Wall Street stocks opened down on Friday, as doubts grew about an end to the Saudi-Russia oil price war and investors awaited data on business activity to assess the extent of the economic hit from coronavirus.
Stock indexes gained about 2 percent on Thursday as oil prices soared on hints of a Saudi-Russia deal, but doubts returned on whether the rebound would last as demand tapers off due to the health crisis.
Walt Disney said on Thursday it would furlough some U.S. employees this month, while sources said luxury retailer Neiman Marcus was stepping up preparations to seek bankruptcy protection.
At 9.31am, Dow Jones futures were down 140.02 points, or 0.65 percent, at 21,273.42.
The empty New York Stock Exchange is seen in a file photo as traders work remotely during the pandemic. Stock futures slid on Friday as hopes of an oil price deal dwindled
Data at 10am is expected to show a reading of ISM’s non-manufacturing activity index dropped to 44 in March from 57.3 in February.
A reading below 50 indicates contraction in the services sector, which accounts for more than two-thirds of U.S. economic activity.
The Labor Department said at 8.30am that employers cut 701,000 jobs last month after adding a revised 275,000 in February. The unemployment rate shot up to 4.4 percent from 3.5 percent.
However, report is far from an accurate depiction of the economic carnage being inflicted by the contagious coronavirus as it only covers data through March 12.
A separate jobless report on Thursday showing 6.6 million Americans applied for unemployment this week was a ‘hard dose of economic reality,’ said Jeffrey Halley of Oanda in a report.
That was double the previous week’s record-breaking U.S. job losses of 3.3 million.
It raised the total number of Americans who are out of work due to the coronavirus-driven downturn to almost 10 million.
On Thursday, stocks rose after oil surged more than 30 percent immediately after President Donald Trump said he expects Saudi Arabia and Russia to back away from their price war.
The U.S. is a major producer of oil, and hundreds of thousands of American jobs depend on a Saudi-Russian deal to cut production and send oil prices back up.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas in a file photo. The US is a major oil producer and has been hurt by low oil prices
‘Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!’ Trump tweeted on Thursday.
Saudi Arabia said it would call an emergency meeting of the Organization of the Petroleum Exporting Countries, state media reported.
The amount cited by Trump would represent an unprecedented cut equal to 10 percent to 15 percent of global supply, in output per day terms, a common unit of measurement.
However, Trump provided few details, an omission some analysts said was likely intentional, and which they said explained a pullback in prices in global stock markets.
In early March, talks over production cuts between the two countries collapsed, leading them to start a price war that pushed oil prices to the lowest levels in nearly two decades.
Federal employment report offers new grim data about pandemic’s economic carnage
A record-long streak of U.S. job growth ended suddenly in March after nearly a decade as employers cut 701,000 jobs because of the viral outbreak that’s all but shut down the U.S. economy. The unemployment rate jumped to 4.4 percent from a 50-year low of 3.5 percent.
Last month’s actual job loss was likely even larger because the government surveyed employers only through March 12, before the heaviest layoffs hit in the past two weeks.
Nearly 10 million Americans applied for unemployment benefits in the last two weeks of March, far exceeding the figure for any corresponding period on record.
Virus-induced shutdowns have forced widespread layoffs throughout the economy, from hotels, restaurants and movie theaters to auto factories, department stores and administrative offices.
Real numbers: New claims for unemployment benefits rose to 6.65 million this week from the 3.3 million the previous week. It means that 10 million Americans have filed for unemployment in the two weeks that the coronavirus started rapidly spreading across the country
Shutdown: These shuttered storefronts in the Bronx, New York, are a scene repeated across as much as 90 per cent of the country
One sign of how painfully deep the job losses will likely prove to be: During its nearly decade-long hiring streak, the U.S. economy added 22.8 million jobs.
Economists expect the April jobs report being released in early May to show that all those jobs will have been lost.
As recently as February, employers had added 273,000 jobs. Some economists have now forecast that the unemployment rate could go as high as 15 percent within the next month.
That rate would be the worst since the Great Depression.
More than 90 percent of the U.S. population is now living under some version of a shutdown order, which has forced the closure of bars, restaurants, movie theaters, factories, gyms and most other businesses.
Some hotels are closed; others are largely empty. Fast-food chains are either closed or providing only drive-through service, costing thousands of jobs.
With business activity tightly restricted, analysts expect a stomach-churning recession.
Economists at Goldman Sachs have forecast that the economy will shrink at an annual rate of 34 percent in the April-June quarter – the worse fall on records dating to World War II.
Goldman expects the economy to rebound with 19 percent growth in the third quarter.