More than 20 million people lost jobs in the United States due to the coronavirus in April, pushing up the unemployment rate to 14.7%, a level last seen during the Great Depression. The jobless rate was, in fact, a 50-year low of 3.5% just two months ago.
A broader measure of unemployment or the so-called U6 rate that includes discouraged job seekers as well as those who are only searching for part-time jobs, jumped to 22.8% last month from only 6.7% at the end of last year, which was the lowest level ever. In reality, almost one-quarter of the entire U.S. workforce remained unemployed or underemployed in April following lockdowns aimed at curtailing the spread of the deadly virus that weighed on corporate profits and brought the economy to a grinding halt.
What’s more, in excess of 33 million people have filed for unemployment benefits in the last seven weeks since the virus shut down the U.S. economy. As a matter of fact, restaurants, retailers, hotels and almost every major industry suffered heavy job losses.
The virus outbreak and the subsequent shutdowns ravaged hotel and restaurant businesses, trimming almost 7.6 million jobs in April. As Americans mostly stayed at home, retailers, especially without online presence, were hit hard. Overall, retail employment dropped by 2.1 million. Nearly 1.5 million jobs were lost in the healthcare industry, while manufacturing and construction companies slashed employment by 1.3 million and 1 million, respectively.
However, major bourses remained unaffected by the dreary jobs report. In fact, the indexes climbed north, with the Dow adding more than 400 points on May 8 and increasing 2.6% for the week. Similarly, the S&P 500 and the Nasdaq were also up 3.5% and 6% last week, respectively.
So, what drove the indexes even when the economy witnessed the loss of tens of millions of jobs? The reason is that the market is forward looking and now it expects a sharp but short recession. Moreover, there are tell-tale signs that the outbreak has peaked and a coronavirus vaccine is much in the cards.
At the same time, Wall Street is presently bullish on coronavirus relief funds. Senate lately passed a $484-billion package to pep up small business houses and hospitals devastated by the pandemic. It followed the historic rescue package worth $2 trillion, which also had a positive impact on investor sentiments.
The Fed has also stepped up and unleashed an array of stimulus measures to date, with the promise of more. The central bank trimmed borrowing costs and pumped billions of dollars into the banking system to sustain the credit flow. Policy makers unanimously trimmed benchmark federal funds rate a full percentage point to a range of zero to 0.25%.
5 Top Picks
BJ's Wholesale Club Holdings, Inc
. (BJ - Free Report
) operates as a warehouse club on the East Coast of the United States. The Zacks Consensus Estimate for its current-year earnings has moved up 5.5% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 18% and 18.5%, respectively. Shares of BJ's Wholesale increased 1.1% on May 8.
ASE Technology Holding Co., Ltd.
(ASX - Free Report
) provides a range of semiconductors packaging and testing, and electronic manufacturing services. The Zacks Consensus Estimate for its current-year earnings has increased 2.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 48%. Shares of ASE Technology advanced 4.1% on May 8.
. (CHGG - Free Report
) operates direct-to-student learning platform. The Zacks Consensus Estimate for its current-year earnings has climbed 12% over the past 60 days. The company’s expected earnings growth rate for the current year is 33%. Shares of Chegg rose 6.3% on May 8.
Sprouts Farmers Market, Inc.
(SFM - Free Report
) provides fresh, natural, and organic food products in the United States. The Zacks Consensus Estimate for its current-year earnings has moved 22.7% up over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 13.3% and 25.6%, respectively. Shares of Sprouts Farmers Market rallied 3.9% on May 8.
Vertex Pharmaceuticals Incorporated
(VRTX - Free Report
) engages in developing and commercializing therapies for treating cystic fibrosis. The Zacks Consensus Estimate for its current-year earnings has risen 15.8% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 65.9% and 65.1%, respectively. Shares of Vertex Pharmaceuticals advanced 0.6% on May 8.
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