the S&P 500 (SNPINDEX: ^ SPX) it lost 40.4 points, or 1.2%, on July 23, breaking a streak of positive days in the second half of the month. Today’s mass sale came after the Labor Department reported that 1.42 million people applied for unemployment last week. That’s 100,000 higher than the week before, and 56,000 higher than the four-week average.
COVID-19 cases continue to rise, a factor that probably weighs on the labor market. More than 70,000 new cases were reported yesterday, along with nearly 1,100 new deaths. According to the World Health Organization, nearly 1.1 million new cases and 12,250 deaths have been reported in July, and many areas are retracting from previous trade reopens as hospitals face pressure to handle the increasing number of cases they require. hospitalization.
Image source: Getty Images.
Today’s liquidation was driven by a sharp drop by the largest companies in the index. Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) both shares fell more than 4%, while Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL)and Facebook (NASDAQ: FB) today all shares lost 3% or more of their value. Unindexed member Tesla (NASDAQ: TSLA) The shares were also sold today, following yesterday’s second quarter gains that included a fourth consecutive quarter gain, but were not strong enough to help counter the downward trajectory of the market today, even on its prospects of being added to the index.
In other news, staunch Becton, Dickinson (NYSE: BDX) and Kimberly clark (NYSE: KMB) It showed the things that make them attractive to own during recessions.
Unemployment claims top 1.4 million again as economic recovery slows
2020 has brought unprecedented levels of unemployment. All weekly initial claim reports since the end of March would have shattered the previous record of most weekly initial claims. The trend had been a decline every week, but that trend ended this week when the number of initial claims increased by approximately 100,000 people since last week.
Against the massive number of people presenting each week, an increase of 100,000 may not seem like a large number. Here is a context of what a “normal” weekly unemployment filing week looks like, represented by initial claims data before the coronavirus business shutdown implemented in late March:
Initial United States Claims for YCharts Unemployment Insurance Data
So is: Total Initial jobless claims were less than 225,000 each week in January and February. An increase of 100,000, in the context of a normal environment, is a big change.
The main reason is the increasing number of COVID-19 cases across the country. And while we have not yet seen deaths in the United States rise to the levels we saw at the start of the outbreak this spring, hospitals report a sharp increase in severe cases requiring hospitalization. Healthcare experts also point out that there is significant evidence that many of those recovering will suffer permanent injury, including lung and other organ damage.
As a result, investors sent a wide swath of stocks lower today in heavy sales. In addition to the technology giants mentioned above, the actions of the casino and resort operator Las Vegas Sands (NYSE: LVS) fell 4.2% and Chipotle Mexican Grill (NYSE: CMG) Shares fell 5.4%. Sands reported second-quarter earnings after the market closed yesterday, optimistic that more of its properties are opening again, but not enough to offset today’s concerns. Chipotle also reported gains yesterday after the deal, but even its explosive results and administration optimism were not enough to prevent some investors from making profits today.
Needles and toilet paper paying the bills
Dickinson, the giant healthcare equipment provider and Dividend Aristocrat Becton, gave investors yet another reminder of why their business is a great recession-resistant investment, and that there are catalysts that have positioned it to deliver strong results right now. . The company said it has “additional pandemic” orders for 265 million needles and syringes from the US and Canadian governments, and another 40 million from the United Kingdom. The medical device provider is a key provider to the global healthcare supply chain, and it looks like they are investors. They are beginning to see the value. Shares were up 16% in the past month.
Kimberly Clark, the consumer goods giant best known for its brands of paper towels, toilet paper, and diapers, reported second-quarter earnings before the market opened today. Organic revenue increased 4% as people showed brand loyalty, while its pricing power and strong supply chain helped earnings rise 3% and operating cash flow increased to a record $ 1.6 billion. Its shares broke the trend today, gaining 2%. Total returns, including dividends for this Aristocrat Dividend, are just under 8% so far this year.
Tesla in reverse
After making a second-quarter profit that many analysts did not expect, Tesla shares fell nearly 5% today. For one thing, today’s mass sale may have been unexpected. The company not only reported that surprise benefit that prepares it to join the S&P 500 index, but the orientation for the rest of the year was optimistic.
On the other hand, the Tesla stock has been in an absolute break. So far this year, it is up over 260% and has gained nearly 500% over the past year. It appears that even the prospects that the world’s largest index funds will have to buy stocks to add the company to their holdings was not enough to prevent some investors from making a profit, at least for today.
