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Stocks Slide for 2nd Day as U.S. Sounds Alarm on Coronavirus Stocks Slide for 2nd Day as U.S. Sounds Alarm on Coronavirus
(3 days later)
Worried investors dumped stocks again Tuesday as American officials warned that it was only a matter of time before the coronavirus outbreak spreads to the United States.Worried investors dumped stocks again Tuesday as American officials warned that it was only a matter of time before the coronavirus outbreak spreads to the United States.
A day after its worst one-day slide in two years, the S&P 500 closed down 3 percent on Tuesday, a decline that put the index deeper in the red for 2020.A day after its worst one-day slide in two years, the S&P 500 closed down 3 percent on Tuesday, a decline that put the index deeper in the red for 2020.
“At this point the market is resigning itself to the fact that the impact of the coronavirus is going to be well beyond China and the first quarter of 2020,” said Yousef Abbasi, global market strategist at INTL FCStone, a financial services and brokerage firm.“At this point the market is resigning itself to the fact that the impact of the coronavirus is going to be well beyond China and the first quarter of 2020,” said Yousef Abbasi, global market strategist at INTL FCStone, a financial services and brokerage firm.
Since the outbreak first emerged in January, the primary concern among economists and investors has been how a temporary paralysis of the Chinese economy — the world’s second largest — would affect global supply chains. For weeks, American investors paid little mind: As recently as last Wednesday, the S&P 500 was at a record high.Since the outbreak first emerged in January, the primary concern among economists and investors has been how a temporary paralysis of the Chinese economy — the world’s second largest — would affect global supply chains. For weeks, American investors paid little mind: As recently as last Wednesday, the S&P 500 was at a record high.
But since then, growing outbreaks in Europe and elsewhere in Asia — and a warning from health officials about the potential risks to the United States — have raised fears that the virus will threaten the nations that serve as key customers for almost everything the global economy produces.But since then, growing outbreaks in Europe and elsewhere in Asia — and a warning from health officials about the potential risks to the United States — have raised fears that the virus will threaten the nations that serve as key customers for almost everything the global economy produces.
“When you start to impact Western Europe and when you start to impact the United States, now you’re impacting the global economy way more significantly because you’re impacting these demand markets,” Mr. Abbasi said.“When you start to impact Western Europe and when you start to impact the United States, now you’re impacting the global economy way more significantly because you’re impacting these demand markets,” Mr. Abbasi said.
Monday was the worst day for American markets since February 2018, with the S&P 500 falling 3.4 percent after officials in Italy and South Korea reported new infections, and the tumble continued Tuesday. Declines in the S&P 500 were led by energy, industrial and materials shares, sectors of the market closely tied to Chinese demand for raw materials.Monday was the worst day for American markets since February 2018, with the S&P 500 falling 3.4 percent after officials in Italy and South Korea reported new infections, and the tumble continued Tuesday. Declines in the S&P 500 were led by energy, industrial and materials shares, sectors of the market closely tied to Chinese demand for raw materials.
The sell-off accelerated after the Centers for Disease Control and Prevention warned Americans that they should brace for the likelihood that the coronavirus will spread to communities in the United States.The sell-off accelerated after the Centers for Disease Control and Prevention warned Americans that they should brace for the likelihood that the coronavirus will spread to communities in the United States.
“It’s not so much of a question of if this will happen in this country anymore, but a question of when this will happen,” said Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases. “We are asking the American public to prepare for the expectation that this might be bad.”“It’s not so much of a question of if this will happen in this country anymore, but a question of when this will happen,” said Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases. “We are asking the American public to prepare for the expectation that this might be bad.”
Investors moved into the safety of government bonds, pushing their prices up and yields down. The yield on the 10-year Treasury note closed at a record low of 1.335 percent and the 30-year bond also dropped to a record of 1.81 percent — two signals that investors expect growth in the United States to slow.Investors moved into the safety of government bonds, pushing their prices up and yields down. The yield on the 10-year Treasury note closed at a record low of 1.335 percent and the 30-year bond also dropped to a record of 1.81 percent — two signals that investors expect growth in the United States to slow.
“The rate at which people are buying, particularly long-end interest rate products, is extraordinary,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.“The rate at which people are buying, particularly long-end interest rate products, is extraordinary,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.
The virus may merely be a catalyst for an overdue sell-off, some analysts said.The virus may merely be a catalyst for an overdue sell-off, some analysts said.
The S&P 500 rose 17 percent between early October, when the market first caught wind that the Trump administration was close to an interim trade deal with China, and last Wednesday, when it closed at a record high. At the same time, forecasts for this year’s corporate earnings — the lodestar for forward-looking stock market investors — have been falling.The S&P 500 rose 17 percent between early October, when the market first caught wind that the Trump administration was close to an interim trade deal with China, and last Wednesday, when it closed at a record high. At the same time, forecasts for this year’s corporate earnings — the lodestar for forward-looking stock market investors — have been falling.
The combination of higher stock prices and lower expected earnings made stocks look increasingly overpriced according to widely used metrics, such as price-to-earnings ratios. This month, the S&P 500 reached a price-to-earnings ratio of 19 times the next 12 months’ expected earnings, the highest level since May 2002.The combination of higher stock prices and lower expected earnings made stocks look increasingly overpriced according to widely used metrics, such as price-to-earnings ratios. This month, the S&P 500 reached a price-to-earnings ratio of 19 times the next 12 months’ expected earnings, the highest level since May 2002.
A high ratio is precarious: Even slight changes in profit expectations can result in big price swings.A high ratio is precarious: Even slight changes in profit expectations can result in big price swings.
“It really requires everything to go well,” said Stephen Gallagher, chief U.S. economist for Société Générale. Now, he said, the market is “entering a period where we’re seeing valuations adjust very abruptly.”“It really requires everything to go well,” said Stephen Gallagher, chief U.S. economist for Société Générale. Now, he said, the market is “entering a period where we’re seeing valuations adjust very abruptly.”
While jarring, the jolt the market has suffered so far isn’t extreme. The S&P 500 was down about 7.6 percent from its recent record high at the end of Tuesday’s trading day.While jarring, the jolt the market has suffered so far isn’t extreme. The S&P 500 was down about 7.6 percent from its recent record high at the end of Tuesday’s trading day.
Still, the slump is already raising expectations that the Federal Reserve could take action to lower interest rates if the sell-off deepens.Still, the slump is already raising expectations that the Federal Reserve could take action to lower interest rates if the sell-off deepens.
Updated June 2, 2020 Updated June 5, 2020
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
In comments on Tuesday, Vice Chairman Richard H. Clarida signaled that Fed was not yet ready to act, though it is monitoring economic developments related to the virus.In comments on Tuesday, Vice Chairman Richard H. Clarida signaled that Fed was not yet ready to act, though it is monitoring economic developments related to the virus.
But in recent days, the market-based probability — derived from prices in the Fed funds futures market — of a rate cut at the Fed’s April meeting jumped to over 60 percent, according to data from CME. Last Wednesday, when markets were at record highs, the market was putting odds of a cut at the April meeting at less than 25 percent.But in recent days, the market-based probability — derived from prices in the Fed funds futures market — of a rate cut at the Fed’s April meeting jumped to over 60 percent, according to data from CME. Last Wednesday, when markets were at record highs, the market was putting odds of a cut at the April meeting at less than 25 percent.
Markets have come to rely on the Fed to step in during periods of extreme stress. In late 2018, after a nearly 20 percent tumble in stocks, the Fed backed away from its plan to continue raising rates. Instead, it cut rates three times in 2019, which helped supercharge almost every form of financial asset and sent the S&P 500 up 28.9 percent for the year.Markets have come to rely on the Fed to step in during periods of extreme stress. In late 2018, after a nearly 20 percent tumble in stocks, the Fed backed away from its plan to continue raising rates. Instead, it cut rates three times in 2019, which helped supercharge almost every form of financial asset and sent the S&P 500 up 28.9 percent for the year.
Growing expectations of rate cuts could help explain the sharp decline in bond yields in recent days, said Scott Mather, chief investment officer of U.S. Core Strategies at Pimco. Investors may be flocking to short-term government debt in the expectation that lower rates from the Fed will raise the value of their holdings.Growing expectations of rate cuts could help explain the sharp decline in bond yields in recent days, said Scott Mather, chief investment officer of U.S. Core Strategies at Pimco. Investors may be flocking to short-term government debt in the expectation that lower rates from the Fed will raise the value of their holdings.
“I think that you’ll hear more about that from the Fed in coming days, certainly if we have a couple more days like this,” Mr. Mather said.“I think that you’ll hear more about that from the Fed in coming days, certainly if we have a couple more days like this,” Mr. Mather said.
Jeanna Smialek contributed reporting.Jeanna Smialek contributed reporting.