Pre-market futures swung from fairly deep in the red — triple digits on the Dow, for instance — to the green, based on better-than-expected Initial Jobless Claims data this morning. Though we are now at 21 straight weeks reporting more than a million new jobless claims, today’s headline of 1.19 million was well below the 1.4 million expected, as well as the week-ago headline. After a tick up on last week’s headline, today sets new claims back in the right direction.
Continuing Claims also improved — from just under 17 million reported three weeks ago (Continuing Claims posts one week in arrears) to 16.1 million in this latest read. While it’s difficult to applaud a million more Americans losing their jobs in the past week and 16 million more having difficulty finding work, we’ll take our economic improvements where we find them. Everyone understands there is no way to “quick fix” our current labor market situation; over time, these drips will fill the bucket (provided it’s not riddled with holes).
There are a few things jobless claims data point directly toward on weeks like these — ADP ADP private-sector employment numbers came out yesterday, coming down drastically from 4.3 million new hires in June to 167K in July. Non-farm payroll numbers to be reported tomorrow, then, by the U.S. Bureau of Labor Statistics (BLS), are also expected to come down — from 4.8 million new jobs to 1.7 million anticipated.
This morning’s claims figures hopefully are beginning to illustrate a bounce-back late last month in new hiring as the economy continues to reopen. It may not show in tomorrow’s data, depending on when this possible bounce-back began, but perhaps a month from now and beyond.
However, this positive outlook is quite dependent on outside factors, such as the U.S. Congress. Will Congress reach an agreement on new relief for Americans hit economically? Aside from this “regular” jobless claims program, we also had supported Pandemic Unemployment Assistance (PUA) which provided millions of additional citizens with unemployment assistance. The longer we go without a new program enacted, the bigger the chance future unemployment numbers will spike.
The market also prices in a COVID-19 vaccine being discovered and distributed widely, despite no companies working on such a vaccine having put forth data on phase 3 testing as of yet. This is crucial to understanding the safety of these drug treatments to immunize people around the world of catching the coronavirus, which is key to a full reopening of the global economy. And while pharma companies are indeed making progress — and do not struggle finding participants to study, which often creates delays in phase 3 testing — until we’ve got the vaccine in hand, we’ll continue along our current road.
The Dow and S&P 500 are looking for their fifth straight positive close, with the Nasdaq aiming at keeping its streak alive at 7, complete with new all-time highs each days. Solid Q2 earnings — or at least not-as-bad as anticipated — are helping keep the market headwinds at bay. So it continues…
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research