Investing

Oil prices surge and jobless claims could keep rising — what to watch in the week ahead

Twenty/20

Experts cautioned that a recent surge in the U.S. stock market might not mean the worst of the sell-off was over. And in the past week, the S&P 500 slumped once again, falling 2.1%.

As the number of U.S. coronavirus cases has risen, so too has uncertainty about how long the economy will remain on pause. President Donald Trump extended the social distancing guidelines through April 30 in an effort to contain the virus's spread. 

On April 2, a weekly report showed that more than 6.6 million Americans filed for unemployment benefits, bringing the two-week total to nearly 10 million. That represents about 6.5% of nonfarm workers.

And oil prices surged more than 35% on Thursday and Friday after President Trump told CNBC that the Saudis and Russia will ease pressure on oil, ending a price war that has contributed to its massive plunge in recent months.

Traders will continue monitoring the health and economic toll of this pandemic. Here's what to watch in the stock market during the week ahead — and how the news could affect your bottom line.

Economists expect another rise in jobless claims

What's happening: Traders will monitor the next report of the number of people filing for unemployment benefits. Over the past two weeks, a record-breaking number of American workers filed for these benefits. 

And for the next report scheduled to be released on Thursday, economists currently project that another 4 million people will have filed for these jobless claims.

Why it matters: So far, the number of jobless claims has varied across the country, as each state's governor takes a different approach in slowing the spread of the coronavirus. Per 1,000 workers, claims for these benefits were most concentrated in Hawaii, Michigan, Pennsylvania, Kentucky, and Rhode Island.

Meanwhile, last week's monthly job report showed that employers shed 701,000 nonfarm positions in March, the first month of job cuts since 2010. The unemployment rate rose to 4.4% from 3.5%.

What it means for you: If you're out of work, help is coming. The government is sending $1,200 stimulus checks to millions of Americans who qualify, and you can get your relief check faster if you're set up to get direct deposits from the IRS. And borrowers with student loans can have their interest rates automatically set to 0% for at least 60 days.

If you think you may be eligible, file for unemployment benefits: The coronavirus relief bill increases the amount of these checks and the duration of payments, and it extends jobless benefits to previously ineligible groups of workers, like gig workers and freelancers. 

Oil prices surge for best day on record

What's happening: Oil prices surged nearly 25% on Thursday, for its best single biggest gain in history. That came after President Trump said the Saudis and Russia had reached an agreement. It jumped more than 12% on Friday.

Even with the recent gains, however, oil prices have slumped more than 50% so far this year, and the average price of a gallon of gas fell below $2 for the first time in four years. The decline in oil prices has also been fueled by worries about how demand will be affected by the coronavirus outbreak.

Why it matters: Professionals on Wall Street closely monitor the change in oil prices because the commodity can have a broad economic impact. Normally, traders use oil prices as a barometer to predict a recession, since economic growth is associated with more demand for fuel.

What it means for you: A more sustained surge in oil prices could be problematic. Even though most Americans aren't driving as much right now, higher fuel costs make it more expensive to transport goods like groceries. Still, given the prior slump in oil prices, it's unlikely that will be a problem anytime soon. And while a recession seems inevitable at this point, some economists are forecasting a quick recovery.

The bottom line

The S&P 500 remains in a bear market and, as of Friday's close, this gauge was down more than 26% from its all-time high in February. 

Coronavirus-related news will continue to dominate the attention on Wall Street in the weeks ahead. While the stock market just endured its worst quarter in decades, there's good news: Data from Bankrate indicates that many investors are holding fast through the volatility. In fact, more people have put money into their portfolios than have taken it out.

At times like this, it's important to remember that downturns can benefit long-term investors and selling right now could be the biggest mistake of your investing career. In fact, right now could be a "real opportunity to create wealth."

Keep your financial goals in mind and stay focused on the long-term merits of investing. The market has always bounced back, even from worse sell-offs than the current one.

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