Bullish Streak Loses Steam as Dow Closes on a Low

Bobby Catone, the owner of a Staten Island tanning salon, speaks to a crowd outside his business after being given a summons by police on Thursday. Catone opened the salon briefly this morning in defiance of a law requiring nonessential businesses to remain closed during the coronavirus pandemic. (AP Photo/Mark Lennihan)

MANHATTAN (CN) — Two days of massive gains ended with a thud as Wall Street finished Thursday barely above its morning starting point.

The Dow Jones Industrial Average, which has gained more than 1,000 points since Friday’s closing and seemed poised for a somewhat positive day, lost 147 points by the closing bell. The S&P 500 and Nasdaq had similarly drops despite morning gains, falling 0.2% and 0.4%, respectively.

Gains from earlier in the week were tempered by the Labor Department’s new unemployment report, which showed that 2.1 million additional workers filed for unemployment last week. An additional 1.1 million filed for special “Pandemic Unemployment Assistance,” a new program designed to help those who normally would not qualify for regular unemployment benefits.

Though the rate of unemployed Americans getting benefits dropped last week for the first time, it is the eighth-straight week that new unemployment claims have fallen. Continuing claims fell meanwhile to 21 million, down 4 million between the weeks ending May 9 and May 16.

More than 40 million Americans have filed for benefits since mid-March, and as of May 9 nearly 31 million citizens were still claiming some form of unemployment benefit. Now that many states have begun opening up their economies, however, claims have gone down.

If the economy worsens this summer, however, it may be harder to determine how badly. The Washington Post reported this morning that the White House will scrap its summer economic forecast — the first time such projections have not been published since the 1970s. The projections typically include data on federal spending and economic predictions from the Treasury Department, Office of Management and Budget, and the White House Council of Economic Advisers. 

While potentially saving President Donald Trump some bad headlines in critical pre-election months, White House officials reportedly consider the economy too volatile in the throes of the Covid-19 pandemic to report the projections.

In some good news, however, House lawmakers passed legislation Thursday that grants small businesses extra flexibility under the Paycheck Protection Program. The legislation now goes to the Senate, where it is unclear if it will pass. 

Under the House bill, small business borrowers would be required to spend only 60% of their PPP loans on payroll, down from 75%, as well as allow businesses to spend the money within six months rather than two.

Many small businesses have been clamoring for further guidance and changes to the program, which has had a rocky rollout, as well as several technical problems and loopholes.  

“Small business owners are working hard to safely and swiftly open and rehire,” said Kevin Kuhlman, vice president of government relations at the National Federation of Independent Business in a statement. “They are doing all that they can to support their employees and ensure that they are in full compliance with the provisions of the Paycheck Protection Program loan terms.”

Unions had decried earlier versions of the bill that failed to include the requirement that any of the funds go to payroll, calling it an end-around labor protections. “We cannot sit idly by as Trump and the GOP use this crisis as an excuse to strip away every gain of the labor movement and progressives have fought for and won over many years of struggle,” several unions said in a Wednesday letter.

The Small Business Administration, which oversees the troubled PPP, also announced on Thursday that it was setting aside $10 billion of the appropriated funding under the lending program for community development financial institutions. 

CDFIs, as these institutions are known, “provide critically important capital and technical assistance” to small businesses, primarily those in rural and minority communities, said Jovita Carranza, administrator of the Small Business Administration. Already CDFIs have provided $7 billion in loans under the Paycheck Protection Program. 

“CDFIs play a critical role in providing under-served communities access to #PPPloans,” Florida Senator Marco Rubio tweeted. “Glad the administration continues to support these critical institutions.”

In the shadow of Thursday’s rally, however, remained another, grimmer milestone: Late Wednesday the number of deaths in the United States attributed to Covid-19 topped 101,000. More than 1.7 million have contracted the disease nationally. 

More than 5.9 million cases of Covid-19 have been reported worldwide, of which 358,000 have died, according to data compiled by Johns Hopkins University.

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