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Markets remained under pressure on Wednesday after the freshly released data showed an unexpected jump in the jobless claims. The rising COVID-19 cases put a curtain on the future of the economic recovery with possible signs of a delayed comeback.
On Tuesday, November 24, the Dow Jones Industrial Average (INDEXDJX: .DJI) surged past 30,000 for the first time in history. The positive news about the COVID-19 vaccine earlier this week pushed the index to record highs as the markets rallied. However, on Wednesday, November 25, Dow Jones (DJIA) lost 173 points and slipped below 30,000 levels closing the day trading at 29,872 levels. As per Reuters, markets fell as the rising COVID-19 cases in the US and jobless claims damped investors’ sentiment. The news about possible mandated lockdowns and the rising US layoffs added further fuel.
After hitting record highs last week, the cyclical stocks and small caps retreated their way South on Wednesday. On the other hand, tech stocks, which have been doing good this pandemic kept the market floating. Tim Ghriskey, chief investment strategist at Inverness Counsel in New York said:
“It’s a growth day, flipping back the other way away from value. It’s this ongoing struggle between the virus and the vaccine. There’s a reality setting in that while the vaccine will start being distributed fairly quickly, the virus isn’t going away quickly and therefore the timeline for economic improvement is getting pushed out.”
The data released on Wednesday showed an unexpected surge in jobless claims. Well, despite the Fed pumping huge money in the economy, it has been a tough time dealing with the prolonged COVID-19 pandemic. This has fueled more uncertainty in the economy pushing the struggling labor market at the edge. “The economic data is not good, and we know it won’t be good for some time given this new wave of the virus,” Ghriskey added.
No Sight Ahead for Market Recovery
The positive news of the vaccine has kept the market hopeful over the last few weeks. However, the rising cases on the other hand have weakened market sentiments. The near-term pandemic scenario looks concerning as the second wave is picking up fast across the globe.
Also, the market is looking ahead for more fiscal stimulus as central banks remain confused. Although the US stock market has recovered quite well after the market crash in March 2020. Since those lows, the S&P 500 (INDEXSP: .INX) has already gained 66% and is 12% up year-to-date. Wall Street analysts are hopeful that the index will gain another 9% from here by the end of 2021.