US stocks close down as jobless claims show recovery cooling

Widespread layoffs add to growing concerns that the economic rebound is plateauing.

People eat at a mostly empty restaurant in the financial district during the coronavirus pandemic in Manhattan, New York, US, where companies are debating whether to ask workers to return back to the office [File: Carlo Allegri/Reuters]
People eat at a mostly empty restaurant in the financial district during the coronavirus pandemic in Manhattan, New York, US, where companies are debating whether to ask workers to return back to the office [File: Carlo Allegri/Reuters]

Wall Street’s main indexes closed lower on Thursday as tech stocks slid and data showed layoffs remain widespread, adding to concerns that the economic recovery is plateauing.

The Dow Jones Industrial Average closed down 0.47 percent at 27,901.98 in New York. The S&P 500 – a gauge for the health of US retirement and college savings reports – closed down 0.84 percent, while the tech-heavy Nasdaq Composite Index ended the session 1.27 percent in the red. 

Tech stocks – which have spearheaded the robust market recovery from pandemic lows as more Americans took to their computers for work, socializing, and shopping – took a tumble on Thursday. 

Apple Inc lost 1.59 percent by the market close, while shares of Amazon ended the session down 2.25 percent. 

Shares of Oracle, which ran higher earlier in the week after it emerged as the frontrunner to strike a deal with China’s ByteDance over TikTok’s US operations, closed 0.41 percent lower.

The session opened on a dull note after the US Department of Labor reported that initial jobless claims declined only slightly last week from the previous one. The data provided more evidence that the US jobs market faces a long road still to recover its pre-pandemic strength.

Some 29,768,326 Americans were collecting unemployment benefits from state and federal programmes in the week ending August 29. Though millions are likely being double-counted, it is still roughly 28 million more people than February 1. 

On Wednesday, Federal Reserve policymakers ended their two-day policy meeting by keeping interest rates steady. The Fed also changed its forward guidance to reflect its more dovish stance on inflation, signalling that its benchmark interest rate could remain near zero through 2023.

Federal Reserve Chair Jerome Powell, speaking to reporters on Wednesday, acknowledged the country’s long road to “maximum employment”. He also said that the central bank was limited in its capacity to address some of the gaps around wage growth and workforce participation.

Analysts continue to look across sectors to gauge how the economy and the stock market will do in the days, weeks and months to come.

The housing market has outperformed the broader economy, driven by low borrowing costs and people looking to relocate from cities to the suburbs. 

Construction of single-family homes rose 4.1 percent in August while building permits for single-family homes – a more forward-looking gauge, rose 6 percent, the US Commerce Department reported on Thursday.

Current rates for a 30-year fixed mortgage rate is about an average of 2.86 percent, according to data from mortgage finance agency Freddie Mac.

Demand for properties in the suburbs and low-density areas, particularly in the West and Midwest, has gotten a boost as more people work from home. 

The bright spot though underscores how inequality is being exacerbated by the pandemic because unemployment has disproportionately affected low-wage workers, who are more likely to rent than own their homes. 

Source : Al Jazeera

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