MANHATTAN (CN) — Wall Street recovered somewhat from a brutal Thursday, as hopes for a sharp economic rebound dim.
At the morning bell the Dow Jones Industrial Average gained 682 points, a 2.72% increase. The S&P 500 and Nasdaq, still reeling from similar losses, also recovered somewhat, posting gains of 2.5% and 2.3%, respectively.
On Thursday, U.S. markets had their worst day since state lockdowns took hold in mid-March, with the Dow losing 1,861 points, a 7% drop. The S&P 500 and Nasdaq also had poor outings on Thursday, losing 6% and 5.2%, respectively.
Abroad, markets were less rosy. In Asia, investors finished the week on a sour note, with markets in South Korea and Australia posting the biggest losses at 2% and 1.8%, respectively. European markets tentatively inched forward, with the pan-European Stoxx 600 up 0.6% and France’s exchange gaining 1% by 8:30 a.m. EST.
Industrial production in the eurozone fell 17% in April, when lockdowns began to take hold on the continent, according to data from the European Union on Friday. Industrial activity fell nearly 12% the previous month.
The hardest-hit countries were Hungary, Romania and Slovakia, each of which saw industrial activity contract more than 26%. But economic leaders France and Germany also suffered greatly in April, posting drops of 20% and 21%, respectively.
Things also look grim for the United Kingdom, which announced on Friday that its economy shrank by more than 20% in April, the country’s biggest ever monthly fall since it began tracking such data in 1997. The fall was about 5% worse than what many economists had predicted. The drop in GDP is three times greater than the fall during the Great Recession more than a decade ago.
Stimulatory actions from Congress and the Federal Reserve have propped up the market and overall economy, University of Oregon economist Tim Duy wrote in a Friday blog post. As a result, he wrote, the market “moves forward choppily with unequal outcomes along a suboptimal path, but still forward.”
Still, investors have become increasingly rattled by data showing another spike in the virus. Some good news could be on the way, however, from the University of Michigan’s consumer sentiment index, expected later this morning. Many economists pin the possibility of a robust recovery mainly on consumer spending, which accounts for 70% of the U.S. economy.
Promising employment data from late last week and on Thursday has done little to cheer up gloomy investors. Last week’s report by the Bureau of Labor Statistics showed employment actually rose by 2.5 million jobs in May, and Thursday’s weekly unemployment report showed the 10th straight week of falling new unemployment claims.
Other reports have cast shadows over any bright spots in the economy. On Wednesday the Federal Reserve predicted the U.S. economy would shrink by 6.5% this year, followed by a 5% gain in GDP net year. And a report from the Organization for Economic Cooperation and Development earlier that day forecast the global economy could shrink by as much as 7.6% if a second wave of Covid-19 washes over the world.
Health experts are not unified in whether the United States is yet experiencing a second wave of Covid-19 or merely a continuation of the first wave. Regardless, more than 21 states have reported a recent increase in daily cases of coronavirus and hospitalizations, including Massachusetts Arizona, Tennessee and Texas. Some areas, such as Houston, now are considering reimposing lockdowns.
More than 7.5 million people have been infected by Covid-19 worldwide, while nearly 422,000 have died, according to data compiled by Johns Hopkins University. In the United States, 2 million people have contracted Covid-19, while more than 113,000 have died.
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