The stock market moved lower on Thursday after jobless claims came in worse-than-expected, rising for the first time in nearly four months amid the recent surge in coronavirus cases across the country.
The Dow Jones Industrial Average was down 1%, over 250 points, on Thursday, while the S&P 500 fell 1.1% and the tech-heavy Nasdaq Composite lost 2.1%.
Stocks took a hit from worse-than-expected jobless claims data: Another 1.4 million Americans filed for unemployment last week, according to data released by the Labor Department.
Not only was that number higher than the 1.3 million expected, but it was also the first time jobless claims have risen since March, suggesting that the labor market’s recovery could be in jeopardy as many states rollback reopenings.
Microsoft fell nearly 3% despite the company beating revenue expectations in the second quarter. Other big tech stocks were also under pressure, with Amazon, Apple and Netflix all trading lower.
Tesla saw its stock fall over 2% despite blowing past analyst expectations and posting a fourth consecutive quarter of profit—meaning it could now qualify to join the S&P 500 index.
Airlines, on the other hand, continued to report massive losses amid the pandemic: American Airlines posted a net loss of $ 2.1 billion, while Southwest Airlines saw a loss of $ 915 million.
The S&P is now less than 4% from hitting a new record high, after turning positive for 2020 earlier this week.
“If there is a bigger resurgence of coronavirus cases and no real plans on fiscal stimulus, that could lead to a big market correction,” says Pierce Crosby, general manager of TradingView. “There’s less and less upside potential, with more downside risk if we don’t have that stimulus check,” he says, adding, “ultimately, it’s a confidence game.”
What to watch for
With an extra $ 600 per week in federal unemployment benefits set to expire next week, lawmakers in Washington are scrambling to agree on the next round of coronavirus stimulus. But stocks rallied late on Wednesday amid news that Congressional Republicans are considering an extension of unemployment benefits through the end of 2020, but at a reduced rate of $ 100 per week. Treasury Secretary Steven Mnuchin added on Thursday that an extension of benefits would be based on “approximately 70% wage replacement.”