“As shutdowns continue, job losses will likely extend into other areas of the labor market,” warned one analyst.
The Dow Jones Industrial Average ticked upwards by a handful of points on Thursday morning, as investors weighed the new jobless claims total of 22 million against optimism from President Donald Trump that parts of the country could open back up.
The S&P was up by 0.75 percent and the tech-heavy Nasdaq was higher by just over 1.1 percent.
Another 5.24 million people filed for first-time unemployment claims last week, according to figures released Thursday morning from the Department of Labor, revealing how the job market in every sector of the economy continues to be devastated by the coronavirus pandemic.
Economists are predicting a second wave of layoffs, as job loss spreads from small businesses and restaurants that were forced to shutter due to state-mandated lockdowns, to companies whose workers have been able to work remotely.
“Job losses have so far been concentrated in sectors directly impacted by quarantine restrictions,” said Robard Williams, a senior vice president at Moody’s. “However, as shutdowns continue, job losses will likely extend into other areas of the labor market, such as business and professional services where firms may begin to see lower revenues from a second order pull back in demand.”
President Donald Trump released details on Wednesday of his administration’s plans to pull back on the social distancing measures that have shuttered businesses across the country, and reopen parts of the economy as soon as May 1.
Several CEOs, some of whom attended a conference call with the president on Wednesday as part of a panel discussion on reopening the economy, have spoken out about the timeline. Amazon CEO Jeff Bezos said Thursday in an annual letter to shareholders that “regular testing on a global scale, across all industries, would both help keep people safe and help get the economy back up and running.”
He also noted that “for this to work, we as a society would need vastly more testing capacity than is currently available.”
Parts of Europe are already tentatively opening up their economy. After four weeks of a nationwide lockdown, German Chancellor Angela Merkel said some restrictions could be lifted as early as Monday. Stores up to 8,611 square feet in size would be allowed to reopen but with strict protocols around hygiene and social distancing to prevent long lineups on streets.
Italy has allowed certain businesses — mainly shops selling books, stationery and children’s clothes — to reopen as long as they followed strict safety protocols such as social distancing inside the stores, having customers wear protective masks and gloves and sanitizing surfaces twice a day.
In contrast, Britain, which has seen a sharp rise in deaths, is expected to extend lockdown measures Thursday for another three weeks.
Home-building data in the U.S. also contribute to a gloomy overall outlook: Housing starts fell by 22.3 percent from a month ago, the worst monthly decline since 1984.
The oil market continued its slump, with crude prices hovering at around $20 a barrel as inventories continue to top out ahead of the May 1 implementation of a new production cut agreement.