Stock Market: Stocks Drops As Unemployment Rises Constantly

The stock market took a plunge thanks to the impact of the coronavirus on the economy. Specifically, it was the newly released data regarding unemployment that caused this downward trend.

Numbers Rose The Day Before

The day before, on Thursday, April 2, 2020, there were grim signs about the number of people who would be unemployed anyway. However, when markets closed for that day, all three American indices went up a little bit.

The Dow Jones Industrial Average went +469.93 points (+2.24%), S&P 500 went up +56.40 points (+2.28%), and the Nasdaq Composite rose +126.73 points (+1.72%). This led to the impression that no matter what the numbers are, the stock prices would weather the storm and not lose too much in value.

Stock Market

This despite reports from The Guardian which stated that 6.65 million American workers had filed for unemployment. Many of these newly unemployed workers used to work in restaurants, bars, theatres, etc.

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Lockdown Impacted Certain Businesses

These are the businesses that the coronavirus has hurt the most, due to the government-imposed lockdowns. However, in the morning hours of Friday, April 3, 2020, we got official data from the U.S. Bureau of Labor Statistics. The release of these numbers had an adverse effect on all American indices.

When trading wrapped up on Friday, Dow Jones Industrial Average was down 1.67%, or 357.99 points, closing at 21,055.45. It was a similar story with the S&P 500, which fell 1.52%, or 38.34 points, to close at 2,488.56. The Nasdaq composite also saw a 1.53% decline, or 114.23 points, to close at 7,373.08.

Reasons For Differing Reactions Stock Market

Stock Market

The main reason that the markets reacted differently on these two days is easy to point out. The numbers the U.S. Bureau of Labor Statistics put out on Friday were worse than the original estimates from the day before.

Unemployment in the U.S. rose nearly an entire percentage, from 3.5% to 4.4%. To make things even worse, these were only the numbers from the first two weeks of March. Since many of the COVID-19 related lay-offs likely came after that period, the damage throughout the month of March is probably way worse. Even those numbers are only of those who have chosen to file unemployment insurance claims.

All-in-all, we’re likely in for a turbulent few weeks and months ahead of us. As long as this coronavirus pandemic lasts, we may experience even more of these setbacks.

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