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Friday, December 8, 2023 | Back issues
Courthouse News Service Courthouse News Service

No News Isn’t Good News in Long Wait for Stimulus Deal

Wall Street flatlined despite a better-than expected jobs report Friday as Congress still deliberates over a stimulus package.

MANHATTAN (CN) — Wall Street flatlined despite a better-than expected jobs report Friday as Congress still deliberates over a stimulus package.

After a week of gains, the Dow Jones Industrial Average ended the afternoon at 0.17% above its starting point. The S&P 500 had lesser gains, while the Nasdaq dropped nearly 09.%.

The Labor Department’s jobs report, released before markets opened Friday morning, showed the U.S. economy clawed back 1.8 million jobs in July, slightly better than the 1.5 million many analysts had predicted. The unemployment rate last month stood at 10.2%, compared with 11.1% in June.

Nearly 13 million Americans remain unemployed compared with levels in February, however, and, according to the most recent unemployment report, more than 31 million people are claiming unemployment benefits under state and federal programs.

“There is still a mountain to climb,” ING Chief International Economist James Knightley wrote in an investor’s note, adding that many who are jobless are not technically considered unemployed because they are not actively looking for work due to industry-specific shutdowns. 

“The August jobs report is going to be worse as the economic effects of Covid-19 containment measures increasingly bite,” Knightley wrote. “We would not be surprised to see a negative August payrolls number … and a negative August retail sales number.”

The jobs report contrasts with the ADP jobs report from earlier in the week, which found that only 167,000 nonfarm jobs were gained last month, much lower than Wall Street analysts had predicted.

“This is consistent with a ‘partial bounce back’ in the labor market, as the unemployment rate slowly falls but remains at an elevated level for a prolonged period,” wrote Jason Furman and Wilson Powell III, research analysts for the Peterson Institute for International Economics. “Further progress in the ‘partial bounce back’ phase will only get harder, especially if the virus remains a widespread concern.”

According to data compiled by Johns Hopkins University, more than 19 million have contracted Covid-19 worldwide, while 716,000 have died. In the United States, more than 4.9 million have been confirmed infected while 160,000 have died.

Investors have been hoping for any news out of Capitol Hill regarding another stimulus package, but so far the Senate has deadlocked over ideological grounds. 

One of the main sticking points has been the additional $600 in weekly unemployment benefits during the pandemic. Democrats have made the $600 one of their key demands in the next stimulus bill, but Republicans have balked at extending the $600, saying it has deterred low-wage earners from re-entering the work force.

On the earnings front, a few companies showed the reverberations of the pandemic. Uber, which announced its earnings after markets closed on Thursday, showed a 29% year-over-year decline in its revenue as the company’s gross bookings shrunk by more than one-third.  

“We are fortunate to have both a global footprint and such a natural hedge across our two core segments,” CEO Dara Khosrowshahi said in a statement. “As some people stay closer to home, more people are ordering from Uber Eats than ever before.”

Hotels have also suffered greatly, as Hilton attested to in its earnings release. The luxury hotel chain marked a $432 million loss during Q2 2020. The company boasted of its new cleaning program, which is created in collaboration with the Mayo Clinic and the maker of Lysol.

In the investing world, Icahn Enterprises also saw its net sales roughly cut in half year over year. The company also reported an increase in its net income, from a nearly $600 million loss during the second quarter of 2019 to a $864 million gain last quarter.

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