Happy Thursday Everyone. It is June 25th and stocks took a plunge yesterday on news of record new confirmed COVID infections in the USA. The Dow dropped 700 points and the Nasdaq snapped its 8-day win streak. Still, the S&P 500 is down only 6% for the year (compared to 31% in late March). But investors are worried about a 2nd economic shutdown. Macy’s has just announced that it will be slashing 3,900 corporate jobs in restructuring, while unemployment has just fallen below 20 million. Also, Disney employees have petitioned to delay the reopening of the parks in Florida as coronavirus cases in that state continue to rise.
Weekly jobless claims totaled 1.48 million last week, worse than the 1.35 million Wall Street estimate. Claims fell by 767,000 to 19.52 million. California accounted for the biggest surge as claims remained above 1 million for the 14th straight week.
Stocks could see more troubles in the second half of 2020, and gains could be capped as the virus continues to keep a hold on the economy. The S&P 500 is still about 5.3% lower year-to-date, even with a near 20% jump in the second quarter, which ends next week. Besides the virus, markets could face volatility from the November election later in the year. A surge in new Covid-19 cases spooked markets Wednesday, with worries that the recovery may not be as vibrant as stock investors have been expecting.
Macy’s said it is cutting 3% of its workforce to reduce costs as it struggles with the effects of the coronavirus pandemic. The department store chain said it expects to save about $365 million through the layoffs in fiscal 2020.
The U.S. economy shrank at a 5.0% rate in the first quarter, as expected. A much worse decline is seen in the current three-month economic period because of the coronavirus pandemic. The decline in the gross domestic product, the total output of goods and services, in the January-March quarter was unchanged from the estimate made a month ago, the Commerce Department reported.
As the number of coronavirus cases surges in Florida, more than 7,000 people have signed an online petition urging Disney and government officials to reconsider the opening of Disney World next month. The petition states that while theme parks are a great way to relax and enjoy free time, it is a non-essential business; it is not fair to the people who work there to risk their lives, especially if they are at risk or have family members who are at risk.