Investing.com – US equities opened with fresh selloffs on Thursday after rising initial jobless claims fueled concerns over the outlook for the economy.
By 09:40 am ET (1:40 pm GMT), the Dow Jones Industrial Average fell 195 points, or 0.7%, to 2.569, its lowest level since early August. The S&P 500 (NYSE: SPY) fell 0.9% and the Nasdaq Composite fell 1.0% and is now nearly 13% below its last all-time high earlier this month.
The downturn came after the US Bureau of Labor Statistics reported that the number of initial jobless claims rose from an upwardly revised 866,000. last week, to 870 thousand, not justifying the hopes for another moderate decline.
“The momentum in the labor market is slowing,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. – Consumer spending – almost 70% of the economy – cannot continue to grow at the same rate after the end of the payment of the increased unemployment benefits. The increase in COVID-19 cases and hospitalizations for the third day in a row threatens to provoke the resumption of quarantine restrictions on economic activity.
Shepherdson said that “the need for further fiscal action is clear, but we no longer expect any meaningful benefits until February.”
US Federal Reserve Chairman Jerome Powell emphasized the need for fiscal measures during his speech to Congress this week, but there is still no agreement among lawmakers on these measures. Powell's colleague, Boston Federal Reserve Bank chief Fred Rosengren said Wednesday night that the economy “remains fragile” and that “a second wave of COVID-19 infections is likely this fall and winter, which could lead to quarantine restrictions in some states on movement and personal communication “.
And the data on the housing market was again significantly better than on the labor market. New home sales rose to 1.011 million in August, well above expectations and the highest since 2006.
As for specific stocks, CarMax Inc (NYSE: KMX) dropped 9.1% and Accenture (NYSE: ACN) fell 5.3% after both companies released disappointing quarterly reports.
But Darden Restaurants Inc (NYSE: DRI), the group that owns the Olive Garden and Longhorn Steakhouse, gained 4.4% on a rebound in its quarterly dividend payments after its year-on-year decline in sales declined from 43% to 28%. …
JPMorgan Chase & Co (NYSE: JPM) shares tumbled 0.3% to their lowest level since early July on reports that the company must pay about $ 1 billion in compensation to avoid prosecution for market manipulation.
EW Scripps (NASDAQ: SSP) jumped 18% and Berkshire Hathaway (NYSE: BRKb) fell 0.8% after Warren Buffett's investment firm agreed to support Scripps' acquisition of TV show maker ION Media for $ 2 , 65 billion
By Jeffrey Smith