US stocks fall after dire jobless claims data
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US stocks have fallen in the wake of yet more shocking employment data and as states and the federal government debate lifting coronavirus measures.
The Dow Jones index was down one per cent in early trading. The S&P 500 had dropped 0.5 per cent but the Nasdaq was 0.2 per cent higher.
Stocks were volatile after data showed that 5.2m Americans claimed unemployment insurance last week, meaning 22m have lost their jobs in the last month.
European stocks were choppy as investors are pulled in different directions by dire economic data and hopes that coronavirus is slowing.
The pan-European Stoxx 600 was 0.4 per cent higher and the German Dax was had risen 0.1 per cent. But the UK’s FTSE 100 index gave up early gains and stood roughly flat.
US stocks have rallied in recent weeks but stalled in the last few days amid terrible economic forecasts and data and as earnings season picks up steam.
The International Monetary Fund (IMF) said on Tuesday that the US economy would shrink six per cent this year. Data has shown that unemployment has surged while retail sales and manufacturing output has plunged.
US President Donald Trump is keen for the country’s economy to “reopen” as soon as possible. He is expected to make an announcement on the subject later today.
This has cheered some investors but many analysts have warned of the consequences of listing coronavirus lockdown measures too early.
Fears over direction of economy
“Concerns for the second half of the year may be underestimated,” said Seema Shah, chief strategist at Principal Global Investors.
“Although governments are looking to lift lockdowns, the re-opening of economies will be only gradual,” she said. Shah added that this would compound “financial strains for businesses and households, suppressing demand and suggesting a slower economic recovery”.
A number of Wall Street titans have reported first-quarter results in recent days, with profit down across the board.
At Goldman Sachs and Bank of America, earnings almost halved, while the sector as a whole has set aside billions of dollars to cover expected loan losses.
Craig Erlam, senior market analyst at currency firm Oanda, said: “Earnings season has got off to a rocky start and will no doubt be sobering but investors will be looking for any signs of encouragement.”
As investors worried about coronavirus’s impact on the economy, they moved into safe-haven assets such as the dollar and bonds. The greenback was up 0.3 per cent on an index against other currencies.
The yield on the 10-year US Treasury bond fell 3.6 basis points (0.036 percentage points) to 0.598 per cent. Yields move inversly to price.