Before The Bell
The stock market, up three consecutive days this week, entered the penultimate session of this five-day span a bit to the downside, driven lower by a disappointing report on weekly unemployment claims. On point, the Labor Department reported at 8:30 AM (EDT) that the latest week had seen 1.88 million new jobless filings, the first week in over two months this figure had dipped below two million. However, the tally was above expectations and brought the aggregate number of job losses since COVID-19 first struck to more than 42 million.
Also disappointing was the fact that continuing jobless claims rose last week after a surprise drop the previous week. But the pullback was not sizable. In fact, the bulls would soon revert to form and the Dow Jones Industrial Average would start to climb into the green after the first half hour of trading. The advance would then continue for an hour before a second round of selling would ensue, which would carry the Dow into the red once more. The losses would persist well into the afternoon, with that composite reaching its nadir at about 3:00 PM.
At that time, the Dow would be off by about 200 points. One concern was the just-released monthly report on jobs from the U.S. Labor Department (more below on the surprisingly good report). Also, there was some concern about the ongoing protests in the streets, which have been less disruptive in the past day or two. For the most part, though, the news has been more reassuring. Meanwhile, the other indexes were weak, with the S&P 500 staying in the red after the first hour and the NASDAQ remaining lower as well.
However, in the final half hour of the day, some optimism returned and the Dow would do an about face, moving back into the green, incrementally, while the S&P 500 Index and the NASDAQ would notably pare their respective deficits. Behind the late turn, which helped the Dow to finish higher by 10 points, but held the NASDAQ 67 points lower may well have been optimism ahead of the latest jobs data, which had been expected to show the loss of another eight million jobs in May on top of the 20 million lost in April.
As to that much-anticipated issuance, the government reported that the nation added 2.5 million positions in May; a loss of nine million jobs had been the consensus forecast. That good news followed a revised loss of 20.7 million jobs in April (initially estimated at 20.5 million). Also, the unemployment rate decreased from 14.8% to 13.3% last month and the labor-force participation rate increase by 0.6% to 60.8%. The lone discordant note was a decline in wages last month following a big gain in April. But that might only reflect a change in the aggregate workforce in May to an increase of lesser paying jobs.
As to the market's reaction, it was wildly positive, with the Dow futures pointing to an opening gain of some 600 points.
– Harvey S Katz, CFA
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
