The Dow Tumbled Because Trump’s Election X-Factor Just Vanished
Long seen as his "trump card," the president currently polls behind Biden when voters are asked who would handle the economy better. | Source: Drew Angerer/Getty Images/AFP
- The Dow Jones tumbled more than 200 points on Thursday.
- Another massive wave of unemployment claims pressured an overbought stock market.
- Donald Trump’s polling suggests his biggest remaining strength may be fading.
The Dow Jones succumbed to a loss on Thursday, and tech stocks continued to be an unexpected source of weakness.
Dragged down by Apple stock, this once-invincible sector is correcting – and taking the rest of the stock market down with it.
Dow Jones Struggles as Jobless Claims Surpass 1 Million for 17th Straight Week
All three major U.S. stock market indices came under pressure in late afternoon trading.
Less than an hour before the closing bell, the Dow had lost 248.3 points or 0.92% to trade at 26,621.8.
The S&P 500 retraced 0.66% to 3,205.35, while the Nasdaq dropped 0.93% to 10,452.79.
The stock market’s decline correlated with a mixed day for U.S. economic data. Most of the focus centered on initial jobless claims, which rose more than expected and recorded their 17th straight week above 1 million.
Persistent problems in the labor market remain a tangible concern for investors. The positive retail sales number will be unsustainable if things do not improve.
Painting a rather worrying picture of the outlook for the Dow, James Knightley at ING warned today that more – not less – pain is coming in the jobs market in the weeks ahead.
Forecasting out to the August employment report, Knightley predicts that a surge of job hunters will reveal the true extent of the damage.
He explains,
The ending of the [enhanced unemployment benefit] benefit will also mean that the August official jobs report could see the unemployment rate rise sharply. Remember to be “officially” unemployed, you have to be actively searching for work, but to claim unemployment benefits you don’t.
In the absence of job creation (due to renewed lockdowns) this implies “official” unemployment could rise by 14.25 million (32 million benefit claimants less 17.75mn currently officially unemployed) as they “actively” look for work.
The rather dire virus figures currently flowing out of the United States weigh further on the labor market outlook.
With California reimposing lockdown restrictions in many areas , the most vulnerable jobs in the nation’s largest state economy are set to vanish almost immediately after they came back.
And on the opposite coast, Florida – the fourth largest state economy – appears to be the new epicenter of the U.S. outbreak.
Combine this with the expiration of the additional unemployment benefits that Knightley outlined above, and the risk environment could take a serious knock.
For the stock market to sustain its recovery, it would appear Nancy Pelosi and her Republican opponents in Congress will need to deliver another colossal multitrillion-dollar stimulus package .
Polling Suggests Trump Has Lost His Economic X-Factor
Another development Wall Street must evaluate is the state of the 2020 election contest – if it’s even fair to call it a contest anymore.
Joe Biden continues to hammer Trump in the polls, prompting a campaign makeover that may be too little, too late.
While many of the president’s acolytes will shrug off Biden’s 15-point lead as liberal bias, it’s the details that should be giving the Trump campaign sweats.
Long seen as his “trump card,” the president currently polls behind Biden when voters are asked who would handle the economy better.
Dow 30: Apple Slips, Boeing Retraces, and Disney Falls
Weakness pervaded the Dow 30 on Thursday, and the index’s heaviest component – Apple – fell more than 1.5%.
Boeing reversed Wednesday’s gain, diving 5% on an analyst downgrade and the record pandemic data that continues to threaten the airline industry’s recovery.
The pandemic threatens Disney too, so it wasn’t surprising to see its stock downgraded by Cowen. The prospects for its core businesses are particularly hampered by the situation in California, where the lockdown weighs on its lucrative Disneyland resort and the movie industry in general.
