U.S. jobless numbers may take a backseat as investors take cues from virus spread
By Saqib Iqbal Ahmed
NEW YORK (Reuters) - Investors are likely to look past what promises to be one of the worst U.S. jobless claims reports in history as they maintain a focus on the coronavirus’ spread and details of the government’s stimulus measures.
Most investors have already accepted that Thursday’s jobless claims will reflect a spreading slowdown in economic activity, as efforts to contain the coronavirus pandemic hit large sections of the U.S. economy.
At the same time, some believe Thursday's data may not accurately show the scope of layoffs across the United States, as companies make hard decisions about layoffs and states grapple with the sudden surge in claims.
Forecasts in a Reuters poll range from a minimum of 250,000 initial claims, all the way up to 4 million. The poll shows a median forecast of 1 million claims, which would top highs logged during recessions in 1982 and 2009.
"Expectations are all over the map and any number we get on Thursday won't give an accurate picture of what is going on out there with downsizing decisions being discussed in corporate America as we speak," said Mohannad Aama, managing director at Beam Capital Management in New York.
New jobless claims already hit a two-and-a-half year high of 281,000 for the week ended March 14, jumping by 70,000 from the week before, the Labor Department said last Thursday.
The strain of the fast-spreading coronavirus outbreak accelerated across the United States on Wednesday beyond the hot spots of New York, California and Washington state as Louisiana and Iowa were declared federal disaster areas.
Nationwide, COVID-19 has infected more than 53,000 people and killed at least 720 with World Health Organization officials warning the United States could become the global epicenter of the pandemic, which broke out late last year in China.
Global investors have already looked past one round of dismal economic data on Tuesday, when markets surged even as surveys on business activity showed record drops in many countries, including the United States.
Still, a much worse than expected unemployment number may be too much to ignore and could crush hopes that unprecedented stimulus from the Federal Reserve and a $2 trillion government stimulus package may have put a floor on the market’s declines, some said.
“We’re coming up with a number that could be over 3 million and perhaps as high as 3.4 million,” said Ron Temple, head of U.S. Equity at Lazard Asset Management, in New York.
With “that kind of magnitude of an increase in unemployment and shock to the system, it’s way too early to be trying to call a bottom or prognosticate how much further (the market) could go down.”