Stocks Down Just 2.6% This Week Despite Record Unemployment And Coronavirus Volatility

Topline: The stock market stumbled on Friday, but ended the week down only 2.6%—despite a slew of worsening economic data, such as record unemployment claims, and ongoing coronavirus volatility continuing to stoke fears on Wall Street.

• The Dow Jones industrial average lost 1.7%, nearly 400 points, on Friday, while the S&P 500 fell 1.5% and Nasdaq Composite lost 1.5%.
• Overall, stocks posted their third weekly decline in the last four weeks: The Dow was down 3.1% for the week, while the S&P and Nasdaq dropped 2.6% and 2.8%, respectively.
• The number of global coronavirus cases surpassed 1 million this week—with more than 261,000 cases in the U.S., which has added to anxiety on Wall Street as economic data begins to reflect the financial fallout from the pandemic.
• On Thursday, weekly jobless claims surged to a staggering 6.6 million—the highest level ever recorded. Some 10% of Americans have now filed for first time unemployment in the last two weeks alone, data shows.
• Stocks got a slight boost earlier this week thanks to oil prices making a comeback, which surged 24% on Thursday for their best one-day rally ever.
• Earlier this week, the stock market closed out its worst first quarter ever on Tuesday: The Dow fell more than 23%—its biggest quarterly decline since 1987, while the S&P 500 fell more than 20% for its biggest quarterly loss since 2008. Both indexes were down over 10% in March.

Crucial quote: “The month of April will be awful, but there’s a compelling case to be made for buying stocks now,” says Adam Crisafulli, founder of Vital Knowledge. He sees the next four to five weeks being filled with “awful headlines, including atrocious economic data and a rapid deterioration in corporate business momentum.” But, he also predicts: “Stocks aren’t going to wait for the economy to return to pre-corona conditions before rebounding – as soon as data begins to stabilize/plateau (even at depressed levels) and some of the travel/assembly restrictions lift, equities will advance.”

What to watch for: After two weeks of double-digit swings in the S&P 500, the fact that the index is down only several percentage points this week is an upbeat sign, according to Lindsey Bell, chief investment strategist for Ally Invest. “Even though volatility remained high by historical standards, it wasn’t as high as in recent weeks,” she describes, adding, “debt markets cooled and talk of new government stimulus began.” While a good deal of uncertainty remains, “investors seem to be looking past 2020 as they make investing decisions,” Bell says.