First-time unemployment insurance filings clocked-in at 3.84 million last week, beating the 3.5 million prediction by economists.
With payroll losses rising, there are now 30.3 million jobless claims. That’s the worst ever in U.S. history and a record that’s unlikely to ever be broken.
Still, the Labor Department believes the worst is behind us. Unemployment claims hit 6.87 million back in the week of March 28th.
The job-loss figures have dropped each week since then. Last week’s report, for example, showed 4.4 million new claims. Today’s numbers indicate a decrease of 603,000.
And though stocks continue to rise while weekly payroll losses slow, Wall Street is starting to lose faith in the current rally.
Even with remdesivir – a likely coronavirus treatment solution – on the way.
“Beware of the oddity in this bear rally,” wrote Andrew Lapthorne, Societe Generale’s global head of quantitative research, in a note.
“Given the overall negative undertone from the economic challenges ahead, the dramatic reversal of global markets after the pandemic lows is more puzzling.”
Other analysts, like Canaccord Genuity’s Tony Dwyer, believe that bulls may have overextended the immediate economic benefits of remdesivir and a U.S. re-opening.
“We do believe as we get closer to the opening of the economy, the various areas of credit – such as the US Treasury Yield Curve and Bank Lending – suggest the market may be getting ahead of itself as hope may be offset by reality,” Dwyer said.
Plenty of technical analysts seem ready to wave the white flag, too, now that the major indexes have reached key retracement levels.
“As we all know, no market moves in a straight line,” wrote Matthew Maley, chief market strategist at Miller Tabak, in a note.
“The damage that was done in the first (37%) decline […] and the recession that is upon us […] could cause another round of selling before too long. History tells us that the odds of another deep decline are very, very high.”
Looking at the market today, though, you’d never know that sentiment was flipping negative.
The Dow is down only 1.00% while the S&P has fallen a meager 0.75%. The Nasdaq Composite is trading flat on the day, buoyed by stronger-than-expected tech earnings.
And with Amazon (NASDAQ: AMZN) set to report after the close this afternoon, scores of hopeful bulls are holding on to their already profitable long positions.
Analysts remain pleased as punch about the company, too, even if they’re unsure about the general market’s short-term future.
“Given how irreplaceable Amazon has proven to many during this crisis, we believe the company has an opportunity to expand wallet share with existing customers and shape the online habits of new users,” wrote Monness Crespi Hardt analyst Brian White in a note to clients.
“We believe Amazon and its dedicated employees will be elevated to hero status in the minds of many customers when this crisis is over, further strengthening Amazon’s brand.”
White’s not wrong. Amazon has been an essential lifeline for millions of housebound Americans. Before the COVID-19 pandemic, Jeff Bezos managed to establish a downright dominating presence in online retail.
Just imagine how well the company did while its brick-and-mortar competitors were closed.
If Amazon’s earnings impress this afternoon (they likely will), don’t be surprised to see stocks rise tomorrow, regardless of Wall Street’s belief that the rally is doomed.
The market certainly looks ready for a sell-off, but until investors see real signs of it, it’s likely better to stay in the market. Plenty of folks got out back in late March after equities hit the COVID-19 crash bottom.
Now, they’re unilaterally wishing they stayed in – something that could happen again as re-opening talks continue across America.