layoffs points

New wave of layoffs points to fresh hurdles for U.S. economic recovery heading into the fall – MarketWatch

Economic Preview

U.S. economy could lose further momentum without more federal aid

A few people check in at the American Airlines counter in Fort Lauderdale. American plans to lay off or furlough up to 19,000 workers. Airline carriers have been crushed by a huge drop in flying during the pandemic.

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A flurry of fresh layoffs and furloughs in the U.S. is posing a new hurdle for a fragile economic recovery whose momentum appears to have flagged.

A handful of large airline carriers and hotel chains such as American Airlines

and MGM Resorts

said this week they would lay off or furlough more than 40,000 employees as they confront a massive loss of customers due to the coronavirus pandemic. Many colleges and schools also plan to reduce staff and more bad news is probably on the way.

Read:Consumer spending slows in July as economic recovery loses some momentum

The new fissures in the economy suggest the easy growth in May and June after the states allowed businesses to reopen is giving way to a more protracted recovery whose progress is likely to be more uneven.

“The layoffs add to concerns the market has about the sustainability of the pace of the recovery,” said senior economist Sam Bullard of Wells Fargo.

Economic growth slowed in July and is likely to do so again in August. The economy is still recovering, to be sure, just not as fast as it was.

“That’s the point I been making to people. Now the hard part starts,” said chief economist Richard Moody of Regional Financial. “August is going to be a transitional month.”

Wall Street will look for more evidence of cracks in the recovery in the upcoming U.S. jobs report for August next Friday.

See: MarketWatch Economic Calendar

The economy may have added about 1.6 million jobs, economists forecast, just a touch lower than the 1.76 million gained in July. The unemployment rate is seen falling to 9.9% from 10.2% in July.

Read:U.S. initial jobless claims fall to 1 million in late August and resume downward trend

The more important number to watch, though, is private-sector hiring. The government added up to 250,000 temporary Census workers in August while educational employment could surge largely because of seasonal-adjustment quirks tied to the pandemic.

Private-sector employment is expected to increase by slightly more than a million. The recently announced layoffs, for their part, wouldn’t show up until the September employment report.

What remains to be seen is whether Democrats and Republicans in Congress break a deadlock over the next financial-aid bill before most of those workers lose their paychecks.

The White House has sent signals it wants to bolster airlines and other industries that have suffered the greatest during the pandemic. Previously the government had helped airlines keep employees on payrolls regardless of whether they were working through massive federal subsidies that recently expired.

Read: Did the expired $600 federal jobless benefit keep people from going back to work?

If there’s a few silver linings, consumer spending and manufacturing production have actually grown faster than expected and shown little sign of fading. So far there’s little evidence the loss of tens of billions in dollars in federal aid for the unemployed has caused households to scale back much.

Take automobile and home sales. They rebounded sharply after the first few months of the pandemic and are still going strong.

Typically demand for expensive goods like new cars, trucks and houses taper off when the economy stumbles and consumers worry about their jobs. That isn’t happening right now.

Still, most economists are skeptical the U.S. can grow much faster without another federal relief package that keeps people in the jobs or helps stoke enough demand to encourage businesses to avoid layoffs.

Read: ‘The recovery is going to be a slow one,’ Fed’s Mester says

“Consumers and businesses are going to remain cautious heading into the fall,” Bullard said. “Given all the headwinds, it’s going to take time for the economy to come fully back.”

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Jones points

Dow Jones Up 300 Points As Oil Stocks Surge, But Nasdaq Backs Off High – Investor’s Business Daily

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futures points

Dow futures down more than 100 points after the market notches its best quarter in decades – CNBC

Stock futures dipped in early morning trade on Wednesday as the market is set to kick off a new quarter after a remarkable comeback.

Futures on the Dow Jones Industrial Average traded 45 points lower. S&P 500 futures and Nasdaq 100 futures also traded in negative territory.

The market just notched its best quarter in decades as it snapped back from the historic sell-off triggered by the coronavirus. The Dow gained 17.8% in the second quarter, posting its best quarter since 1987, while the S&P 500 finished the period with a near 20% gain, its best since 1998. The tech-heavy Nasdaq soared 30.6% for the quarter, the most since 1999.

In after-hours trading Tuesday, FedEx jumped nearly 9% after posting quarterly earnings and revenue that topped analysts’ forecast. The shipping company experienced a surge in deliveries amid the coronavirus lockdown.

While the market bounced sharply from its March lows, the recent spikes in coronavirus cases in some states kept investors on edge. White House health advisor Dr. Anthony Fauci warned Tuesday that if the outbreak continues at its current pace, daily new cases could surpass 100,000 new infections per day.

So far, more than 12 states have now paused or rolled back their reopenings as cases in the U.S. jumped 40% over the past week to an average of about 39,750 on Monday, according to a CNBC analysis of data compiled by Johns Hopkins University. 

“We continue to expect it to be an uneven process, albeit with a positive trajectory,” Keith Lerner, chief market strategist at SunTrust Advisory Services, said in a note. “The good news is through this digestion period, markets are working off some of the excesses that had built up, and elevated expectations are being reset.”

Investors will monitor the pace of recovery in the U.S. labor market. ADP will release its private payroll count for June on Wednesday at 8:15 a.m. ET. Economists polled by Dow Jones expect an increase of 2.50 million after a 2.76 million decline in May.

On the corporate front, Macy’s is set to report its quarterly earnings before the bell on Wednesday.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

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futures points

Dow futures sink more than 200 points after mixed day on Wall Street – MarketWatch

U.S. stock index futures sank in overnight electronic trading, following a mixed day on Wall Street on Monday. As of midnight Eastern, Dow Jones Industrial Average futures

were down 150 points, or 0.6%. S&P 500 futures

and Nasdaq-100 futures

fell as well. The Dow

fell more than 100 points Monday, while the S&P 500

inched up slightly and the Nasdaq

closed up 71 points. Stocks have been rallying in recent weeks as investors are more optimistic about an economic recovery as some businesses around the U.S. start to reopen.

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