E US Stock Market Weekly Update March 23- March 27, 2020

US stocks had a rebound this week, and all major US stock indexes closed higher. But it could still be too early to call this the bottom for the US stock market. Could it be that the stock market has already discounted all the negative implications of the coronavirus outbreak, and it reacts positively to any negative financial news? Like the record weekly US initial jobs claims surpassing the reading of 3 million posted this week. I am not so sure about that.

United States Initial Jobless Claims

“The number of Americans filling for unemployment benefits jumped to 3.28 million in the week ended March 21st, the highest since the series began in 1967 and well above expectations of 1 million. The accommodation and food services sector was the hardest hit, while the health care & social assistance, arts, entertainment & recreation, transportation & warehousing, and manufacturing industries also saw an increase in unemployment. According to unadjusted data, the biggest rises were seen in Pennsylvania (+378,908), Ohio (+187,784) and California (+186,809). The 4-week moving average, which removes week-to-week volatility, also jumped to a record high of 1 million while continuing jobless claims increased to 1.8 million, above consensus of 1.71 million. The report was quite expected by markets as it provides one of the first clues on the economic impact of the coronavirus when near 1 in 3 Americans are in lockdown and many non-essential businesses were forced to close.”

Source: Trading Economics

We should wait for the next few weeks to analyze better this extreme negative figure for the US weekly jobless claims. If the next few readings are at these high levels, there should be a significant downward revision for the US GDP growth, and this could harm the stocks and their valuations. Still, the investors and traders have shown a risk-on sentiment buying stocks at very low levels. Boeing (BA) stock was one of the stocks that performed well this week with weekly gains of +70%.

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Disclosure: I have no position in any stock mentioned

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