Before The Bell - Wall Street strode into the penultimate session of this week on something of a high note, having booked solid aggregate increases over the past three trading days. And it added to those gains in the first hour of trading yesterday, buoyed by solid quarterly earnings performances from some retailing chains. However, there was a continuing cloud over the market, and that was the steady drumbeat of millions of new layoffs. As this was Thursday morning, the Labor Department reported its latest weekly jobless claims figures.
And the layoffs continue to come, albeit at a lesser rate, which has been the case since the number of jobs lost peaked more than a month ago. Still, at 2.4 million, which was largely in line with forecasts, the total number of job losses during the nine weeks of the COVID-19 pandemic on our shores is now on the cusp of 39 million. That is almost one-quarter of the workforce, which puts it in line with the worst levels of the Great Depression of the 1930s. As such, we could see a jobless rate of some 25% for May.
Meanwhile, back on Wall Street, the stock market, which sprinted to a nice gain on the day after the first hour of trading, with the Dow Jones Industrial Average advancing by about 140 points. However, that would be the high point for the day, and by 11:00 AM (EDT), the blue chips were down at session lows, off just over 200 points. The Dow then would spend the remainder of the day in modestly negative territory, staying largely range-bound in the area of about a 100 points loss, finally ending down 102 points.
Things were worse for a change on the S&P 500 and the NASDAQ, which fell by 0.78% and 0.97%, respectively, about double the percentage decline for the Dow. That closing weakness was underscored by some declines in the tech group, which was brought about not only by the steep job losses, but also by reports of rising tensions with China. Even with this late-week setback, the market is still some 3% higher for the week, reflecting rising optimism on the economy as more businesses reopen and on hopes for a vaccine to prevent the coronavirus.
Today, meantime, will be the last trading day before the long Memorial Day weekend, in which we will be honoring those who served in all of our past wars, including such individuals who paid the ultimate price to keep our nation free. But before the weekend, the Street will need to navigate through more earnings releases and news on economic reopening action and the latest on tensions with China. Finally, yesterday saw the release of April's leading economic indicators. They fell 4.4% following a steeper 7.4% drop in March.
As to the day ahead, and after some slight early gains in the equity futures last evening, the stock market is now poised to open the session on a mixed note when trading resumes shortly. – Harvey S. Katz, CFA