Wall Street Opens Lower as Jobless Data Deepen Economy Fears

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Investing.com — U.S. stock markets opened lower on Thursday as concern about a reviving Covid-19 pandemic in Europe was compounded by another set of weaker-than-expected unemployment numbers from the U.S. labor market.

By 9:35 AM ET (1335 GMT), the Dow Jones Industrial Average was down 281 points, or 1.0%, at 28,233 points, while the S&P 500 was down 1.1% and the Nasdaq Composite was down 1.3%. While last week’s winning streaks they’re still positive for the month so far, they’ve given up around half the gains they made since the start of October.

Earlier, the Labor Department had said initial jobless claims had risen to 898.000 their highest level since late August last week, confounding hopes for another modest decline. While some doubts remain over the numbers due to the fact that California hasn’t filed any for three weeks while it investigates claims of fraud and other administrative issues, the rise is consistent with other signs of weakening in the economic rebound at the end of summer. 

“It seems pretty clear from the decently reliable data on jobless claims that 1) layoffs are really high, rising somewhat and more likely to be permanent & 2) momentum in net hiring is slowing,” said Julia Coronado, founder of MacroPolicy Perspectives and a former Federal Reserve economist, via Twitter. “I really want to see pretty, shiny things but I just don’t.”

Sentiment was also overshadowed by fears that the renewed spread of Covid-19 as the northern hemisphere winter starts will inevitably lead to fresh restrictions on economic activity. The U.K. and France have both tightened regulations on non-essential meetings and activity this week, with France putting Paris and other major cities under a curfew. Inhabitants of London, meanwhile, will be barred from mixing with other households from the weekend. 

The news has somewhat overshadowed the morning’s earnings releases, which saw both Walgreens Boots (NASDAQ:WBA) and Morgan Stanley (NYSE:MS) handily beat expectations. Walgreens stock rose 5.7% to its highest since the end of August, while Morgan Stanley – for whom expectations had been high – rose 0.9%.

Elsewhere, Fastly (NYSE:FSLY) stock fell 28%, reversing all of a frothy three-week rally, after it said the TikTok streaming service, its biggest customer, hadn’t used its software as much as expected against the backdrop of a looming ban in the U.S.