COVID-19 double whammy: soaring unemployment, weak financial markets

Initial U.S. unemployment claims soared over 6 million for the week ended March 28, as the coronavirus crisis continues to result in record layoffs. Investor confidence is weak as the stock market continues falling.

Last week’s bad employment news may have been slightly tempered by a mini-rally in the stock market, but that’s not the case this week. Not only has unemployment surged, but the euphoria the financial markets saw from passing of the economic relief package has all but disappeared.

According to a statement from the U.S. Department of Labor, for the week ending March 28, the number of initial claims was 6,648,000, up 3,341,000 from the previous week's revised level. This marks the highest level of initial claims in the history of the seasonally adjusted series.

The previous week's level was revised up by 24,000 from 3,283,000 to 3,307,000. The 4-week moving average was 2,612,000, an increase of 1,607,750 from the previous week's revised average. The previous week's average was revised up by 6,000 from 998,250 to 1,004,250.

The sobering unemployment stats, which are certain to continue rising as more struggling companies lay off or furlough workers, are accompanied by weakening investor confidence.

Wednesday’s closing market numbers were particularly brutal, as the Dow fell 4.44%, or 973 points, which was the largest point decline in two weeks. The Nasdaq fell 339 points (4.41%), and the S&P 114 points (also 4.41%). 

All the markets opened lower Thursday morning.