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U.S. stocks traded sharply lower Thursday after data showed nearly another 3 million Americans lost jobs last week, down slightly from the prior week, but pointing to about 36 million jobs lost to the COVID-19 pandemic.
Equities were further rattled by hawkish talk on China from President Donald Trump.
What are major indexes doing?
The Dow Jones Industrial Average opened 239 points, 1%, lower, near 23,009, while the S&P 500 dropped 29 points, or 1%, to start trading near 2,791. The Nasdaq Composite fell 74 points or 0.8%, to open near 8,790.
The Dow on Wednesday slumped 516.81 points, or 2.2%, to finish at 23,247.97, wile the S&P 500 gave up 50.12 points, or 1.8%, to close at 2,820. The Nasdaq Composite slumped 139.38 points, or 1.6%, ending at 8,863.17.
What’s driving the market?
In U.S. economic data, weekly jobless claims rose by 2.98 million in the week ended May 9, slightly worse than consensus forecast. The new claims also brought the coronavirus crisis total to nearly 36.5 million over the past two months, by far the biggest loss in U.S. history, sending the unemployment rate up to over 15%.
Analysts said stocks have stalled on growing concerns that historic stimulus efforts by central banks and governments won’t be enough to ensure a rapid, or V-shaped, rebound from the economic hit by putting major economies in a virtual deep freeze in an effort to contain the pandemic.
For weeks, markets have remained buoyant even in the face of staggering job losses. But as corporate earnings reporting season winds down, investors are left in an information vacuum, said Diane Jaffee, senior portfolio manager at TCW. “That’s when the macro noise takes over.”
For all the questions about the post-COVID-19 landscape, Jaffee believes multiple signals show the economy has hit bottom, and is starting to grind higher, albeit from a depressed base. The energy sector has provided some tailwind so far in the second quarter, and investors may look to the early release of bank stress tests for some confirmation of the health of financials, Jaffee said in an interview.
Soaring unemployment around the world and a wave of bankruptcies are accompanied by a lack of certainty about when things will “go back to normal” and whether there will be a second wave of infections as economies attempt to rebound, said Fawad Razaqzada, market analyst at Think Markets, in a note.
“So, while central banks and governments are doing all they can to address the supply side of the economy, demand from households and businesses could nonetheless remain soft for a long time and undermine economic recovery,” he said.
Federal Reserve Chairman Jerome Powell on Wednesday urged lawmakers and the White House to boost spending to help make sure that earlier efforts to bolster the economy in the face of the pandemic would bear fruit. The Fed chief warned that the recovery “could come more slowly than they would like” and would require policy makers to do more.
Read:There is a growing sense recovery will be slow, Powell says
Which companies are in focus?
- Shares of Cisco Systems Inc. CSCO, +5.10% were up 3% early Thursday. The network services providers showed stronger-than-expected resilience in its earnings Wednesday, but saw sales decline amid the pandemic. Opinion:Cisco says pandemic worse than dot-com crash and recession, but earnings are faring just fine
- Norwegian Cruise Lines NCLH, -8.72% shares fell after the company said it’s still seeing strong demand for cruises, and can withstand 18 months of suspended travel, but reported results that badly missed expectations.
- Shares of Applied DNA Sciences Inc. APDN, +52.41% rocketed 60% higher in premarket action after the company announced FDA authorization for its COVID-19 test.
- Tapestry Inc., TPR, -2.80% the parent company of Coach, Kate Spade, and other brands, said it is starting to re-open stores around the globe, in line with government easing of regulations. Shares slid 3% after the bell.
How are other markets trading?
Crude-oil prices rose on news of production cuts, with West Texas Intermediate Crude for June delivery CLM20, +2.37% up 2.3% or 59 cents to $25.88.
The price of an ounce of June gold rose $6.90, 0.4%, to $1,722.70 GCM20, +1.15% .
The benchmark U.S. 10-year Treasury note TMUBMUSD10Y, 0.616% ticked down 3 basis points to about 0.626%.
The dollar strengthened 0.2% against a basket of currency trading partners, according to the US Dollar Index DXY, +0.19% .
European stocks were lower: the STOXX Europe SXXP, -2.95% fell 2.6%.
In Asia overnight, the Hong Kong Hang Seng HSI, -1.45% fell 1.5%.
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