Jobless Claims Rose to 281,000 Last Week But Experts Say That Number Could Surge Far Higher Soon

Plus, Treasury Secretary Mnuchin revealed details of a third coronavirus aid package, Disney issued a warning about its future performance, and Ford suspended its dividend.

Stocks were slightly higher to start Thursday with the Dow trading flat, while the S&P 500 is up 0.3%. The Nasdaq is up 2.2%.

Today’s slight moves higher followed yet another violent day on Wall Street as the Dow dropped 1,338.46 points, or 6.3%, on Wednesday. The index closed below 20,000 for the first time since February 2017. The S&P 500 dropped 5.2% yesterday and is now down about 30% from its record high set last month. “Markets are clearly in a state of panic and forced liquidations – but risks remain skewed to the upside and this should become much more apparent once some of the solvency issues are addressed,” said Adam Crisafulli, founder of Vital Knowledge, in a note. 

President Trump signed the $100 billion coronavirus aid package into law yesterday. The second coronavirus relief bill includes provisions for emergency paid leave for workers, unemployment benefits, and free testing for COVID-19. Treasury Secretary Steven Mnuchin this morning revealed the details of the Trump administration’s plan to send relief money to Americans as part of a third massive stimulus package to blunt the economic impact of the coronavirus crisis. Mnuchin said that the plan includes payments to Americans totaling $500 billion, delivered in two doses of $1,000 per adult and $500 per child. “What’s happening has not happened in our lifetime before… What we have is a crisis,” said billionaire investor Ray Dalio. “There will also be individuals who have very big losses. … There’s a need for the government to spend more money, a lot more money.” In Europe, the European Central Bank announced a new Pandemic Emergency Purchase Program which will deploy $819 billion to purchase securities in an effort to support the European economy, while the Bank of England cut interest rates to 0.1% and increased its bond-buying program. 

Jobless claims rose to 281,000 last week, reflecting only just the tip of the iceberg of the impact the coronavirus outbreak will have on the unemployment picture in the U.S. The number represents a jump from last week’s 211,000, and next Thursday’s number could show an even more significant spike in jobless claims. “Looking at the states’ unemployment claims numbers that have been coming out over the last few days, it looks to me like the order of magnitude in most states seems to be about 10 times higher than the normal weekly numbers before the crisis,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “That means next week’s jobless claims number could jump 200,000-something this week to two million next week.” Former White House economic advisor Gary Cohn said, “I believe that we are going to have massive unemployment very, very quickly.”

Cases of COVID-19 rose to more than 219,400 globally, and to at least 9,159 in the U.S. New York Governor Andrew Cuomo ordered 75% of the workforce in non-essential services to stay at home as cases in the state surged to at least 4,152 as new infections confirmed overnight rose by 1,769. Dr. Kathleen Neuzil, director of the Center for Vaccine Development at the University of Maryland’s School of Medicine who as part of the leadership team of infectious disease experts working with the National Institute of Health on coronavirus research said today that deaths from COVID-19 could kill millions across the United States. “We have 350 million people in the United States, and you do the math,” Neuzil said. “If 70 million people are eventually infected with this virus and again if there are multiple waves of this virus, then you can do the math.”

Disney warned today that the coronavirus pandemic has impacted many of its businesses and segments, and said that it is becoming more challenging to estimate its future performance. “We have closed our theme parks; suspended our cruises and theatrical shows; delayed theatrical distribution of films both domestically and internationally; and experienced supply chain disruption and ad sales impacts,” Disney said in a filing with the SEC. “In addition there has been a disruption in creation and availability of content we rely on for our various distribution paths, including most significantly the cancellation of certain sports events and the shutting down of production of most film and television content.” Also this morning, Ford said that it would suspend its dividend and withdraw its 2020 guidance as the company tries to shore up cash amid the coronavirus crisis. The automaker will also draw $15.4 billion from two credit lines. “Like we did in the Great Recession, Ford is managing through the coronavirus crisis in a way that safeguards our business, our workforce, our customers and our dealers during this vital period,” said Ford CEO Jim Hackett in a statement. “As America’s largest producer of vehicles and largest employer of autoworkers, we plan to emerge from this crisis as a stronger company that can be an engine for the recovery of the economy moving forward.”

Stocks We’re Watching

Fujifilm Corp (OTC: FUJIY): Fujifilm shares jumped 21% yesterday after Chinese health officials declared that clinical trials on favipiravir, the main ingredient in Fujifilm’s Avigan anti-viral drug “has a high degree of safety and is clearly effective” in the treatment of COVID-19. In a clinical trial in Shenzhen involving 80 patients and in Wuhan involving 240 patients, those who took favipiravir showed greater chest improvement and took less time to test negative for the genomic trace of the virus compared to patients not given the drug.