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Another Volatile Week Of Trading Ends On Low Note Following Horrendous Jobs Report

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Another Volatile Week Of Trading Ends On Low Note Following Horrendous Jobs Report

The S&P 500 kicked off the second quarter on a low note this week as investors remain uncertain about how long the coronavirus (COVID-19) economic shutdown will last.

Massive Job Losses

On Tuesday, the Dow Jones Industrial Average and the S&P 500 finished their worst quarters in history. The Dow dropped 23% in the first quarter, while the S&P 500 declined 20%.

Both indices kicked off the second quarter with huge declines on Wednesday after U.S. President Donald Trump said Americans should prepare for a “very, very painful two weeks” and projected between 100,000 and 240,000 U.S. deaths from the coronavirus outbreak.

Trump also extended federal coronavirus social distancing recommendations to the end of April after previously targeting Easter as a “beautiful time” to begin ramping up U.S. economic activity.

See Also: How To Make Sure You Get The Largest Possible COVID-19 Stimulus Check

Oil stocks got a boost on Thursday after Trump said he expects Saudi Arabia and Russia to cut oil production by 10 million barrels per day. WTI crude oil prices climbed 24% to above $25 on Thursday following the news but still remain well below their 2020 highs above $65 per barrel.

“Energy was expected to be ground zero for what is expected to be a default cycle coming up,” said Shawn Cruz, manager of trader strategy at TD Ameritrade. “So any positive developments in the price of crude are going to significantly help that situation.”

On Friday, the U.S. Labor Department reported the economy lost 701,000 jobs in the month of March, ending a 113-month streak of job gains dating back to 2010, while unemployment rose to 4.4%. Economists say the actual job losses in the month are likely much higher than the initial estimate considering the Labor Department relied on data from the first half of the month, prior to large-scale COVID-19 economic shutdowns.

“The unemployment rate is what a lot of economists use to model the economy, and that was the biggest jump since 1975 month over month,” said Cruz.

That number comes on the heels of Thursday’s Initial Jobless Claims report, which revealed approximately 6.6 million Americans filed for unemployment last week, bringing the two-week total to 10 million.

Earnings In Focus

Walgreens shares dropped 8% after the company reported same-store sales were up 26% in the first three weeks of March and dropped by a mid-teens percentage rate in the last week of the month.

Next week, earnings season continues to wind down with reports from Levi Strauss on Tuesday.

Analysts are anticipating S&P 500 earnings will decline by 5.2% in the first quarter of 2020, according to FactSet.

Economic Updates

Investors will get more key economic updates from the latest Federal Open Market Committee meeting minutes out on Wednesday and the European Central Bank monetary policy meeting accounts out on Thursday.

 

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