25 Jun 1.48 Million New Unemployment Claims
Stocks are holding their ground just above their 200 day moving average. This is a pivotal moment for stocks, as the next move could set the tone for the weeks or months to come. If stocks bounce (the statistical probable outcome), the rally could be a strong one. However, if the fear of continued Covid-19 risk and the corresponding risks to the US economy prevail in the mindsets of investors, we may see stocks break beneath this critical level. In that case, the losses would be significant. If you are a betting person, now is the time to stake your position on whichever path you believe will prevail.
This morning’s weekly unemployment report showed a staggering 1.48 million individuals filed for first time unemployment benefits last week. To make matters worse, continuing claims, which measure people who previously filed and are still receiving benefits, decreased by only 77,000 in the last week for a total of 19.5 million. Most markets expected to see more people re-enter the workforce. However, with the Federal Government still offering an additional $600 per week in benefits, many are refusing to return to their jobs. I believe the additional benefit will need to expire before we see a massive transition back into the workforce.
There remains little incentive to float an interest rate in the near term.