Markets slump after closing strong month

Markets slump after closing strong month
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Stock markets slumped Friday morning after closing out one of their best months on record just a day earlier.

In early trading, the Dow Jones Industrial Average was down 400 points, or 1.7 percent, and the S&P 500 was down 53 points, or 1.8 percent.

On Thursday, the S&P 500 closed out its best month since 1987, increasing 12.7 percent. The increase marked a significant rebound from March lows responding to the initial panic and pessimism of the coronavirus pandemic.

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Some analysts believe that the resurgence in March brushed off the severity of the economic decline.

Gross domestic product shrank by an annualized 4.8 percent in the first quarter, and is expected to take a significantly harder hit in the second quarter, which began in April. Over 30 million people have applied for unemployment benefits.

The Congressional Budget Office has estimated that unemployment will peak at 16 percent and remain elevated at least through the end of 2021.

Some states this week began moving to end lockdowns, even without a solid testing and contact tracing system in place, raising questions as to whether customers would venture back out to stores.