MANHATTAN (CN) — Another surge of massive unemployment didn’t much dent investor confidence, as markets remained neutral following the news Thursday.
Stock futures had been up nearly 2% due to an increase in oil prices but quickly plummeted 3 percentage points after the Labor Department clocked a record-breaking 6.6 million new unemployment claims in its weekly jobs report, essentially doubling the previous week’s already historically bad numbers.
Markets stabilized at the opening bell, however, with the Dow Jones Industrial Average rising a few points and the S&P 500 and Nasdaq similarly holding steady.
Though last week’s unemployment spike had also been historic, and the market’s initial response was likewise stoic, that gave way later to significant drops, with the Dow losing 1,500 points since last Thursday’s close. The first quarter of 2020 was one of the worst — and most volatile — quarters on Wall Street.
Several states saw particularly high increases in unemployment, with California shooting up from 186,000 claims to 878,000 claims in a week and New York going from about 80,000 claims to 366,000 claims.
High unemployment is not likely to quickly evaporate. The Federal Reserve Bank of St. Louis already has predicted unemployment to rise to 32%, higher than during the Great Depression. During the Great Recession of 2007–09, about 8.7 million jobs were lost, according to the Bureau of Labor Statistics.
Boston Federal Reserve President Eric Rosengren warned Wednesday that unemployment would likely “rise pretty dramatically over the next couple of months.”
U.S. Labor Department Secretary Eugene Scalia released a statement in which he said rising unemployment “reflects the sacrifices American workers are making for their families, neighbors, and country in order to ‘slow the spread’” of coronavirus.
Scalia noted the Labor Department’s increased efforts with states to provide enhanced unemployment benefits during the pandemic.
Prior to the Labor Department’s report, Asian markets had a mixed day, with Japan’s Nikkei and Australia’s ASX 200 dropping 1.3% and 2%, respectively. Markets in Shanghai, Hong Kong and South Korea all rose at least 1 percentage point, with the later closing up 2.3%.
Europe also posted mild gains, despite coming off its worst day for coronavirus-related deaths. Most European markets were up about half a percentage point around 8 a.m. E.S.T.
Confirmed cases of Covid-19, the respiratory disease caused by a new strain of coronavirus, have more than doubled in the last week. The pandemic has affected about 951,000 and killed more than 48,000 worldwide, according to data compiled by Johns Hopkins University.
So far, about 216,000 in the United States have been infected by the virus, while 5,100 have died.
Those numbers are likely to increase as testing becomes more widespread, and the administration’s leading infectious-disease experts have suggested 100,000 to 200,000 Americans dying from the disease could be a best-case scenario at this point.