Stocks rise after historic jobless claims, coronavirus relief bill

0 4 months ago

Stocks opened higher Thursday after an eagerly awaited coronavirus relief package cleared the U.S. Senate and headed for the House. Optimism surrounding the stimulus package at least temporarily outweighed early signs of COVID-19’s acute damage to world’s largest economy.

The Labor Department’s weekly report on new unemployment claims showed the growing toll of the coronavirus on the economy. New claims skyrocketed to a record 3.283 million, far more than consensus economists expected and far above the levels seen after the 2008 financial crisis.

The increase in joblessness was “due to the impacts of the COVID-19 virus,” the Labor Department said in a statement. “Nearly every state providing comments cited the COVID-19 virus impacts. States continued to cite services industries broadly, particularly accommodation and food services.”

While more than consensus economists expected, the actual level of claims was less than some had anticipated. Ahead of the report, some economists had braced for jobless claims to top four million for the week.

During the regular session Wednesday, the S&P 500 and Dow posted their first back-to-back sessions of advances in more than a month. At the highs of the session, the Dow had added 1,315 points.

Yet by market close Wednesday, stocks pared some gains, after the bill with $2 trillion worth of relief for the coronavirus-stricken economy exposed intra-party divisions. Late in the afternoon, Democratic presidential contender and Vermont Senator Bernie Sanders suggested he would be willing to hold up the bill amid a dispute with Republican lawmakers who called for changes over unemployment benefits provided in the package.

Coronavirus around the world

And others outside of Capitol Hill aired their grievances over the legislation. New York state governor Andrew Cuomo called the legislation “terrible” for his state, and suggested the aid allocated would not make up for the budget gap created by the coronavirus outbreak.

Meanwhile, the coronavirus outbreak continued to escalate domestically and abroad, with the global case count topping 480,000 as of Thursday morning, according to Johns Hopkins data. More than 69,000 of these were in the U.S., with New York state comprising the bulk of domestic cases.

9:30 a.m. ET: Stocks open higher

Stocks opened higher after the U.S. Senate passed a massive $2 trillion stimulus bill overnight, and after jobless claims last week surged to a staggering more than 3 million.

Here were the main moves in markets, as of 9:34 a.m. ET:

  • S&P 500 (^GSPC): +37.3 points (+1.51%) to 2,512.86

  • Dow (^DJI): +342.16 points (+1.6%) to 21,542.71

  • Nasdaq (^IXIC): +116.05 points (+1.67%) to 7,507.00

  • Crude (CL=F): -$0.78 (-3.18%) to $23.71 a barrel

  • Gold (GC=F): +$32.60 (+2.00%) to $1,666.00 per ounce

  • 10-year Treasury (^TNX): -6.2 bps to yield 0.794%

9:22 a.m. ET: Stock futures turn positive with minutes to go until the opening bell

Stock futures pared losses in the minutes leading up to the opening bell on Wall Street Thursday morning, pushing into the green even after a record number of unemployment claims were shown to have been filed last week. Contracts on each of the three indices were each up less than 1%.

9:15 a.m. ET: Claims could have been worse…and probably are

Most economists expected the ugly initial claims report (the most bearish was Citibank with a forecast of 4 million). Capital Economics points out that widespread crashing of state unemployment websites means the full scale of the carnage may not have been fully captured in last week’s data.

In other words, the picture is likely to grow even more dire:

The unprecedented surge in initial jobless claims to 3,283,000 last week, from 282,000, starkly illustrates the extent of the economic devastation that the coronavirus has unleashed. To put that in perspective, claims have never exceeded 700,000 in a single week before.

Furthermore, there are good reasons to believe that understandable constraints on the capacity of offices to process claims mean that the true picture of layoffs is even worse.

8:50 a.m. ET: Oil reels amid ‘unprecedented’ demand shock

Crude (CL=F) took another leg lower after jobless claims skyrocketed to a historic 3.3 million in the wake of the coronavirus crisis, and is now testing $23 per barrel. Oil’s swoon underscores what analysts widely believe is a demand shock that will defy all of OPEC’s efforts to prop up prices.

As Goldman Sachs wrote on Wednesday:

Global isolation measures are leading to an unprecedented collapse in oil demand which we now forecast will fall by 10.5 mb/d in March and by 18.7 mb/d in April (our 2020 yoy demand forecast is now -4.25 mb/d). A demand shock of this magnitude will overwhelm any supply response including any potential core-OPEC output freeze or cut.

The scale of the demand collapse will require a large amount of production to be shut-in, of potential several million barrels per day. Such a hit on production will not be reversed quickly, however, as shutting-in can often permanently damage reservoirs and conventional producing wells. We therefore increasingly see risks that the rebound in prices will be much sharper than our base-case rally back to $40/bbl Brent by 4Q20, with a normalization in activity increasingly likely to be accompanied by a large inflationary oil shock.

The word “unprecedented” is getting thrown around a lot lately…and with good reason.

8:30 a.m. ET: Outbreak sends U.S. jobless claims skyrocketing

More than 3 million Americans filed first time jobless claims in the latest week, and the number may get worse.

New unemployment claims surged to a record 3.283 million for the week ending March 21, according to the Labor Department’s weekly report. This was more than four times greater than the previous record high of 695,000 from 1982.

Consensus economists had expected new unemployment claims to total 1.7 million, according to Bloomberg-compiled data. For the prior week, new jobless claims were revised up slightly to 282,000, from the 281,000 previously reported.

Meanwhile, continuing unemployment claims, which are reported on a one-week lag, rose to 1.803 million for the week ending March 14. Consensus economists expected these to rise to 1.791 million.

For the prior week, continuing jobless claims totaled 1.702 million, revised up slightly from the 1.701 million previously reported.


7:20 a.m. ET Thursday: Powell says Fed is ‘not going to run out of ammunition’

Federal Reserve Chair Jerome Powell, speaking in a rare televised interview on NBC’s Today show Thursday morning, vowed the central bank would continue using the tools at its disposal to help combat economic turmoil stirred up by the coronavirus outbreak.

When it comes to maintaining credit flows, Powell said the Fed still had room to apply further support to financial markets.

“We’re not going to run out of ammunition,” he said in the interview.

Powell also said he expected economic activity will “resume and move back up in the second half of the year,” noting that the virus will “dictate the timetable” for a rebound.

7:10 a.m. ET Thursday: Stock futures hold slightly lower after two straight days of gains

Contracts on the three major indices remained lower during the pre-market session Thursday morning, a day after the S&P 500 and Dow had posted their first back-to-back sessions of gains in a month.

Here’s where indexes traded Thursday morning, as of 7:10 a.m. ET:

  • S&P 500 futures (ES=F): 2,449.5, -17.5 (-0.71%)

  • Dow futures (YM=F): 20,971.00, -55 (-0.26%)

  • Nasdaq futures (NQ=F): 7,425.25, -42.5 (-0.57%)

  • Gold (GC=F): +$0.20 (+0.01%) to $1,633.60 per ounce

  • 10-year Treasury (^TNX) note: yielding 0.811%, or down 4.5 basis points

11:55. p.m. ET Wednesday: Futures fall as Senate clears stimulus bill

Stock futures appeared poised to open lower on Thursday, as the $2 trillion stimulus package was finally voted up by the Senate and headed to the House. The coronavirus relief plan has been mired in partisan politics for days, but investors have pushed stocks to two consecutive days of gains. With the bill heading for passage, markets appear to have bought the rumor, and are now selling the fact.

Here’s where indexes traded just before midnight Eastern:

  • S&P 500 futures (ES=F): 2,447.50, -19.50 (-0.79%)

  • Dow futures (YM=F): 20,936.00, -90.00 (-0.43%)

  • Nasdaq futures (NQ=F): 7,429.00, -38.75 (-0.52%)

  • Gold (GC=F): +$8.50 (+0.53%) to $1,642.00 per ounce

  • 10-year Treasury (^TNX) note: yielding 0.869%

11:30 p.m. ET: JPMorgan slices economic forecast (again)

Trader Federico DeMarco works at the New York Stock Exchange, Wednesday, March 18, 2020 in New York. Major U.S. stock indexes closed sharply lower on Wall Street Wednesday as fears of a prolonged coronavirus-induced recession took hold. The Dow industrials lost more than 1,300 points, or 6.3%. After a brutal few weeks, the Dow has now lost nearly all of its gains since President Trump’s inauguration. (AP Photo/Mark Lennihan)

The bank is once again taking the knife to its U.S. recession call, seeing the world’s largest economy plunging by an annualized rate of -10% in the first quarter and -25% in the second. JPMorgan’s economists also expect the unemployment rate to surge to 8.5% by the time it’s all over.

JPMorgan is also slightly less optimistic about the recovery process:

A growing rift between the federal and state approaches to containing or mitigating the spread of the virus suggests the Chinese experience may no longer be an appropriate comparison. At the very least it should further depress sentiment and confidence in the institutions on which the market economy relies.

6:01 p.m. ET Wednesday: Stock futures roughly flat as overnight session kicks off

Futures for each of the three major indices were little changed Wednesday evening as investors hoped for progress toward the passage of a stimulus bill in the face of the escalating domestic coronavirus outbreak.

Here were the main moves in markets, as of 6:01 p.m. ET:

  • S&P 500 futures (ES=F): up 0.06%, or 1.5 points to 2,468.5

  • Dow futures (YM=F): up 0.04% or 8 points to 21,034.00

  • Nasdaq futures (NQ=F): up 0.11% or 8.25 points points to 7,476.00

  • Gold (GC=F): +$8.50 (+0.53%) to $1,642.00 per ounce

  • 10-year Treasury (^TNX) note: yielding 0.869%

A woman walks on a nearly empty street near the New York Stock Exchange (NYSE) in New York, U.S., March 18, 2020. REUTERS/Lucas Jackson

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