Stocks Languish After Dismal Fed Report And Poor Labor Report

Stock indexes continue their recent vacillations, as equities are largely selling off again today after moving higher Wednesday, following a bleak Federal Reserve Minutes release and dire unemployment data.

Stock indexes rallied ahead of the Federal Reserve minutes from last month, but have since slumped back into the prior day’s range. The Dow Jones Industrial Average is down 0.28% from Wednesday, the S&P 500 shed 0.6%, while the Nasdaq has given up 0.65%, as the indexes struggle to break out of the recent range that began last month.

Stock Index ETFs are red today as well, tracking moves in the benchmark stock indexes. The SPDR S&P 500 ETF Trust (SPY), is off by 0.46%, the SPDR Dow Jones Industrial Average ETF (DIA) is 0.17% lower, while the Invesco QQQ Trust (QQQ), is leading the other ETFs down, slipping 0.75%

For over two months now, millions of Americans have filed for initial unemployment benefits. Even as the economy is starting to reopen in certain regions of the country, layoffs and furloughs have gripped the US labor market, causing serious damage.

Another 2.4 million Americans filed for first-time benefits last week on a seasonally adjusted basis, according to the Department of Labor report Thursday. On a cumulative basis, 38.6 million people have filed for initial unemployment aid since mid-March, when coronavirus lockdowns commenced broadly across the country. That means approximately 23.7% of the March US labor force was affected.
In an effort to take advantage of the congressional program, more than 2.2 million people in 35 states last week filed initial claims for the pandemic unemployment assistance program. That’s an increase from the approximately 1.9 million people who filed first-time pandemic claims in the two weeks ending May 9.
Markets are also digesting news from the Federal Reserve report that suggested a second wave of the coronavirus could seriously debilitate the U.S. economic climate, and that the Fed is still prepared to use the tools necessary to deal with ongoing economic uncertainty and weakness.
“In this scenario, a second wave of the coronavirus outbreak, with another round of strict restrictions on social interactions and business operations, was assumed to begin around year-end, inducing a decrease in real GDP, a jump in the unemployment rate, and renewed downward pressure on inflation next year,” the summary said.
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