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U.S. stocks fell Thursday as 30 million Americans filed for unemployment benefits over the past six weeks in the wake of the coronavirus pandemic. Major averages, however, still posted their best month in decades on hope about curbing the disease.
The Dow Jones industrial average fell 288.14 points to close at 24,345.72. The blue-chip average climbed 11.1% in April, its best month since 1987. The Standard & Poor’s 500 fell 0.9% to end at 2,912.43. The broad index rose 12.7% for the month, also its largest one-month gain since 1987.
The monthlong rally came as the Federal Reserve and Congress announced aggressive measures to help the economy weather the fallout from the widespread business shutdowns and stay-at-home guidelines put in place to fight the pandemic.
Fresh data Thursday showed how badly the pandemic has crippled the U.S. economy, with roughly 3.8 million people filing for unemployment last week, the Labor Department said. Jobless claims, which provide the best measure of layoffs across the country, were lower than the 4.4 million who filed the week before and down from the all-time high of 6.86 million applications in late March. That brings the total to about 30 million Americans that have filed for unemployment benefits over the past six weeks.
“Thankfully, for now, the economic contagion seems to have plateaued, with the number of new weekly claims falling for the third week in a row,” Andrew Stettner, senior fellow at nonpartisan think tank The Century Foundation, said in a note. “But we’re still at a level that is a mortal threat to the nation’s financial well-being and a moral emergency for policymakers.”
On Thursday, some big tech titans reported results for the first quarter that weren’t as bad as investors had braced for, which helped limit the market’s losses. Facebook rose 5% after it reported trends in advertising revenue stabilized in April following a steep drop-off in March. Microsoft inched up 1% after reporting better-than-expected results for the first quarter. Those are two of the biggest stocks in the S&P 500, which give their movements outsized heft on the index.
Stocks rose a day earlier in the U.S., driven by optimism about a possible treatment for the coronavirus. Gilead Sciences’ experimental drug remdesivir was reported to be effective against the new coronavirus in a study run by the National Institutes of Health. The nation’s top infectious diseases expert said the drug reduced the time it takes patients to recover, raising hopes that life around the world may eventually tiptoe back toward “normal.”
Investors have largely shrugged off weak economic data in recent weeks because it has already been priced into stocks, according to Nigel Green, chief executive and founder of financial consultancy deVere Group.
“Instead, investor optimism is being reinforced by reports of major progress in the effort to develop coronavirus treatments,” Green said in a note. “Also as central banks continue to roll out and further enhance their stimulus packages, and as crippling lockdown restrictions around the world begin to ease to revive economies.”
The Federal Reserve said Thursday it will expand its Main Street lending program, allowing larger businesses to participate and it will relax minimum-loan amounts to help more small businesses.
The European Central Bank also announced it is stepping up its measures to cushion the economy against a record downturn caused by the lockdowns on business due to the virus outbreak, offering large helpings of cheap credit to banks in hopes it will be passed on to struggling businesses.
Stocks are within 20% of their February records after slumping in March into a bear market, or a drop of 20% from a peak.
To be sure, Wall Street professionals say the broader stock market could still be poised for a pullback. Analysts at Goldman Sachs forecast the S&P 500 index will fall to 2,400 mid-year before rallying to 3000 at year-end.
The firm anticipates the unemployment rate will surge toward 15% in the third quarter, with the jobless rate anticipated to end 2020 at 10% if the economy recovers in the latter half of the year.
Separate data overnight showed China’s manufacturing activity weakened in April as the pandemic clobbered global consumer demand, hampering Beijing’s efforts to revive the world’s second-largest economy.
Surveys by a Chinese magazine and an official industry group showed activity slipped back after rebounding in March following the closure of much of China’s economy to fight the virus. A sub-measure for exports plunged.
China became the first major economy to reopen factories in March after the ruling Communist Party declared victory over the outbreak. But the United States, Europe and other major markets have yet to lift controls that are depressing consumer spending.
Nations around the world have laid out plans to relax restrictions keeping people at home and businesses bereft of customers. Any new treatment for COVID-19 could also lower the dread so prevalent among households and businesses around the world.
In Europe, the French CAC 40 fell 2.1%, and the German DAX lost 2.2%. In London, the FTSE 100 dropped 3.5%. Japan’s benchmark Nikkei 225 surged 2.1%, while Australia’s S&P/ASX 200 gained 2.4%. The Shanghai Composite added 1.3%. Markets in South Korea and Hong Kong were closed for holidays. Many other markets will be closed on Friday for May Day.
Contributing: The Associated Press
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