Giant Jobless Surge Is Only a Ripple in Stocks: ‘It’s Priced In’

(Bloomberg) -- Surging claims for unemployment benefits elicited a notably calm reaction in the stock market, relative to its recent volatility.

Down as much as 2.6% overnight, the S&P 500 contract steadily trimmed the loss before erasing it around 9 a.m. in New York, after the government said 3.28 million people filed claims last week, a record. While the data were more stark evidence of the immense human hardship caused by the virus, a sense that investors had steeled themselves for the increase and a continued focus on stimulus may have prevented a more violent reaction.

Here’s what seven investors and strategists had to say about the reaction.

Michael Antonelli, managing director and market strategist at Baird:

“Those kinds of moves lead me to believe the market had already thought about this and how bad it’s going to be. The market is really focused on the virus much more than economic data, we know economic data will be horrendous for a while,” he said. “When you get punched in face, if the punch is a little bit harder, it doesn’t make that much of difference.”

Peter Boockvar, chief investment officer, Bleakley Financial Group:

“It’s been fully priced in, notwithstanding the big miss, because the estimate was a shot in the dark and fortunately the bill is going to pass today to mitigate the impact. ”

Simona Mocuta, senior economist at State Street Global Advisors:

“I do not anticipate that a month from now we are going to see numbers of the same magnitude,” she told Bloomberg TV. “ It’s striking, it’s extraordinarily high, but I would expect the correction improvement to be quite dramatic as well in a few weeks time.”

Barry Knapp, managing partner at Ironsides Macroeconomics:

“The economy is a little more dynamic than people expect,” he told Bloomberg TV. “The stock market typically bottoms six months before earnings do so we’re in the vicinity of when the timing low should occur as well. So I think buying on weakness here is absolutely the right thing to do.”

Seema Shah, chief strategist at Principal Global Investors:

Today’s numbers were almost as awful as many had feared. While markets were already expecting this and may not react, the information is worrying. Jobless claims are already surging just a few weeks after the first wave in coronavirus cases across the United States. Businesses are already facing such significant financial difficulties as containment measures weigh heavily one economic activity, that they have had to lay-off workers.

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance:

“The stock market sold off in advance of this shock to the economy -– and this jobless claims number validates the fear that drove that selloff –- but the market has since rallied on the assumption that a stimulus bill will be passed. Unfortunately the public health crisis still remains a big problem and we need to get ventilators to the hospitals that need them most.”

Matt Maley, equity strategist at Miller Tabak:

“It’s a ‘buy the news’ reaction. Everybody was so nervous about this number that the market could do nothing to do but pop after it came out.”

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