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Street: Falling unemployment not good for stocks

A worker assembles stand mixers on the production line at the Whirlpool KitchenAid manufacturing facility in Greenville, Ohio.
Luke Sharrett | Bloomberg | Getty Images
A worker assembles stand mixers on the production line at the Whirlpool KitchenAid manufacturing facility in Greenville, Ohio.

As unemployment falls, so too may the stock market.

This cold-hearted theory is being proposed by many on Wall Street.

"Signs of pressure from labor costs are starting to rear their head," Bank of Merrill Lynch equity strategist, Savita Subramanian, told clients on Monday.

Many companies in the S&P 500 this month have issued negative earnings pre-announcements and lower guidance because of rising wages and higher costs for benefits.

Case in point, during a conference call Monday, Brian Goldner, Hasbro CEO, noted that the single biggest input cost for the firm is labor. "We continue to see labor inflation rates in the double-digit range," he said.

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