NEW YORK (AP) — Stocks were falling in early afternoon trading Friday, putting Wall Street on track for its third losing week in the last four.
The losses came after the government reported that U.S. employers cut 701,000 jobs last month, the first drop in nearly a decade and the latest of what is sure to be many grim indicators of the toll the coronavirus is is taking on the economy as businesses, industry and travel shut down in an attemp to slow the spread of the outbreak.
U.S. stock indexes held steady at first, then headed lower after the price of oil lost some of its momentum. That undercut a rally for energy stocks, which had been helping to keep the overall market’s losses in check.
The S&P 500 was down 1.8% as of 12:42 p.m. Eastern time after earlier flipping between modest gains and losses. The Dow Jones Industrial Average fell 376 points, or 1.8%, to 21,033, and the Nasdaq was down 1.7%. Even those losses would be some of smaller daily pullbacks since the sell-off began in mid-February.
The relatively muted reaction “is actually a bit of a silver lining for investors at this point,” said Peter Essele, head of portfolio management for Commonwealth Financial Network.
“It shows that markets have already factored in dismal economic numbers for at least the next few weeks,” he said.
Businesses have shut down across the country and the world as people stay home in hopes of slowing the spread of the coronavirus outbreak. Friday’s report likely doesn’t even fully capture the extent of the recent job losses, which have been accelerating by the day, because it collected data from before stay-at-home orders were widespread.
“There is far worse to come,” said Eric Winograd, senior economist at AllianceBernstein.
Economists say next month’s report may even show the economy has wiped away the last of the 22.8 million jobs created during its nearly decade-long hiring streak. On Friday,
The S&P 500 is down 25% since its record set in February, reflecting the growing assumption that the economy is set to slide into a sudden, extremely sharp recession. Part of that decline also reflects the market’s expectations for stunning job losses, such as those included in Friday’s jobs report.
But the panic selling that dominated the first few weeks of the sell-off has calmed a bit since Washington unleashed massive amounts of aid to help markets and the economy. The Federal Reserve has promised to buy as many Treasury securities as it takes to keep lending markets running smoothly, and Congress approved a $2.2 trillion rescue plan for the economy.
“Together, these actions are staggering and unprecedented and will go some distance toward helping to cushion the economic blow of this health crisis and help get the country to the other side,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.
For the week, the S&P 500 is on track for a 2.5% loss, following up a 10.3% surge and a 15% drop in the prior two weeks.
Now, markets are waiting to see when the number of new coronavirus infections peaks. Only that can give some clarity on how long the economic downturn will last and how deep it will be.
Businesses that were just hanging on before the outbreak because of the then-strong economy may not survive. Commonwealth Financial Network’s Essele pointed to retail chains and malls in particular.
“It’s a bit of a brush fire that we’re going to get,” he said. “The strong will survive on the other end of this.”
The United States has more than 245,000 confirmed cases of the virus, which leads the worldwide tally of more than 1 million compiled by Johns Hopkins University.
For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough. But for others, especially older adults and people with health problems, it can cause more severe illness, including pneumonia, and death.
More than 55,000 people have died, but over 219,000 have recovered.
Markets got a bit of a lift Friday from another gain in oil prices.
Benchmark U.S. crude climbed nearly 5% to $26.55 per barrel, adding on to its nearly 25% surge the prior day on expectations that Saudi Arabia and Russia may dial back their price war.
The world is awash in oil as demand for energy collapses, and President Donald Trump said the rivals may be close to cutting back on production to prop up oil’s price.
That helped propel some energy stocks higher, including a 5.4% rise for EOG Resources, though the gains faded through the morning. Benchmark U.S. oil had been above $28 per barrel earlier in the morning.
Energy stocks in the S&P 500 overall were down 3% after being higher earlier in the morning.