Wall Street, sailing through choppy waters, has been kept afloat by increasingly improving jobs reports and the promise of America reopening.
MANHATTAN (CN) — Using the reopening as a North Star, investors have navigated the choppy market waters by ignoring the bad news that has rocked the rest of the nation.
“The list of things the market cares about seems to dwindle,” Stephen Innes of Axi Corp. wrote in an investor’s note Wednesday. “And you can add renewed concerns over U.S.-China relations and anarchy in the streets in the U.S. metropolitan centers to that list.”
“It seems that potential headwinds — like a slower growth recovery, earnings disappointments, potential U.S. tech regulations, and rising geopolitical tensions — are being ignored,” Innes wrote. “Instead, news flow around new stimulus packages and possible vaccine breakthroughs are greeted emphatically.”
At Wednesday’s opening bell, the Dow Jones Industrial Average opened to a 200-point gain, bolstered somewhat by promising news from ADP’s unemployment report. The S&P 500 and Nasdaq posted similar early gains.
According to ADP, only 2.7 million private-sector jobs were lost in May, a far cry from the nearly 9 million jobs analysts had forecast would be lost last month, as well as the 20 million that ADP reported lost in April.
Predictably, the services industry suffered the most, according to ADP, losing nearly 2 million jobs last month. Most other industries reported only 100,000 to 200,000 job losses in May.
“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” Ahu Yildirmaz, who co-heads ADP’s Research Institute, said in a statement. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”
Markets abroad continued their upwards trend. In Asia, Japan’s Nikkei and Hong Kong’s market both closed up 1.3%, while markets in Australia and South Korea did even better, finishing up 1.8% and 2.8%, respectively. European markets were on track for similar gains, with most major exchanges on the continent up 2% by 9 a.m. EST.
The ebb and flow of markets may find further save harbor later this summer, as the Senate is now working on plans for a fourth, and perhaps final, stimulus package. The hope is that legislation will be passed sometime in July.
In addition to another stimulus, senators still are trying to extend the deadline small businesses have for spending their Paycheck Protection Program loans.
Under the current guidelines, small businesses have only eight weeks to spend their loans, but a bill passed last week in the House extends that timeline to 24 weeks and grants additional flexibility on how the funds can be used.
On Tuesday, Labor Department Inspector General Scott Dahl tendered his resignation — one day after reporting to a House subcommittee that he had found a “significant amount of fraud” in unemployment programs during the Covid-19 pandemic.
“This department has estimated about 10% of the [unemployment insurance] payments are improper under the best of times. We are in the worst of times,” Dahl told the House on Tuesday, noting that more than $26 billion of the $2 trillion in the first stimulus package have been lost via fraud.
Dahl had previously warned that individuals receiving unemployment benefits under the newly created Pandemic Unemployment Assistance program merely had to self-certify that they lost wages due to Covid-19 and faced no repercussions for failing to provide documentation.
Dahl is the latest in a string of agency watchdogs who have either resigned or were fired by the Trump administration. Democratic lawmakers have introduced legislation to requires inspectors general to be removed only for several specific causes.
The number of people infected worldwide with Covid-19 has grown to nearly 6.4 million, while 380,000 have died. according to data compiled by Johns Hopkins University. In the United States, 1.8 million are confirmed to have had Covid-19, while nearly 107,000 have died.