MANHATTAN (CN) — The party’s temporarily over on Wall Street, as markets on Tuesday snapped a rally that saw the Dow Jones Industrial Average gain more than 1,300 points in two days.
At Tuesday’s opening bell, the Dow lost 356 points, a 1.3% decrease, while the S&P 500 also fell more than 1%. The Nasdaq, which had reached a new peak on Monday, fell only 0.6%, still about 50 points more than its previous zenith in February.
Despite the dip in investor enthusiasm, small businesses, a crucial component of the economy, are more optimistic in their economic future, according to a survey released Tuesday by the National Federation of Independent Business.
The group’s May optimism index showed that small business optimism gained 3.5 points last month to 94.4, about the same level as in early 2016, despite real sales expectations remaining in negative territory.
More than half the respondents reported capital outlays on new equipment, vehicles, or improved and expanded facilities during the last six months. Small businesses overall reported cutting jobs by 0.17 workers per firm since March, while 23% of all owners reported job openings they could not fill in the current period.
“It’s still uncertain when consumers will feel comfortable returning to small businesses and begin spending again, but owners are taking the necessary precautions to reopen safely,” NFIB chief economist Bill Dunkelberg said in a statement.
Wall Street had been steeping in the warmth of Friday’s jobs report, which showed nonfarm jobs actually rose by 2.5 million last month. The unemployment rate fell to 13.3%, according to the Bureau of Labor Statistics, a far cry from the 20% or higher that many experts — including Federal Reserve banks in Minneapolis and St. Louis, as well as the Congressional Budget Office — had predicted.
Many question the BLS data, however, noting the agency itself had warned the response rate on the survey was 15% lower than usual and that the unemployment rate could actually be 3% higher than reported.
“Let’s be realistic, there will be a lot of firms that have been permanently damaged or who will be operating at lower levels than they were pre-virus for an extended period,” Joel Naroff, president of Naroff Economics, wrote on Friday. “You don’t shut down an economy for two months and think there will be no long-term impacts.”
Markets in Europe saw an appreciable drop, with most major exchanges down at least 1.5% by 8:30 a.m. EST. In Asia, the converse was true, with all but Japan’s Nikkei finishing up for the day. Australia’s ASX 200 saw a huge 2.4% jump, though the exchange was closed on Monday.
Enthusiasm has tempered due to a spike in Covid-19 cases in more than a dozen states, particularly in areas that had reopened early. On Monday, Texas saw 638 new cases of the virus, while Florida reported 966 new cases, the first time in a week the Sunshine State saw fewer than 1,000 new cases.
Fortunately, the World Health Organization reported on Monday that transmission of coronavirus by asymptomatic patients is “very rare.” Unfortunately, the number of cases of Covid-19 continue to creep upward.
More than 7.1 million people have been infected by Covid-19 worldwide, while about 407,000 have died, according to data compiled by Johns Hopkins University. In the United States, 1.9 million are confirmed to have had Covid-19, while 111,000 have died.
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