Stocks fell today, extending declines after Texas said it was pausing its reopening process due to a renewed surge in coronavirus infections in the state. Investors also monitored incoming economic data, with a new report showing stubbornly high levels of new unemployment claims.
New unemployment claims came in at 1.48 million for the week ending June 20, marking the fourteenth straight week that claims held above one million. Consensus economists had expected new claims to total 1.32 million. Since mid-March, new jobless claims totaled more than 47 million.
“Jobless claims are not falling fast enough. Everything we have seen in the last week or two between rising case counts/hospitalizations, stalling economic progress in some important states, government job cuts, means one thing: the Phase 4 of fiscal stimulus must be bigger,” Neil Dutta, head of economics at Renaissance Macro Research, said in an email. “Things should be better in 3-4 weeks, but the news will get worse before it gets better.”
The risk-off mood came after some states in the South and West reported another day of increases in new coronavirus cases. Texas on Thursday halted its phased reopening process temporarily, as hospitalizations and new cases.
California reported more than 7,100 new cases – a one-day record by far for the state – while Florida and Texas also reported record jumps in new cases at more than 5,500 each as of Wednesday’s counts. Apple (AAPL) re-closed seven more retail locations in Houston, Texas, bringing its total re-closures nationwide to 18 as a result of the rise in infections.
New York, once the nation’s epicenter of new coronavirus cases, along with New Jersey and Connecticut called for a 14-day quarantine for visitors traveling from many of the states seeing major jumps in new cases. Outside of the US, South Africa on Wednesday reported its largest one-day increase in new infections. In Tokyo, Japan, new cases rose by 55 for the most since May.
With the pandemic still ongoing, the International Monetary Fund on Wednesday slashed its outlook for 2020 global growth to a record low estimate of -4.9%, down from its April estimate of -3%. US global growth is expected to fall by 8.0% in 2020, down from a previous forecast of -5.9%, before rising by 4.5% in 2021.