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Thursday, March 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

Stocks See Minor Gains While Awaiting Toll of Mid-Pandemic Reopening

Markets were able to climb partly out of Thursday’s pit to finish out the week on a mildly positive note.

MANHATTAN (CN) — Markets were able to climb partly out of Thursday’s pit to finish out the week on a mildly positive note.

On Thursday, U.S. markets had their worst day since state lockdowns took hold in mid-March, with the Dow Jones Industrial Average plummeting 1,861 points, a 7% drop. The S&P 500 and Nasdaq lost 6% and 5.2%, respectively.

Markets again swung back into positive territory on Friday, however, with the Dow finishing up 475 points, a 1.9% increase, while the S&P 500 — helped by huge gains among airlines and cruise companies — and the tech-heavy Nasdaq both posted roughly gains slightly above 1%.

Investors were nudged along somewhat by the University of Michigan’s consumer sentiment index, which found consumer sentiment rose for the second-straight month, from 72.3 in May to 78.9 in June. The index is still roughly 20% lower than it was a year ago.

“The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than at any other time in the long history of Michigan surveys,” the survey’s chief economist Richard Curtin said in a statement. “Despite the expected economic gains, few consumers anticipate the re-establishment of favorable economic conditions anytime soon.”

The survey found consumers believe that a resurgence in the spread of coronavirus would be the most probable cause of a renewed economic downturn.

Wall Street also received calming, albeit unsurprising words once again from the Federal Reserve, which said in its semiannual monetary policy report that it would use “its full range of tools” to prop up the U.S. economy during the pandemic. Federal Reserve Chairman Jerome Powell is scheduled to testify before the House and Senate next week.

In the report, the Fed gives a wide swath of forecasts for next year, from predicting unemployment could be as high as 12% — or as low as 4.5% — in 2021, to a -1% change in GDP to a 7% gain in GDP next year. The central bank remains steady, however, in that it doesn’t plan to change the federal fund interest rate. 

Promising employment data from 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.

While investors have become increasingly rattled by data showing another spike in the virus and its impact on the economy, some White House officials disregard such fears.

On Friday morning during an appearance on “Fox & Friends,” economic adviser Larry Kudlow asserted “there is no second wave” of Covid-19.
There is no emergency,” Kudlow said. “There is no second wave. I don’t know where that got started on Wall Street.”

Kudlow noted that, as testing has gone up and gotten better, the number of cases reported has also gone up, but that the rate of new cases has dropped to 0% to 1%. “It’s really flattened out,” he said.

In February, Kudlow said the coronavirus outbreak in the United States was contained “pretty close to airtight,” and weeks later he said at the Conservative Political Action Conference that “a virus is not going to sink the economy.” 

Health experts are not unified on whether the United States is yet experiencing a second wave of Covid-19 or merely a continuation of the first wave. Regardless, Massachusetts ArizonaTennessee and Texas are among more than 21 states reporting a recent increase in daily cases of coronavirus and hospitalizations. Some metropolitan areas, such as Houston, now are considering reimposing lockdowns.

Earlier in the week 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.

More than 7.5 million people have been infected by Covid-19 worldwide, while nearly 423,000 have died, according to data compiled by Johns Hopkins University. In the United States, 2 million people have contracted Covid-19, while more than 114,000 have died.

Follow @NickRummell
Categories / Economy, Financial, Securities

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