Dow Climbs Ever So Slightly as Job Losses May Have Peaked

The new unemployment figures are higher than expected but still down from last week, suggesting the worst is over.

Friends and family celebrated the 112th birthday of Minnesota’s oldest resident, Erna Zahn, with a parade Tuesday in front of her window at the Oak Hills Living Center in New Ulm. (Elizabeth Flores/Star Tribune via AP)

BOSTON (CN) — Against new Labor Department figures showing Depression-level of unemployment in the United States, stocks opened to moderate gains Wednesday.

The Dow Jones Industrial Average was up 47 points, or .15%. The S&P 500 increased 17 points, or .61%.

Some 5.245 million new unemployment claims were filed in the second week of April, the government said, slightly higher than the 5 million most analysts were expecting but still a drop from the roughly 6.6 million filed the previous week.

A total of 22 million claims have now been filed in the last four weeks, since a national emergency over the new coronavirus was declared in America.

The week-to-week decline suggests that the surge in coronavirus-related job losses may have peaked, although the raw numbers are still staggering.

Last week’s total of 6.606 million was revised slightly upward to 6.615 million. 

Meanwhile the Commerce Department reported that housing starts in March fell 22.3% from the previous month, with a seasonally adjusted annual rate of about 1.2 million units, down from 1.56 million in February. Construction of single-family houses fell 17.5% while apartment sand condominiums were off by 32.1%. 

Yesterday Fannie Mae predicted that 2020 home sales would be down 15%. 

The Philadelphia Federal Reserve Bank announced that its Manufacturing Business Outlook Survey registered -56.6 in April, down from -12.5 in March. Any number below zero indicates worsening conditions. The April number was the worst since July 1980. 

Asian markets were mixed overnight, with the Nikkei 225 down 1.3% but the Shanghai Composite Index and some others edging upward. Most European indexes were trading higher.

Morgan Stanley reported revenues of $9.5 billion, down about 8% from the same period last year, and income of $2.1 billion, down 27%. Its wealth and investment management divisions accounted for nearly all the losses while sales and trading revenues were up 30% after a period of heavy volatility.

The results missed analysts’ expectations and the firm warned of more trouble to come.

“An extended period of depressed economic activity necessitated to combating the disease, and the severity and duration of the related global economic crisis, will adversely impact our future operating results,” the bank said, adding that future earnings would reflect “many of the same negative impacts and without the potential benefit of higher client trading activity experienced in the first quarter.” 

Bank of New York Mellon reported first-quarter revenue of $4.1 billion, up 5%, and earnings of $944 million, up 4%. But the bank’s divisions produced uneven results; earnings from investment services were up 13% while earnings from investment management were down 27%.

“We plan to maintain our conservative risk profile, strong capital and high-quality, liquid balance sheet, which will position us to withstand severe stress and to support our clients,” CEO Todd Gibbons said in a statement.

Abbott Labs, which recently received approval by the Food and Drug Administration for a quick coronavirus test, saw revenues rise 2.5% to $7.7 billion and earnings up 3.2% to 65 cents per share.

But the company also said that investors should no longer rely on its previous guidance for the 2020 fiscal year “due to uncertainties regarding the duration and impact of the coronavirus pandemic.” Abbott had previously projected earnings of $3.55 to $3.65 per share. 

BlackRock’s revenue beat expectations; the firm reported inflows of $3.7 billion, up 11%. But the firm’s diluted earnings per share of $5.15 were below what analysts were predicting.

Results were affected by the firm’s contribution of $539 million to a charitable foundation in February. 

The company said in a statement: “iShares ETFs have acted as a valuable market technology as investors once again turned to bond ETFs for price transparency and incremental liquidity in volatile markets. iShares sustainable ETFs had a record quarter with $10 billion of net inflows. We had one of our best quarters in illiquid alternative fundraisings ever, generating $7 billion in new flows and commitments.” 

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