Stocks ended Friday’s session and the week lower as market participants digested mounting signals of economic devastation amid the still-escalating coronavirus pandemic.
The Department of Labor’s official jobs report Friday reflected far greater job losses in March than expected – and the report only captured data through the 12th of the month, before much of the country went on lockdown in response to the coronavirus pandemic. With the pandemic continuing unabated and social distancing measures set to remain in place longer than initially anticipated, economists are bracing for data to deteriorate much more sharply in prints to come.
Some of the most recent data, including weekly jobless claims, have begun reflecting an even more devastating impact from the coronavirus. In the last two full weeks of March alone, an astonishing nearly 10 million American filed for initial unemployment insurance, underscoring the mounting strain the outbreak has unleashed on the U.S. economy. With this record-breaking data in hand, the Congressional Budget Office said in a new report Thursday it expected the unemployment rate to top 10% in the second quarter, rising above levels from the peak of the global financial crisis.
Companies from small and local businesses to some of the largest corporations in the country have announced major layoffs and furloughs to cut costs as consumers stay indoors during the outbreak. Boeing on Thursday announced a voluntary employee buyout program, and General Electric’s Aviation unit was reportedly furloughing 50% of its engine manufacturing workers.
Other companies highlighted shifting consumer trends as social distancing measures blanket the country. Walgreens Boots Alliance, the worst performer in the Dow during Thursday’s session, said it saw a sales jump and then swiftly reverse to a mid-teens percentage decline in the last week of March as foot traffic evaporated.
Overseas, closely watched purchasing managers’ indices (PMI) for Italy, France, Germany, Spain and the UK dropped to record lows in March as widespread lockdowns were invoked to try and slow the virus’s spread. The 19-member eurozone composite PMI was 29.7, nearly halving from February’s 51.6 and plummeting far below the neutral level of 50.0 to indicate contraction.
The coronavirus had infected one million people globally, crossing that level for the first time on Thursday since the first case of the virus was reported just four months ago in China. The death toll rose above 55,000 globally.
In the U.S., cases topped 266,000 as of Friday afternoon, according to Johns Hopkins data. New York, the domestic epicenter of the outbreak, saw cases top 100,000 as of Friday, Governor Andrew Cuomo said.
The energy sector remains another focal point tied to the coronavirus pandemic, with the commodity’s prices hit in recent weeks as the virus took out demand and some producers threatened to increase supply.
But on Friday, crude oil prices increased again after posting their largest one-day advance in history a day prior. Saudi Arabia reportedly called an emergency meeting of OPEC and its allies including Russia, with the hope of agreeing to supply cuts to put an end to a price war begun early last month.
4:05 p.m. ET: Stocks end lower, log weekly losses after weak jobs report
Stocks returned to posting weekly losses by Friday’s close as volatility resumed on Wall Street. The S&P 500 and Dow ended the week down about 2.3% and 2.7%, respectively. The Nasdaq fell 1.7%, faring the best of the three major indices.
By sector, energy stocks led advances in the S&P 500 after crude oil prices rose more than 30% during the week. The Consumer Staples and Health-Care sectors also ended the week in the green. Declines were led by the Utilities sector, down 7%.
Here’s where the indices settled at the end of regular equity trading:
S&P 500 (^GSPC): -38.25 points (-1.51%) to 2,488.65
Dow (^DJI): -360.91 (-1.69%) to 21,052.53
Nasdaq (^IXIC): -114.23 (-1.53%) to 7,373.08
2:38 p.m. ET: Crude oil posts first weekly gain in six weeks
U.S. West Texas intermediate crude oil futures settled more than 11% higher to $28.34 per barrel on Friday, extending gains after rising a record 24.7% during Thursday’s session.
That brought weekly gains for the commodity to more than 30%, its first increase in six weeks.
Brent crude oil, the international standard, rose 13.6% to $34.02 per barrel as of 2:28 p.m. ET.
12:17 p.m. ET: Stocks extend declines
Stocks extended losses further, with each of the three major indices off more than 2%. The Dow’s losses were led by declines in shares of United Technology and Exxon Mobil, the latter of which reversed gains after outperforming during Thursday’s session.
11:52 a.m. ET: Stocks hold lower during intraday trading, Dow drops 300+ points
Here were the main moves in markets, as of 11:52 a.m. ET:
S&P 500 (^GSPC): -42.13 points (-1.67%) to 2,484.77
Dow (^DJI): -380.64 (-1.78%) to 21,032.80
Nasdaq (^IXIC): -119.58 (-1.6%) to 7,367.42
Crude (CL=F): +$1.20 (+4.74%) to $26.52 a barrel
Gold (GC=F): +$3.90 (+0.24%) to $1,641.60 per ounce
10-year Treasury (^TNX): -4.8 bps to yield 0.579%
10:48 a.m. ET: After much worse than expected March jobs report, April’s estimates ‘now need to be revised,” strategist says
The March employment report, which showed job losses that far exceeded economists’ expectations, underscored even worse than anticipated early impacts from the coronavirus outbreak. Market participants should brace for much worse data to come, Hercules Investment CEO James McDonald told Yahoo Finance.
“As a precursor to the data that will come out for April, those estimates now need to be revised. Those estimates now need to be increased and we need to be prepared for a serious serious situation – but this is not ‘The Grapes of Wrath,’” McDonald said during Yahoo Finance’s The First Trade Friday. “We have so many programs, so many philanthropic organizations, we will get through this. There’s been a lot of support injected into the economy. We’ve taken half of the U.S. budget to inject programs already before the crisis has even hit us and so it’s important to understand that there will a process through.”
McDonald said he is advising long-term minded clients to move to cash and “wait until the selling abates so we can start buying good, discounted assets around the world that will have good long-term upside,” he said.
“But now is not the time,” he added. “As we digest this information, it’s important to understand no one even came close to calculating the impact.”
And in thinking about a recover, Anthony Chan, former JPMorgan Chase Chief Economist, told Yahoo Finance that investors should remember that not all jobs will return as quickly, or in some cases even at all, once the economy is on the upswing and social distancing guidelines ease.
“When people try to compare this to prior recessions, it’s not really apples to apples because this is something that we actually are ourselves inducing,” Chan said. “We’re slowing it down and then we’ll be turning it on. The only fallacy is, when we start turning the economy back on it’s not like a light switch. Some of the wires will get frayed some of them will be broken – not all of those jobs will be coming back in the same way that they were let go in the first place.”
10:00 a.m. ET: ISM non-manufacturing index dropped less than expected in March
The Institute for Supply Management’s non-manufacturing purchasing managers’ index (PMI) dropped to 52.5 in March from 57.3 in February. The index unexpectedly held in expansionary territory over the neutral level of 50.0.
Consensus economists had expected the non-manufacturing PMI to fall well into contractionary territory at 43.0 for the month, according to Bloomberg data.
While headline index remained relatively resilient for the month, there were still pockets of weakness, reflecting impacts from the pandemic. The business activity subindex dropped by 9.8 points to 48, the first contraction since July 2009. And the firm’s labor gauge also dipped into contractionary territory in March to 47, with the one-month decrease of 8.6 points marking the most since 2008.
9:31 a.m. ET: Stocks open lower after disappointing jobs report
Here were the main moves in markets, as of 9:32 a.m. ET:
S&P 500 (^GSPC): -12.92 (-0.52%) to 2,513.98
Dow (^DJI): -144.2 (-0.67%) to 21,269.24
Nasdaq (^IXIC): -28.58 (-0.38%) to 7,459.11
Crude (CL=F): +$2.36 (+9.32%) to $27.68 a barrel
Gold (GC=F): -$0.40 (-0.02%) to $1,637.30 per ounce
10-year Treasury (^TNX): -3.5 bps to yield 0.592%
8:30 a.m. ET: U.S. economy sheds 701,000 jobs, unemployment rate rises to 4.4%
The Department of Labor released its monthly jobs report at 8:30 a.m. ET Friday. Here were the main metrics from the report, compared to consensus data compiled by Bloomberg:
Change in non-farm payrolls, March: -701,000 vs. -100,000 expected and +275,000 in February
Unemployment rate, March: 4.4% vs. 3.8% expected and 3.5% in February
Average hourly earnings, month on month: 0.4% vs. 0.2% expected and 0.3% in February
Average hourly earnings, year on year: 3.1% vs. +3.0% expected and +3.0% in February
7:07 a.m. ET Friday: Stocks fall ahead of March jobs report, oil jumps again
Here were the main moves in markets, as of 7:07 a.m. ET on Friday:
S&P 500 futures (ES=F): down 0.92%, or -23.25 points to 2,493.25
Dow futures (YM=F): down 0.98% or -209 points to 21,064.00
Nasdaq futures (NQ=F): down 0.96% or -73 points to 7,554.25
Crude (CL=F): +$1.11 (+4.38%) to $26.43 a barrel
Gold (GC=F): -$5.70 (-0.35%) to $1,620.00 per ounce
10-year Treasury (^TNX): -2.9 bps to yield 0.598%
6:00 p.m. ET Thursday: Stock futures open flat
Here were the main moves during the overnight session for equity futures, as of 6:00 p.m. ET:
S&P 500 futures (ES=F): down 0.05%, or -1.25 points to 2,515.25
Dow futures (YM=F): down 0.01% or -2 points to 21,271.00
Nasdaq futures (NQ=F): down 0.1% or -7.25 points to 7,620.00