Wall Street’s love affair with technology stocks shows no sign of stopping. But at the same time a new federal report shows just how deep job cuts have been and how few opportunities there are right now for employment.
The Nasdaq, an index that includes the top FAANG stocks [Facebook, Apple, Amazon, Netflix, Google], Microsoft, Tesla and many other titans of tech, topped 10,000 for the first time ever Tuesday. The index has surged more than 11% this year.
Investors have flocked to tech giants, such as Facebook, Apple, Amazon, Netflix and Google owner Alphabet, this year in hope that they will post strong sales and earnings growth — despite concerns about the Covid-19 outbreak crippling the global economy and US job market.
The United States is now officially in recession and worries about social and racial unrest have dominated the headlines since the killing of George Floyd, an unarmed black man who was arrested by police officers in Minneapolis, last month.
Surging stocks only make sense if you believe these three things
The broader market has rallied along with big tech stocks. The S&P 500 inched back into positive territory for the year Monday for the first time since February.
Companies in traditionally more value-oriented sectors like energy, retail, health care and financial services have also enjoyed big rebounds since the bottom hit its low point of the year in March.
And the CNN Business Fear & Greed Index, which looks at seven barometers of investor sentiment, has been showing signs of greed in the market since last week.
The jobs battle
U.S. employers laid off 7.7 million workers in April — a sign of just how deep the economic hole is after the closure of thousands of offices, restaurants, stores and schools during the pandemic.
The Labor Department also said in a Tuesday report that job openings plummeted and hiring all but disappeared in April. The number of available jobs fell 16% from March, to 5 million. Hires declined 31% to 3.5 million.
The grim April — which followed an even bleaker March with 11.5 million layoffs — suggests that the economy could take time to recover nearly a decade’s worth of gains that vanished in about 60 days. Hiring did rebound in May as 2.5 million jobs were added on net, the government said in a separate report Friday. But those gains appeared to reflect temporarily laid-off employees returning to work and increases in people with part-time jobs, rather than an economy at full throttle.
The Tuesday report shows how employers responded quickly to the pandemic by furloughing or laying off workers in March, though that slowed the following month as consumer spending appeared to bottom out and even recover slightly. The Job Openings and Labor Turnover survey, or JOLTS, details overall hiring and job separation figures, while the monthly jobs data reflects net changes.
The next several months could be a challenge as monthly hiring was only at 60% of 2019’s average. There are 4.6 unemployed workers for each job opening, meaning it will likely take time for the economy to return to its pre-coronavirus health.
