Unemployment Numbers and Stocks Both Soar. How?

Unemployment Shatters '80s Record, Dow has 1,300 Rally

Wall Street

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(AP/WBEN) - Nearly 3.3 million Americans applied for unemployment benefits last week — almost five times the previous record set in 1982. On the same day, the Dow rallied 1,300 to cap the biggest three-day gain since the 1930s.

How can both happen on the same day? 

“Markets do not report on what’s happening,” said Tony Ogorek of Ogorek Wealth Management. “Markets look through what’s happening and look out further. What the market’s saying is I got it, unemployment went up… however the government is releasing a combination of fiscal and monetary stimulus that is equalling about $6 Trillion total.”

“From an economics standpoint, that’s sort of our version of the A-Bomb.”

The stimulus helped the markets this week, so did the constant red the Dow had been looking at.

“We had sustained selling,” Ogorek said. “I think it got to such a point, that it began to snap back, and that’s what we’ve been seeing over the past three days. My sense is that what we saw was really a relief rally, and the vast majority of times you get a relief rally, you are going to re-test the lows.”

Which means the impact of the past two weeks may still be felt.

Revenue has collapsed at restaurants, hotels, movie theaters, gyms and airlines. Auto sales are plummeting, and car makers have closed factories. Most such employers face loan payments and other fixed costs, so they’re cutting jobs to save money.

As job losses mount, some economists say the nation’s unemployment rate could approach 13% by May. By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10%.

Unemployment claims have skyrocketed
ABC News

Many people who have lost jobs in recent weeks, though, have been unable to file for unemployment aid because state websites and phone systems have been overwhelmed by a crush of applicants and have frozen up. That logjam suggests that Thursday’s report actually understates the magnitude of job cuts last week. 

So does the fact that workers who are not on company payrolls — gig workers, free-lancers, the self-employed — aren’t currently eligible for unemployment benefits even though in many cases they’re no longer able to earn money.

Ogorek believes all of those factors will hit Wall Street at some point.

“I don’t think this is the beginning of the end… in all likelihood we are going to re-test those lows we saw in the future.”

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