NEW YORK – The stock market's first reaction to Friday's stunningly bad jobs report was to take it in stride. But Wall Street slid through the day as investors looked ahead to the likelihood that even worse numbers are on the way.
Stocks initially held steady after the government said U.S. employers cut 701,000 more jobs than they added last month, the first drop in nearly a decade. Many businesses have slammed to a halt amid attempts to slow the spread of the coronavirus, and investors were fully expecting to see such abysmal numbers.
But the market headed lower as the day progressed and, as has become typical in recent Fridays, investors looked to get out of stocks ahead of the weekend, which could be filled with even more bad news. The losses accelerated after New York's governor announced the biggest daily jump yet for deaths in the country's hardest-hit state.
“It was interesting to see that the initial reaction to the jobs number wasn't more significant,” said Lindsey Bell, chief investment strategist at Ally Invest. “As that sunk in, you started to see the market start to sell off after realizing that these numbers are going to get a lot uglier.”
The S&P 500 fell 38.25 points, or 1.5%, to 2,488.65. The Dow Jones Industrial Average fell 360.91 points, or 1.7%, to 21,052.53, and the Nasdaq was down 114.23, or 1.5%, to 7,373.08. Small-company stocks fell far more than the rest of the market. The Russell 2000 index lost 33.76 points, or 3.1%, to 1,052.05.
Potentially scary events on the calendar include Thursday's weekly report on applications for unemployment benefits, which has been the closest thing to a real-time measure of how ferociously layoffs have swept the country. Companies will also soon begin reporting their profit results for the first three months of the year, with reporting season beginning in earnest in two weeks. Next month's jobs report may even show the economy has wiped away the last of the 22.8 million jobs created during its nearly decade-long hiring streak.
Friday's jobs report likely didn't fully capture the extent of the recent job losses, which have been accelerating by the day, because it collected data from before stay-at-home orders were widespread.
“There is far worse to come,” said Eric Winograd, senior economist at AllianceBernstein.
Most of all, investors will be watching the number of new cases. Only the peak in that can give some clarity on how long the downturn will last and how deep it will be.
“The worry is, there's just too much uncertainty,” said Mark Hackett, chief of investment research for Nationwide.
The S&P 500 is down 26.5% since its record set in February, reflecting the growing assumption that the economy is set to slide into a sudden, extremely sharp recession.
Service sector slows
WASHINGTON – Growth in the U.S. service sector slowed in March with a much bigger decline expected in coming months from all the shutdowns and job layoffs that have occurred because of efforts to contain the coronavirus.
The Institute for Supply Management said Friday that its service-sector index slowed to 52.5 in March from a reading of 57.3 in February.
Any reading above 50 indicates the service sector, where most Americans work, is expanding. But with record layoffs over the past two weeks, economists believe services will fall into a contraction in April.