Week-In-Review: Stocks Fell Again Last Week As Unemployment Soars
Stocks fell last week after the number of Covid-19 cases topped 1 million, even as much of the developed world is effectively shut down. Imagine, what the number would be if we were all running around and not practicing social distancing? Hopefully, we get a treatment or a cure – soon, because this new don’t interact with people situation is not fun. The toll on the economy will be devastating and as we enter earnings season over the next few weeks, the E in earnings will almost all but disappear. Remember, the economy was fine for most of January and February and began to get hit in March. So, whatever the actual numbers are, they will be taken with a huge grain of salt because Q2 numbers are expected to be awful. The one thing I will be looking for is to see if any company actually raises guidance for 2020.
Stocks rallied nicely on Monday as the market continued to bounce from deeply oversold levels. Over the weekend, President Trump extended the deadline past Easter to help flatten the curve. Johnson and Johnson said they are close to coming up with a vaccine for Covid-19. Stocks opened higher on Tuesday but closed lower on the last trading day of the month and quarter. After the dust settled, the market suffered heavy losses in March and in Q2 2020 as the Coronavirus effectively shut down the Western hemisphere. Stocks fell 900 points on Wednesday on the first day of the second quarter. U.S. intelligence officials questioned China’s official number of cases -saying they are much higher than what is actually being reported.
Thursday & Friday Action:
Stocks rallied on Thursday after weekly jobless claims soared and oil prices vaulted higher after President Trump tweeted that Russia and Saudi Arabia will cut production. In other news, the number of Covid-19 cases topped 1 million and, despite most of the world staying at home, shows no signs of slowing. Before Friday’s open, the Labor Department said U.S. employers lost 701,000 jobs in March, much lower than the decline of 101,000 that was expected. Meanwhile, the unemployment rate rose to 4.4% and this was the first negative number for jobs since 2010. March was the first month impacted by the coronavirus.
Market Outlook: Economy Is Locked Down
The short-term trend is down as the major indices imploded in late February after fear spread that the coronavirus will cripple the global economy and spark a world-wide recession (or worse). Since then, global governments and global central banks stepped in with massive rate cuts to help “stimulate” markets. If March’s lows are breached, then look out below. As always, keep your losses small and never argue with the tape.