An unexpected surge in the number of jobs lost last month dented Wall Street.
The Dow ended 361 points or 1.7% lower on Friday in New York, to finish at 21,053. The index is now 26% down year to date.
The S&P 500 fell 1.5% to 2489 and the Nasdaq slid 1.5% to 7373.
Ten of the S&P 500’s 11 industry sectors ended lower; utilities, materials and financials paced the losses. The one advancer: consumer staples.
ASX futures finished up 46 points or 0.9% to 5079. The local currency fell 1.1% to US59.93¢ at 4.16pm New York time.
The yield on the US 10-year note edged 2 basis points higher to 0.62%, as of 4.14pm New York time.
The jobless data was released ahead of the opening bell and it confirmed that the US economy is buckling under the strain of the COVID-19 virus.
The economy lost 701,000 jobs in March, seven times more than the consensus forecast, ending a more than decade long streak of monthly gains. And the worst is yet to come.
“While this payroll report may appear dark, it sadly pales in comparison to the expected 24 million job loss in April,” Oxford Economics said. “With much of the US economy at a standstill and 10 million individuals having filed for unemployment benefits over the last two weeks, the labour market has entered a traumatic period.”
The jobless rate spiked to 4.4% in March from 3.5%.
The economic hit wasn’t unexpected; jobless claims earlier this week foretold a sudden stop in the US, and elsewhere. Job losses and the jobless rate are expected to leap higher over the next month.
Morgan Stanley said it expects two peaks for the virus in the US with the first shortly. “While we expect an initial peak in about 14 days for the cities with the first outbreaks, we see a second peak from interior regions of the country pushing the ultimate US peak to mid-May.
“While we would expect some resumption in activity in the coastal regions prior to a full US peak, we believe resumptions will be limited until a full US peak. Governors will be hesitant to broadly relax their social distancing until the immediate threat of imported cases is diminished. We believe our view of a peak in mid-May could be under-appreciated by the market.”
Bank of America also sees more difficult days ahead.
“The lack of an effective policy response to control the spread of the virus in developed markets and some emerging markets has led us to take down 2020 global growth to -2.7% from 0.3%,” the bank said.
“This is considerably worse than the 2008-09 recession. The delay in strong social distancing policies, in our view, will extend the duration of the shutdown and mean a deeper confidence shock and an even weaker post-shutdown recovery.”
How grim will it get in the US: “We expect three quarters of US GDP contraction with growth down a cumulative 10.4%,” Bank of America said. “Measured as qoq saar, we forecast 1Q of -7%, 2Q of -30% and 3Q of -1% with a recovery of +30% in 4Q. Annual GDP this year will be down 6%. We expect between 16 and 20 million jobs to be cut with a peak unemployment rate of 15.6%.”
LPL Financial’s Ryan Detrick said for investors considering more equity exposure here, the biggest change since late March is the entry point.
“Now that the S&P 500 is more than 10% off the recent lows, the entry point to add equities here is not as compelling. We’d feel a lot better with more clarity on when COVID-19 might be contained in the US, but unfortunately that may still be a few weeks away.”