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More Than 20 Million Jobs Lost at First Quarter’s End

More than 20 million jobs were lost in April, worse than anything observed during the Great Recession, payroll company ADP reported Wednesday.

MANHATTAN (CN) — Markets fell slightly on Wednesday after yet another report showed historic job losses in April.

Payroll company ADP released the numbers early Wednesday, reporting that, worse than anything observed during the Great Recession, the United States lost more than 20 million jobs in April.

The Dow Jones Industrial Average, which had gained 130 points at opening, lost 218 points, nearly a 1% decrease, for the day. The S&P 500 posted similar losses, though the Nasdaq ended up increasing half a percentage point at the closing bell.

Markets in Europe had earlier signaled a mixed day at best for investors, with Germany’s DAX and France’s CAC both giving up more than a percentage point, and the pan-European Stoxx 600 falling only 0.35%. 

ADP found that the leisure and hospitality industry was hit hardest, losing 8.6 million jobs in April. Next up came the trade-transportation-utility industry, which suffered a 3.4 million loss of employees. Construction jobs also fared poorly, with a 2.4 million drop in positions.

Proportionately, businesses with fewer than 50 employees suffered the worst, losing 6 million jobs during that period. Large businesses, defined as those with at least 500 employees, lost 8.9 million from their ranks but likely felt the pinch less due to their larger overall employee pools.

More than 30 million Americans have filed claims for unemployment since mid-March, when the coronavirus pandemic spurred a wave of shutdown orders across the United States.

As companies continue to post mixed first-quarter earnings, Wall Street is bracing for a second quarter that will likely show the true economic hurt of the Covid-19 pandemic. 

“We’re going to see crazy ADP numbers today and the jobs report will probably be one of the worst ever on Friday,” James Bullard, president of the St. Louis Federal Reserve, told CNBC in a Wednesday morning interview. 

Investors have tried to focus on the trees rather than the dark forest, looking to corporate earnings for solace — or confirmation bias that things could be worse — during the economic downturn. 

In its earnings release Wednesday morning, General Motors showed that it managed to turn a profit, albeit a relatively small one at $294 million. The Q1 2020 profits were paltry, however, in comparison with the $2.2 billion in profits the company made during the first quarter of 2019.

The automaker’s market share remained fairly consistent across most segments, but its production was slammed in China due to the Covid-19 outbreak in late 2019. The company announced it plans to restart its operations in North America on May 18 with “extensive safety measures.”

Another blue-chip stock, the Walt Disney Company, reported late Tuesday that while its year-over-year revenues increased $4 billion ending in March, the entertainment company lost nearly $6 billion in income.

Most of the losses came from shuttered amusement parks and cruise ships during the pandemic, but Disney also was hurt by canceled sporting events and the suspension of film and television content due to studio closures. The company’s cable networks and broadcasting segments managed to turn a small profit.

“Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evidence in the extraordinary response to Disney+ since its launch last November,” CEO Bob Chapek said in a statement.

Another company that has been able to somewhat weather the Covid-19 storm, CVS, posted an 8.3% increase in revenues for Q1 2020. The company’s income grew from nearly $3.6 billion in the first quarter of 2019 to $4.1 billion in the first three months of 2020. In its earnings release, CVS also boasted of its $11 billion in liquidity.

With locked-down Americans seeing their doctors less, however, the company said pharmacy sales dropped in April due to the drop in new prescriptions.

One particularly happy story in earnings has been Beyond Meat, which posted a 141% increase in net revenues year over year. The company’s gross profits also have increased, from $10.8 million in the first quarter of 2019 to $37.7 million during Q1 2020. The company posted a net income increase of $1.8 million, while a year ago it had lost $6.6 million on its plant-based products. 

Due to shutdowns of U.S. meat-processing plants, meat is now in short supply and rationed at some big box stores like Costco. U.S. slaughterhouses have shown to be hot spots of coronavirus outbreaks, with at least 18 plant temporarily closed in the last two months.

More than 3.7 million people worldwide have been confirmed infected by Covid-19, according to data from researchers at Johns Hopkins University, and about 261,000 have died. In the United States, more than 1.2 million people have contracted the novel coronavirus and 72,000 have died.

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