After selling off dramatically over the last few days, stocks are attempting to recover some lost ground Thursday, after being down earlier, as the banking and energy sectors mitigate poor U.S. unemployment data.
Both the Dow Jones Industrial Average and S&P 500 are attempting to maintain positive ground on Thursday after the Dow dropped more than 450 points earlier in the day, and the S&P 500 fell a similar percentage. The S&P 500 climbed 0.6% before falling back to flat on the day, while the Dow is up just over 0.3%. The Nasdaq Composite has remained red on the day. Both the S&P 500 and Nasdaq were down over 1% to start off the session, and are currently losing ground quickly again as of 1 pm EST.
This market is still in this muddle-through zone where you’re trying to understand how difficult will this economic environment be or is there an all-clear coming soon,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, noting the S&P 500 tested the lower end of its recent trading range.
The earlier selloff to lows in the major indices was propelled by a report from the Labor Department that a total of 2.981 million Americans filed unemployment insurance during the week ending May 9, much worse than the expectation of 2.7 million new claims, according to economists polled by Dow Jones. Previous bad news like this had not seemed to jolt markets, giving analysts pause as to whether stocks are ready for a more meaningful selloff now.
With these additional unemployment claims, total coronavirus crisis numbers have reached over 36 million during the past two months, easily the largest loss in U.S. history. A record of 20.5 million jobs were lost just in April as the coronavirus pandemic shuttered the economy, driving the unemployment rate surging to 14.7%. Analysts at Goldman Sachs are now predicting this number could reach as high as 25%.
“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Fed Chairman Powell said Wednesday, acknowledging that more needs to be done to bolster the economy amid the coronavirus pandemic. The remarks sank the Dow and S&P 500, which lost 2.2% and 1.8%, respectively, while the Nasdaq Composite gave up 1.6%.
Crude oil has climbed more than 7.5% on the day, with the ProShares Ultra Bloomberg Crude Oil (UCO) rallying 7.89%, and driving up energy stock like Exxon Mobile, Chevron, and Conoco Phillips, helping stocks rebound despite the poor unemployment data.
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