Grim economic data sends markets down
A crush of dismal data about the economy helped send markets lower Thursday, a meek ending to a historic, juggernaut month for stocks.
The S&P 500 fell 0.9 percent after reports showed millions more U.S. workers filed for unemployment benefits last week and the European economy crumpled to its worst performance on record last quarter, among other lowlights.
It was the biggest loss for the U.S. stock market in more than a week, but it still was just a wiggle the S&P 500’s best month in decades.
The index surged 12.7 percent in April, its biggest monthly gain since 1987. Before Thursday’s fall, it had been on track for its best month since 1974 as stocks recouped more than half their 34 percent plunge from February into late March on worries about a sudden, devastating recession.
“The disconnect between the market and the economy in April is about as wide as any of us have ever seen,” said Ryan Detrick, senior market strategist for LPL Financial.
Promises from the Federal Reserve to do whatever it takes to prop up the economy through the coronavirus crisis helped spark the rally, as did trillions in spending by Congress.
The rally has continued recently on optimism that economies around the world are close to reopening.
April’s gains for stocks came in the face of mayhem in the oil market, where prices in one corner dipped below zero for the first time, and as investors continued to rush into U.S. government bonds in search of safety.
Reports piled up by the day showing the severe hits the econwithin omy is taking from widespread stay-at-home orders meant to slow the spread of the virus.
It all left many professional investors skeptical about the steep rebound in stocks, whose rapid ascent resembles a “V” on a line chart following its equally sharp decline, when there’s still too much uncertainty about how long the recession will last.
Thursday’s deluge of dour economic data — along with some investors looking to sell after weeks of gains — was enough to send 86 percent of stocks in the S&P 500 down and European stocks sharply lower.
The S&P 500 fell 27.08 points to 2,912.43. The Dow Jones Industrial Average lost 288.14, or 1.2 percent, to 24,345.72, and the Nasdaq fell 25.16, or 0.3 percent, to 8,889.55.
“This is the saddest day for the global economy we have ever seen” in the 50 years that economists at High Frequency Economics have been following economic data, they wrote in a report.
Benchmark U.S. crude oil continued its extreme swings, jumping $3.78, or 25.1 percent, to settle at $18.84 per barrel. Brent crude rose $2.73, or 12.1 percent, to $25.27.