Market Snapshot: Dow erases gains after loss of 20 million private sector jobs underlines economic pain

Market Snapshot

The ADP report comes two days ahead of the more closely followed Labor Department monthly jobs update

Getty Images

U.S. stocks lost some altitude on Wednesday as investors pored over data showing a collapse in private-sector employment in April, putting a damper on enthusiasm sparked by an easing of lockdowns imposed by the coronavirus pandemic.

Investors also parsed corporate quarterly updates from some of the nation’s largest companies, with Walt Disney Co.’s profit diving more than 90% in the second quarter due to the hit from the pandemic on the entertainment giant.

How are stock benchmarks faring?

The Dow Jones Industrial Average

fell 18 points, or 0.1%, to 23,867. The S&P 500

was virtually flat at 2,869. The Nasdaq Composite

climbed 92 points, or 1.1%, to 8,902.

On Tuesday, the Dow

gained 133.33 points, or 0.6%, to end at 24,883.09, the S&P 500 index

advanced 25.70 points to finish at 2,868.44, a gain of 0.9%, while the Nasdaq Composite Index

added 98.41 points, or 1.1%, to close at 8,809.12.

What’s driving the market?

The U.S. stock market came under pressure Wednesday, even as investors looked ahead to the easing of lockdown measures, with states like California allowing some businesses to open their doors again on Friday.

A key drag was labor-market data from payment processor Automatic Data Processing Inc.
which showed private-sector employers shed 20.2 million jobs in April, closely matching the consensus estimate from economists polled by Econoday. Last month, ADP’s data didn’t reflect the full scale of the employment picture that has left more than 30 million Americans without jobs in less than two months.

“One thing is for sure is that this pandemic health crisis has produced depression-magnitude job losses which means this recovery is going to take longer than many are thinking,” said Chris Rupkey, chief financial economist at MUFG, in a note.

The private-sector employment number comes a day before the weekly U.S. jobless claims report and ahead of Friday’s more closely followed monthly nonfarm-payrolls report. On Wednesday, St. Louis Federal Reserve President James Bullard said Friday’s report would be “one of the worst ever.”

The illness derived from COVID-19 has infected 3.6 million people world-wide, and a third of that figure is in the U.S. alone, according to data supplied by Johns Hopkins University. More than 250,000 lives have been lost globally.

President Donald Trump, speaking during an interview with ABC’s “World News Tonight” Tuesday evening, said “it’s possible there will be some” additional deaths as dozens of states attempt to reopen their economies closed to help stem the contagion. He indicated that restarting business activity was paramount.

“We have to get our country open and we have to get it open soon,” said the president, who was visiting a Honeywell International

plant in Arizona.

On Tuesday, stock gains faded after Fed Vice Chairman Richard Clarida told CNBC in an interview that the U.S. economy likely will need more support, though he added that he was expecting a second-half recovery to growth.

“We’re in a period of some very, very, very hard and difficult data that we’ve just not seen for the economy in our lifetimes, that’s for sure,” Clarida told the business network.

Which companies are on the move?

Shares of General Motors Co.

rose 4.9% after first-quarter sales and earnings fell less than estimated as U.S. truck sales rose sharply.

Shares of CVS Health Corp.

gained 1.1%, after the drug store and health care benefits company reported better-than-expected profit and revenue

Office Depot Inc.

shares climbed 17% after the office supplies retailer’s earnings blew past estimates for the first quarter.


late Tuesday reported fiscal second-quarter profit of $460 million, or 26 cents a share, on sales of $18.01 billion, up from $14.9 billion in the year-ago quarter, but closures of its theme parks cost the media giant more than $1 billion in profit. Shares were up 0.4%

Shopify Inc. shares

were up 5.3% after the e-commerce retailer posted a surprise adjusted profit and said that gross merchandise volume accelerated in April from the first quarter.

How are other markets trading?

West Texas Intermediate

fell $1.26, or 5.2%, to $23.31 a barrel, on the New York Mercantile Exchange. Gold

was down $24.00, or 1.4%, to $1,686.80 an ounce.

The Stoxx Europe 600 index

was down 0.4%, while the U.K.’s FTSE 100

was 0.1% higher. Asian shares also booked gains, with Hong Kong’s Hang Seng index

picking up 1.1%.

The Treasury Department’s announced it would boost the size of its longer-dated bond auctions more than expected, weighing on government bond prices. The 10-year Treasury note yield

climbed 6 basis points to 0.72%. Bond prices move in the opposite direction of yields.

Read: Asian markets gain amid hopes for global economic recovery

What's your reaction?
Leave a Comment

escort eskişehir escort samsun escort gebze escort sakarya escort edirne