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Poor Jobless Claims Send Stocks Soaring Once Again, All Eyes On Today's Employment Report
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Stocks closed higher yesterday after another poor Weekly Jobless Claims report.
It was like "deja vu all over again." Last week's Jobless Claims report showed a shockingly large 3.28 million people filing for unemployment, and stocks soared on the news. This week's Jobless Claims report showed an even bigger number with 6.64 million people filling for unemployment, and stocks soared once again.
How is this possible?
Because the market is forward looking and those terrible numbers were largely already priced in.
Plus, we all know why this is happening. This is not a surprise. And it's a temporary event.
That doesn't mean stocks can't go back down again.
Volatility is here to stay for a while.
But stocks were grossly oversold, and were primed for a rebound.
We'll get another look at the jobs market this morning with the Employment Situation report. The consensus is calling for a loss of -150,000 jobs. But nobody really knows how to even guesstimate these numbers. We've seen that with the Jobless Claims and we're seeing that with this report as well. For example, the consensus range is crazy large with estimates as low as -1.27 million on one end and +50,000 on the other.
We'll see what the number comes in at and how the market reacts.
Nobody knows for certain what the market will do on any given day.
But it's important to know that these numbers are backward looking. And many traders are turning their attention to the future.
And the buzz that we could see the outbreak peak over the next two weeks, with hopes that the social distancing measures are flattening the curve, have many optimistic that we can get on the other side of this having dodged the worst case scenario.
And if that comes to pass, we could begin to open up our economy sooner rather than later.
The worst is not yet behind us.
But when it is, stocks are expected to soar as things begin to get back to normal, and pent-up economic demand is unleashed.
In the meantime, support for all three indexes come in at their gap left on their charts from March 23rd. For the Dow that's 19,121.01; for the S&P that's 2,300.73. And for the Nasdaq that's 6,984.94.
On the upside, however, the Dow has already exited its bear market when it closed up by 20% from its lowest close. And technically, they have already begun a new bull market.
For the S&P, we need to see a close at or above 2,877.72 for their bear market to end and a new bull to begin.
For the Nasdaq, it's 8,285.51.
Set yourself an alert. When we close above those levels, it will definitely be cause to celebrate.
Best,
Kevin Matras
Executive Vice President, Zacks Investment Research
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