The number of Americans filing initial claims for unemployment in regular state unemployment programs climbed by 30,000 in the week ended November 21, the Labor Department reported today, November 25. For the week initial claims in state programs rose to a seasonally adjusted 778,000. Economists surveyed by Reuters had expected 730,000 new claims for the week.
This is the second straight week for an increase in new claims for unemployment and adds to other data showing the U.S. economy is slowing under the impact of a new surge in coronavirus infections and a rising number of restrictions on economic activity as states attempt to slow the spread of the virus.
Unadjusted initial claims rose by 78,372 in the week to 827,710. The unadjusted numbers tend to be more accurate when the survey week includes a holiday.
If you add in the number of gig and self-employed workers who do not qualify for regular state unemployment programs but who do qualify for benefits under federal programs set up in the coronavirus relief and stimulus legislation, then a total of 1.14 million workers filed new claims in the last week. As of early November (remember none of these surveys cover exactly the same periods) there were at least 20.5 million workers collecting unemployment benefits.
The stock market, which has been extremely adept at ignoring bad news from the real economy as it continues to set new record highs, found today’s numbers a bridge too far (especially because after yesterday’s records, taking some profits today seemed only smart.)
The Standard & Poor’s 500 closed down 0.16% and the Dow Jones Industrial Average lost 0.58%. The small cap Russell 2000 index dropped 0.46% by the end of the session.
For today at least, the rotation into economic-recovery-dependent stocks and out of technology stocks stalled. The Technology Select Sector SPDR ETF was up 0.30% versus a 0.44% loss for the Financial Select Sector SPDR ETF. Â Apple (AAPL) and Amazon (AMZN) gained 0.75% and 2.15%, respectively. Â Stocks such as Caterpillar (CAT) and Pioneer Natural Resources (PXD), which were up yesterday on hopes for a stronger post-vaccine economy, fell 1.28% and 1.25%, respectively.
The NASDAQ Composite climbed to end the day with a gain of 0.48% and the big-tech-heavy NASDAQ 100 finished top 0.60%.
Gold mining stocks gained with the VanEck Vectors Gold Miners ETF (GDX) up 1,86%.
The “fear index,” the CBOE S&P Volatility Index (VIX), however continued its march lower with the VIX dropping another 1.80% to 21.25. The VIX closed at 41.42 on November 6. There are just very few investors interested in paying money right now to insure against a drop in the market.
