August 20, 2020
It was a down day across the board on Wall Street yesterday as all three major stock indices lost ground. The Dow and S&P 500 fell 85.19 and 14.93 points, or -.3 and -.4%, respectively. The NASDAQ, after reaching another intraday high, lost 64.38 points, or -.6%.
The economic engine that drove the markets to new all-time highs is now causing some investors to question its sustainability going forward. “There is still a fair amount of uncertainty around the path of the coronavirus, through the flu season, and what that may mean for economic growth,” said Jim McDonald, chief investment strategist at Northern Trust.
The job market has been a key indicator of economic growth, and good news came in the report two weeks ago showing new jobless claims below 1 million for the first time since the coronavirus lockdown began. But the Labor Department reported yesterday that 1.106 million filed initial jobless claims for the week ending August 15, more than the 923,000 expected by economists. Trevon Logan, an economics professor at Ohio State University, said on “Squawk Box” that he would not read too much into the initial claims numbers from last week coming in higher than expected, but said the overall trend showed the recovery “treading water.”
Also of concern to investors was the U.S. central bank’s minutes for its July 29 meeting commenting that economic recovery remains highly uncertain, that job gains in May and June had slowed, and that “substantial improvement” in the labor market would hinge on a “broad and sustained” reopening of businesses.