Dow Closes 1.7% Lower After Jobless Rate Spikes
April 03 2020 - 8:56PM
Dow Jones News
By Gunjan Banerji,Anna Hirtenstein and Chong Koh Ping
U.S. stocks and government bond yields fell Friday, capping
another week of declines, after new data revealed that the
pandemic's toll on Americans has increased by the day.
The monthly jobs report showed that employers shed 701,000 jobs
in March, the start of a labor-market slowdown stemming from the
coronavirus pandemic. It's a jarring shift for a job market that
was booming just a few weeks ago, with unemployment hovering near
multidecade lows.
Meanwhile, Gov. Cuomo said New York, the hardest-hit state, saw
its highest single increase in deaths since the outbreak
started.
The S&P 500 fell 38.25 points, or 1.5%, to 2488.65. The
Nasdaq Composite lost 114.23 points, or 1.5%. The Dow Jones
Industrial Average fell 360.91 points, or 1.7% to 21052.53.
Major U.S. indexes ended the week with modest declines after
logging the worst quarter since the financial crisis. All three are
down more than 24% from their mid-February highs.
Many investors were bracing for disappointing jobs numbers due
to the profound effect of the coronavirus on people, businesses and
markets around the world in recent weeks.
"I don't think anybody's surprised that it was a terrible
month," said JJ Kinahan, chief market strategist at TD Ameritrade.
"We know it's going to be brutal. These are hard times."
Friday's report marked the first time since 2010 that employers
shed more workers than they added. Still, many were girding for
even gloomier figures to be released in coming weeks. The latest
monthly jobs report doesn't reflect the millions of
unemployment-insurance claims that people filed in the last two
weeks of March.
A record 6.6 million Americans applied for unemployment benefits
last week -- double the number two weeks ago -- as the country shut
down parts of the economy in an effort to contain the virus.
Investors were also wary of fresh data that shows the spread of
the coronavirus across the U.S.
"We could be entering the next few weeks of peak fear," said
Rusty Vanneman, chief investment officer of Orion Advisor
Solutions. "I think that some of the worst data is yet to
come."
As stocks fell, investors turned to the relative safety of
government debt. The yield on the 10-year U.S. Treasury note fell
to 0.587% after settling at 0.624% in the previous session, capping
off a third straight week of declines. Bond yields fall as prices
rise.
Investors said they were continuing to track containment
measures in the U.S. and countries around the world. Some investors
attributed the smaller gyrations this week to the moves by the
Federal Reserve, which they said made it easier to trade across
asset classes.
In Europe, economic data out Friday showed the brutal impact the
coronavirus is having on economic growth. Purchasing Managers'
Indexes for the services sector in the eurozone fell to the lowest
level ever. The pan-continental Stoxx Europe 600 dropped 1%.
In Asia, major stock indexes were largely flat. The Shanghai
Composite Index closed down 0.6%. The People's Bank of China eased
monetary policy, indicating that the Chinese economy is still in
need of support despite people returning to work. To encourage more
lending, it cut reserve ratio requirements for small- and
medium-size banks by 1 percentage point and lowered rates for
commercial banks' excess reserves to 0.35% from 0.72%.
On Thursday, Brent leapt 21%, marking its largest one-day
percentage gain on record, based on data going back to 1988.
President Trump said he expected Russia and Saudi Arabia to agree
to cut production. Moscow denied talking to the Saudis, but the
kingdom's officials said it would consider substantial output cuts
if other nations joined the effort.
Luca Paolini, chief strategist at Pictet Asset Management, said
Friday's stock declines show the market is skeptical about
oil-production cuts. It would take coordinated action from all the
major oil producers, including the U.S., to make a lasting
difference.
"If there's an agreement for a production cut, I would see that
as a positive," he said.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Chong
Koh Ping at chong.kohping@wsj.com
(END) Dow Jones Newswires
April 03, 2020 20:41 ET (00:41 GMT)
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