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Business

US stocks hit reverse after hopeful early Thursday start

By
Noah Manskar
Published April 16, 2020, 3:44 p.m. ET

US stocks attempted to shrug off another surge in unemployment filings on Thursday only to slip back into negative territory by the afternoon.

The Dow Jones industrial average climbed as much as 62.01 points, or 0.2 percent, at the open before dropping as much as 292.97 points, or 1.2 percent, in midday trading after being dragged down by the US Department of Labor’s latest report.

Labor said another 5.2 million initial jobless claims were filed last week — meaning the pandemic has put a staggering 22 million people out of work in just a month.

The S&P 500 also dipped as much as roughly 0.6, adding to Wednesday’s losses as fears about the virus’ economic toll weighed on investors. The Nasdaq Composite managed to stay in the green and was recently up 0.5 percent, at 8,437.86, in a choppy trading session.

“Equities were unable to hold onto earlier gains as the short-term shock to the economy appears to dampen risk appetite,” Ed Moya, senior market analyst at OADNA, said in a commentary.

All three major indexes posted the early gains due in part to a Wednesday evening briefing where President Trump said the coronavirus has peaked in the US and indicated that some states will reopen by May 1.

And investors have been encouraged by other signs that the peak of the virus crisis has passed, such as some European countries letting businesses get back to work and US states forming plans to restart their economies after imposing lockdown measures.

Thursday’s jobless claims, while eye-popping, also marked a decline from the week ending April 4, when more than 6.6 million people sought unemployment benefits.

“The labor market curve is flattening and that’s a good thing for the economic outlook as it signifies a recession this time around, not a new Great Depression from the 1930s that lasted three and a half years,” said Chris Rupkey, chief financial economist at MUFG Union Bank.

But the unemployment figures were also too stark to ignore, especially as the recent job losses have erased all of the job gains since the end of the Great Recession.

Wall Street has also had to digest a slew of bad earnings reports amid continued uncertainty about just how long the shutdown will last.

“What the market cannot price in perfectly is when the economy re-opens, what the nuances in that reopening will look like and what its impact will be to corporate profits one quarter away, two quarters away and a year away,” said David Bahnsen, chief investment officer at the Bahnsen Group.