Historic Unemployment Leaves Its Mark on Wall Street

MANHATTAN (CN) — Markets tumbled worldwide as investors have been battered from all sides by ominous warnings, dire forecasts and grim data.

The Labor Department once again reported historic unemployment claims, this time to the tune of 2.98 million filed the week ending May 9. In total, more than 36 million new claims have been filed since mid-March, when lockdowns began.

Wall Street has taken previous unemployment reports in stride, but on Thursday investors began selling even before the report came out.

When the report was released at 8:30 a.m., futures on the Dow Jones Industrial Average had fallen more than 200 points. By the morning bell, the Dow pared back those losses to just under 200 points lost, with the S&P 500 and Nasdaq both falling less than 1%.

Most states reported fewer unemployment claims last week than the previous week, the data show. One of the outliers, Connecticut, reported 262,000 new claims. Florida also has continued its upward march in unemployment, reporting 47,000 new claims. 

The unemployment rate is rapidly approaching 20% — it was almost 15% for the week ending May 2 — getting precariously close to the roughly 25% unemployment rate seen at the height of the Great Depression. 

Other factors have caused markets to tumble, as well. Asian markets fell across the board, with Japan’s Nikkei and Australia’s ASX 200 both falling 1.7%. Markets in Shanghai and South Korea were able to stanch their losses at less than 1 percentage point each.

Relations between the United States and China also have grown increasingly worse in recent weeks, making investors nervous.

While earlier this week China had agreed to reduce tariffs on some U.S. imports, and trade officials have said they are working together to keep the deal in place, economic realities have made it difficult. As part of the deal, China agreed to purchase $200 billion in American-made products in exchange for lower U.S. tariffs, but most experts say the shattered world economy has made it nearly impossible for China to meet its end of the bargain. 

Rhetoric from the White House has not helped, either. Earlier this week, administration trade adviser Peter Navarro, a noted hawk on China, said that “a bill has to come due for China” over its handling of the spread of Covid-19. 

In a tweet on Wednesday, President Trump again blamed China for the spread of the virus. “As I have said for a long time, dealing with China is a very expensive thing to do,” he wrote. “We just made a great Trade Deal, the ink was barely dry, and the World was hit by the Plague from China. 100 Trade Deals wouldn’t make up the difference – and all those innocent lives lost!”

Other measures taken recently signal increasingly cold relations between the countries.

On Wednesday the Federal Retirement Thrift Investment Board voted unanimously to halt all investments in Chinese companies. Citing security reasons, the Federal Communications Commission last month threatened to pull the broadcasting licenses of four Chinese-controlled telecom companies.

Some experts now predict that China could retaliate by blocking U.S. pension funds from investing in the country.

In Europe, markets were rattled by increasingly dire warnings about how long the virus may affect the world. As of 8 a.m. EST, most markets on the continent were down more than 2%, hinting at an overall down day for markets worldwide. 

During a press conference on Thursday, members of the World Health Organization warned that coronavirus may remain indefinitely. “It is important to put this on the table,” Dr. Mike Ryan, WHO’s emergencies director, said during the press conference. "This virus may become just another endemic virus in our communities, and this virus may never go away.”

Experts domestically also are warning Americans to prepare for the worst. Later on Thursday, the former chief of the of the U.S. Biomedical Advanced Research and Development Authority will testify that the United States may soon see its “darkest winter in modern history” due to a lack of a national coordinated, science-based response to the pandemic. 

Nearly 4.3 million people worldwide have been confirmed infected by Covid-19, according to data from researchers at Johns Hopkins University, and 297,000 have died. In the United States, more than 1.3 million people have contracted the novel coronavirus and more than 84,000 have died.

Follow @NickRummell

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit