The stock market started the second quarter the same way the first quarter ended, with significant losses across the board.
The Dow Jones Industrial Average, S&P 500 and Nasdaq all slid 4.4% yesterday as investors braced for more bad news about the spread of the coronavirus and historical jobless claims due to the outbreak.
President Donald Trump warned that a “very, very painful” two weeks lie ahead for the country as it faces a rapidly spreading COVID-19 outbreak that is approaching 200,000 cases here in the US.
With uncertainty over how long the country will be shut down in an attempt to slow the spread of the virus, it’s becoming virtually impossible to predict how the market will perform going forward.
“Everything hinges on how long we are in this shutdown,” said Anwiti Bahuguna, head of multi-asset strategy at Columbia Threadneedle Investments, in an interview. “We don’t know how long the shutdown may last, so it’s hard to predict what U.S. growth will look like.”
Adding to the misery on Wall Street, this morning’s initial jobless claims report showed that a record 6.6 million Americans filed for unemployment insurance last week.
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That dwarfs the then-record 3.3 million new filings reported two weeks ago, and brings the total claims to nearly 10 million in the last two weeks due to the coronavirus outbreak.
For comparison, today’s numbers were almost 10 times higher than any previous report prior to the coronavirus outbreak.
Excluding the last two weekly reports, the highest week for claims was 695,000 in 1982. And as miserable as the job market was during the Great Recession, the highest number of jobless claims during that period was 665,000 in March 2009.
“We’ve lived through the recession and 9/11. What we’re seeing with this decline is actually worse than both of those events,” said Irina Novoselsky, CEO of online jobs marketplace CareerBuilder.
The lone bright spot in the markets is oil, as the price surged 10% after President Trump mentioned the possibility of a truce in the price war between Saudi Arabia and Russia.
West Texas Intermediate (WTI) futures jumped $2.11/barrel to $22.42 on the seemingly good news.
“Worldwide, the oil industry has been ravaged,” Trump said during a media conference on Wednesday. “It’s very bad for Russia, it’s very bad for Saudi Arabia. I mean, it’s very bad for both. I think they’re going to make a deal.”
Trump added he expects both countries to end their price war within a “few days” meaning they will slow production and bring prices back up.
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The president also invited the heads of US oil companies like Exxon Mobil and Chevron to meet with him at the White House to potentially discuss how Washington can help the companies get through the current crisis as they face bankruptcies and massive layoffs.
“I’m going to meet with the oil producers on Friday. I’m going to meet with independent oil producers also on Friday or Saturday. Maybe Sunday. We’re going to have a lot of meetings on it,” he added.