US job losses: Stock market panic as 6.6 million apply for unemployment in week

Futures for the Dow Jones slipped by 0.03 percent, S&P stocks fell by 0.2 percent and Nasdaq 0.3 percent amid the major global downturn as the US fights the coronavirus pandemic. US stock futures were flat after bouncing in and out of positive territory in European trading after figures showed the number of Americans seeking unemployment benefits in the last three weeks has topped 15 million. 

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In a major blow for US President Donald Trump, weekly new claims topped 6 million for the second straight time last week as tough measures to control the coronavirus outbreak abruptly ground the country to halt.

The Labor Department said first-time claims for unemployment benefits in the week, ending April 4, totalled about 6.6 million, down modestly from an upwardly revised 6.87 million the week before.

But experts said the markets had priced in job losses, with UBS forecasting an annualised contraction in second-quarter US gross domestic product range of 9.5 percent, while Nomura estimates it will drop 42 percent.

Ulrich Leuchtmann, head of FX and commodity research at Commerzbank, said: “The market is aware of the dramatic effects of the lockdown and is more interested in when these will end.

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US stock futures have dipped (Image: GETTY )

US stock market

Wall Street faces a downturn over unemployment figures (Image: GETTY )

“So the US jobless figures are not a big game changer number.”

Beth Ann Bovino, chief US economist at S&P Global Ratings in New York, said: “These dismal numbers suggest another record-breaking April jobs report.

“America is now in recession and as it appears to deepen, the question is how long it will it take before the US recovers.”

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Americans seeking unemployment benefits in the last three weeks has topped 15 million (Image: GETTY )

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The devastating figures will strengthen economists’ expectations of job losses of up to 20 million in April.

It comes after the White House on Friday said the economy purged 701,000 jobs in March. That was the most job losses since the Great Recession and ended the longest employment boom in US history that started in late 2010.

Beth Ann Bovino, chief US economist at S&P Global Ratings in New York, said: “These dismal numbers suggest another record-breaking April jobs report. 

“America is now in recession and as it appears to deepen, the question is how long it will it take before the US recovers.”

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US stock markets are expected to be hit as the US fights a recession (Image: GETTY )

With more than 95 percent of Americans under “stay-at-home” or “shelter-in-place” orders, reports continue to mount of state employment offices being overwhelmed by a deluge of applications.

Mike Ricci, a spokesman for Maryland Governor Larry Hogan, posted on Twitter on Wednesday: “We have approximately 1,000 calls coming through in every two hour period of time,” saying that “currently, federal employees and people who have worked in multiple states.

The breadth of businesses shuttered because of the stringent measures to curb the spread of COVID-19 has expanded from bars, restaurants and other social gathering venues to transportation and factories.

The US has the highest number of confirmed COVID-19 cases in the world.

Gregory Daco, chief U.S. economist at Oxford Economics in New York, added: “The labor market has entered a traumatic period. We foresee the unemployment rate spiking to 14% in April.”

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The US is expecting devastating death tolls in the wake of the coronavirus crisis (Image: EXPRESS)

Wall Street jumped on Wednesday on early signs the coronavirus outbreak in US hot spots, including New York, was close to peaking, with the Dow Jones and S&P 500 ending more than 3.4 percent higher.

Meanwhile, Exxon Mobil, Chevron, Marathon Oil and Apache Corp rose between 1.5 percent and 16 percent in premarket trade ahead of the OPEC+ meeting of the world’s biggest oil producers to discuss production cuts.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said: “Sentiment remains volatile, but investors appear to be looking through the growing headline numbers of COVID-19 cases and focusing on signs that the spread of the pandemic is being brought under control, which in turn is underpinning hopes for a relatively swift relaxation of containment measures. 

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Oil prices extended gains on hopes major producers would agree to cut output when they met later in the day in response to a collapse in global oil demand.

New York Governor Andrew Cuomo said the state’s efforts at social distancing were working in getting the virus under control in one of the biggest hot spots in the US. 

US President Donald Trump said he would like to reopen the USeconomy with a “big bang” but that the death toll from the coronavirus first needs to be heading down. 

While Mr Trump’s optimism helped stoke Wall Street’s rally, recent U.S. data and forecasts are only now beginning to reflect the economic damage.

McDonald’s Corp said global comparable sales tumbled 22.2 percent in March, while Starbucks Corp forecast a 47 percent drop in second-quarter earnings.