Stock market tanks as reality sinks in
San José, CA – On Thursday, June 11, reality finally caught up with Wall Street. For weeks there was a huge gap between the economy, where millions upon millions of people had lost their jobs and livelihood, and the soaring stock market which had turned positive for the year. But today reality seems to have sunk in, sending the headline Dow Jones Industrial Average down more than 1800 points, or almost 7%. The broad S&P 500 index fell almost 6%, and the technology-heavy NASDAQ fell more than 5%. Stock market from Asia to Europe also fell.
The day before, on June 10, Federal Reserve Chair Jerome Powell gave a very downbeat report on the economy, predicting that the unemployment rate would still be more than 9% at the end of the year, dashing Wall Street’s dream of a rapid snapback in the economy. Powell also said that it would take years for the job market to recover and warned of a second spike in the COVID-19 pandemic in the United States.
In addition to the wretched state of the economy, Wall Street had also been behaving if the pandemic was behind us. But again, the reality of growing hospitalizations for COVID-19 dashed this hope. Many states had waved off growing numbers of infections, saying that it was just because of more testing. But state after state have been reporting spikes in hospitalizations over the last three weeks.
Arizona warned hospitals to reactivate their emergency response plans for the pandemic. Arkansas has seen hospitalizations double since Memorial Day, while Alabama and Texas have hospitalizations increasing by more than 40%. South Carolina and Utah have had hospitalizations rise by 20% or more during that time. While all of these states had lower rates as compared with urban epicenters such as New York City and its metropolitan area, they also share Republican state governments, almost all of whom are hell-bent on reopening the economy, no matter what the cost in human lives.
Last, but certainly not least, the U.S. Department of Labor released the weekly new claims for unemployment insurance for the week ending June 6. New claims for UI were 1.54 million, bringing the total over the last 12 weeks to about 44 million. In addition, some 700,000 new claims for the Federal Pandemic Unemployment Assistance (PUA) were filed, bringing the total state and local new applications to 2.2 million.
Continuing claims for the week earlier, ending May 23, were 29.5 million for state unemployment insurance and the PUA and other programs. This was down slightly from the more than 30 million the week before, largely due to a big drop in the state of New York, which had been hit the hardest by the pandemic, but which is seeing a sustained drop in new infections, hospitalizations and deaths. Most economists have not viewed fighting the pandemic and economic recovery as opposed to each other.
Worse still, a recent survey in early June shows that up to one-third of people who tried to file for unemployment insurance either have not been able to, or have succeeded in applying but are still not getting their benefits. And worst of all, many Republicans are dead set against extending the enhanced unemployment benefits, which expire at the end of July. With actual unemployment still at Great Depression levels near 20%, and forecast to stay in double digits for months, Republican are keen to increase hunger and homeless for millions to force a few workers back to work at low wages and with inadequate protection.