U.S. Stock Market

U.S. Stocks Point To Lower Open As U.S. Jobless Claims Show Worst Numbers In History

Initial Jobless Claims Show That 3.3 Million People Lost Their Jobs

The most important economic data of this week, the U.S. Initial Jobless Claims number, has been released and indicated that roughly 3.3 million people applied for unemployment benefits.

Economists provided various forecasts and while the consensus number was 1 million, it’s hard to say whether there was any consensus at all. Finally, we see the real data instead of guesswork.

This number easily trumps the previous record of roughly 700,000 Initial Jobless Claims that was made back in 1982. At this point, there’s little doubt that the next release can show even more alarming numbers as the situation with coronavirus in the U.S. continues to get worse.

Currently, S&P 500 futures are pointing to a lower open but they are off their recent lows. Nowadays, premarket action does not necessarily dictate the dynamics during the main trading session, so it remains to be seen whether the market is shocked by the news or not.

U.S. Dollar Index Shows That Risk Appetite Is Still Present

The U.S. Dollar Index continued to show weakness today but has rebounded from the 100 level. The U.S. dollar has served as the safe haven asset of last resort during the current crisis, so traders and investors can use it as a gauge of the market’s risk appetite.

Another safe have asset, gold, is showing positive dynamics. Gold has been recently trying to breach the $1700 level, and increased risk appetite amidst market turmoil may ultimately help it get through this level.

As I mentioned yesterday, the situation is not that easy for gold mining stocks since many companies have already suffered from virus-related production shutdowns. Such developments can serve as an additional bullish factor for gold, as supply will decrease at times of increased demand.

Major Test For The U.S. Market

The stock market has already enjoyed a rebound on news about the Fed’s unlimited quantitative easing program and the $2 trillion coronavirus aid package.

Now, U.S. stocks will have to face the economic reality. The key questions for investors are whether the current situation is priced into stock prices and if it can get even worse.

According to data from Johns Hopkins University, the U.S. has 69,197 coronavirus cases, and the current pace of contagion means that it is on track to surpass China and Italy in the next few days.

The duration of coronavirus containment measures represents a key risk for the market, so I’d expect very volatile trading in the last two trading sessions of this week.