MANHATTAN (CN) — Despite steep losses Thursday morning, Wall Street was able to swing back to end the day in positive territory.
The Dow Jones Industrial Average, which was down nearly 450 points at one point, closed out Thursday up 377 points, a 1.6% increase. The S&P 500 and Nasdaq also recovered earlier losses to end up in the black, up 1.1% and 0.9%, respectively.
Some see a disconnect, though, between the stock market and other indicators, such as the 10-year Treasury bond market. “I believe the stock market is mostly focused on the reopenings, while bond participants are concerned about its pace and the very gradual recovery we are most likely to see,” Peter Boockvar, chief investment officers at Bleakley Advisory Group, wrote in an investor’s note.
Initially fazed by more rough unemployment numbers early Thursday morning, investors once again took the growing loss of jobs in stride.
To the tune of 2.98 million claims filed the week ending May 9, the Labor Department once again reported historic unemployment on Thursday. In total, more than 36 million new claims have been filed since mid-March, when lockdowns began.
Most states reported fewer unemployment claims last week as compared with 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.
Continuing unemployment claims related to the new Pandemic Unemployment Assistance program also jumped to 3.4 million last week, from fewer than 1 million, though investors expect that number to increase significantly as government agencies get a better hold on the backlog in reporting.
“There is likely scope for this to be revised significantly higher, as some of the largest states report disproportionately low shares of continuing PUA claims,” researchers at Goldman Sachs wrote in a note.
While not as headline-grabbing as massive unemployment, the Labor Department’s other release for Thursday — the import-export price index summary — showed a 2.6% decrease in import prices, the largest drop since 2015.
Most of the drop was due to plummeting fuel prices, which have been driven by immense oversupply and a nearly corresponding lack of demand. Fuel imports fell nearly 32% in April, following a 26% drop in March.
U.S. exports also fell dramatically in April. The 3.3% drop was the largest monthly decrease since the index was published monthly in 1988. Agricultural exports fell by 3.1% last month.
Investors have put most of their eggs in the Federal Reserve’s basket, hoping the central bank’s lending and liquidity programs would help keep the economy afloat. Against this hype, however, warnings from the Fed about the possibility of a quick recovery have grown increasingly dour.
On Tuesday, Cleveland’s Federal Reserve Bank President Loretta Preska predicted that the second quarter would show the most severe effects of the pandemic downturn. The following day, Chairman Jerome Powell urged Congress to do more to prop up the economy, noting a recovery could “take longer than they would like.”
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, echoed Powell’s comments, calling Thursday for more congressional action, particularly if a recovery takes 18 months or longer. “I think a V-shaped recovery is off the table,” Kashkari said during a CBS roundtable.
More than 4.4 million people worldwide have been confirmed infected by Covid-19, according to data from researchers at Johns Hopkins University, and more than 300,000 have died. In the United States, more than 1.4 million people have contracted the novel coronavirus and 85,000 have died.