Dow jumped 222, advancers over decliners about 3-2 & NAZ went up 37. The MLP index edged higher to the 43s & the REIT index rose 4+ to the 359s. Junk bond funds inched higher & Treasuries were sold. Oil dropped to the 42 after recent strength & gold sank 24 to 1928.
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 42.71 | | -0.68 | -1.6% |
| GC=F | Gold | 1,934.00 | -18.50 | -1.0% |
The number of Americans who filed for unemployment
benefits for the first time came in above 1M for the 22nd time
in 23 weeks as the economy struggles to recover from the coronavirus pandemic, the Labor Dept said. Initial
jobless claims totaled just over 1M last week, down from 1.104M in the previous week. The forecast called for initial jobless claims to come in
right at 1M. It
was the 2nd-consecutive week that new claims was above 1M. Initial claims were last below 1M in the prior week,
when they totaled 971K. Since the pandemic began initial jobless
claims have jumped by more than 58M. Continuing claims — which account for those receiving unemployment
benefits for at least 2 straight weeks — fell 223K to 14.5M last week.
Another million applied for jobless benefits as coronavirus pandemic’s economic toll rises
The Federal Reserve unanimously approved changes to its strategy that paves the way for interest rates to remain low for years. The updated framework will help the central bank more easily adapt to new challenges facing the US economy & better achieve its dual mandate of price stability & maximum employment. “Our revised statement reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities, and that a robust job market can be sustained without causing an unwelcome increase in inflation," said Federal Reserve Chair Jerome Powell. Going forward, the central bank will allow inflation to average 2%, meaning it can run moderately above that level "for some time" following periods of persistently low prices. Policy decisions will also be based on the size of the unemployment shortfall versus a "deviation." The changes mean the central bank will no longer raise interest rates following a drop in unemployment, which it had done for decades to preemptively stamp out a rise in inflation. The strategy is an acknowledgment that the Phillips Curve, which suggests economic growth brings inflation & therefore more jobs & lower unemployment, is dead.
Central bank changes course, paving way for rates to remain low for years
The US economy shrank at an alarming annual rate of 31.7% during the Apr-Jun qtr as it struggled under the weight of the viral pandemic, the gov estimated. It was the sharpest quarterly drop on record. The Commerce Dept downgraded its earlier estimate of the GDP last qtr, finding that the devastation was slightly less than the 32.9% annualized contraction it had estimated at the end of Jul. The previous worst quarterly drop since record-keeping began in 1947 was a 10% annualized loss in 1958. Last qtr, businesses shuttered & Ms of workers lost jobs as the world's largest economy went into lockdown mode in what succeeded only fitfully in limiting the spread of reported viral infections. A bounce-back in hiring as many businesses reopened suggested that the economy began to recover in Jun with Q3 growth estimated to be around 20% annualized. But economists say a full recovery remains far off given that the virus has yet to be contained & the gov's financial support has faded. Unemployment is still high at 10.2% & roughly 1M are applying for jobless aid each week even as the amount of aid they receive has shrunk. Consumer confidence has tumbled. Though the stock market & home sales are surging, the broader economy shows signs of stalling, & Ms face potential evictions from their homes.
US economy shrinks under weight of pandemic
While the GDP data on a shrinking economy is dreary, it will show improvement in Q3 (which isn't saying much). More important is jobless claims being stick at 1M. Before the virus hit, it was a little above 200K every week & that's where it belongs in a strong economy. As said previously, the economy is improving but in small & shaky steps. Housing is a bright spot & auto sales are recovering.
Dow Jones Industrials
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