cycle (interest rate), and it is also affected by corporate profits at the micro level. Among them, American employment data, consumer price index, consumer confidence index and retail sales data are four indicators reflecting the American economic cycle, which can indirectly infer the profitability of American enterprises. The economic cycle in the United States is relatively long, and the time spent on a complete economic cycle is relatively stable. Since the 1980s, a complete macroeconomic cycle in the United States has gone through about 8- 10 years, and the American economy experienced recession in 1990, 200 1 and 2008 respectively.
As an indicator that best reflects the employment market in the United States, the data of non-agricultural employment population is closely related to the economic cycle, so it has a high positive correlation with the three major stock indexes in the United States. The American non-farm employment index reflects the development and growth of manufacturing and service industries. The reduction of non-agricultural employment means that enterprises reduce production and the economy enters a depression. In the absence of hyperinflation, such as a substantial increase in non-agricultural employment, it shows healthy economic growth. The statistical results show that since 2000, the interest rate in the United States has decreased, and people may invest more money in the stock market for the inherent need of maintaining and increasing value, thus stimulating the stock price to rise. Therefore, the increase in the FOMC federal funds target interest rate will lead to a decline in the stock market. For example, on 20 15, the market predicted that the Federal Reserve would raise interest rates soon, and funds would flow out of emerging markets on a large scale. In August, the US stock market suffered a setback, and the market was worried that raising interest rates would affect corporate profits, leading to stock selling.