This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2020/02/28/business/coronavirus-markets.html

The article has changed 35 times. There is an RSS feed of changes available.

Version 5 Version 6
Stock Market Continues to Plummet in Worst Week Since 2008: Live Updates Stock Market Continues to Plummet in Worst Week Since 2008: Live Updates
(about 2 hours later)
Panic in the stock market over the spreading coronavirus continued into a seventh day on Friday, with shares in the United States tumbling following steep declines in Asia and Europe.Panic in the stock market over the spreading coronavirus continued into a seventh day on Friday, with shares in the United States tumbling following steep declines in Asia and Europe.
The S&P 500 index dropped more than 3 percent in early trading Friday. Before trading began, the index was already down more than 12 percent from a record high reached just last week, and the drop has put the index on track for its worst week since the 2008 financial crisis. The S&P 500 index dropped about 2 percent by midday on Friday. Before trading began, the index was already down 12 percent from a record high reached just last week, and the drop has put the index on track for its worst week since the 2008 financial crisis.
Yields on government bonds, a measure of investor sentiment about the outlook for the economy, also tumbled.
The sell-off is fueled mostly by worry that measures to contain the virus would hamper corporate profits and economic growth, and fears that the outbreak could get worse. The selling has dragged stock benchmarks around the world into a correction — a drop of 10 percent or more that’s taken as a measure of extreme pessimism — in a matter of days.The sell-off is fueled mostly by worry that measures to contain the virus would hamper corporate profits and economic growth, and fears that the outbreak could get worse. The selling has dragged stock benchmarks around the world into a correction — a drop of 10 percent or more that’s taken as a measure of extreme pessimism — in a matter of days.
A potential outbreak in the United States represents a significant test for President Trump, whose presidential success has been deeply tied to the economy and a rising stock market.
On Friday, the slide in Asia and Europe followed a 4.4 percent nose-dive in the S&P 500 index on Thursday, the worst day for American shares since 2011.On Friday, the slide in Asia and Europe followed a 4.4 percent nose-dive in the S&P 500 index on Thursday, the worst day for American shares since 2011.
In Europe, the FTSE 100 in Britain and the DAX in Germany fell more than 4 percent. In Europe, the FTSE 100 in Britain fell more than 3 percent and the DAX in Germany fell more than 4 percent.
In Asia, the Nikkei 225 in Japan closed down 3.7 percent, the KOSPI in South Korea dropped 3.3 percent and the Shanghai Composite in China dropped 3.7 percent.In Asia, the Nikkei 225 in Japan closed down 3.7 percent, the KOSPI in South Korea dropped 3.3 percent and the Shanghai Composite in China dropped 3.7 percent.
Oil prices continued a lurching drop, reflecting decreased demand as factories and transportation slow down. Brent crude, the international benchmark, fell as low as $50.05 a barrel. It was above $71 in early January. Oil prices continued a drop, reflecting decreased demand as factories and transportation slow down.
Investors have also poured into investments like gold and government bonds, which are generally considered safer. The yield on the benchmark 10-year United States Treasury bonds fell to a record low of 1.16 percent in trading Friday morning, down from 1.9 percent at the start of the year.
Larry Kudlow, the director of the White House’s National Economic Council, said on Friday that the United States economy is “fundamentally sound” and that he did not expect that the coronavirus outbreak would do long-term damage to the economy even if more cases emerge.
“It looks like we will weather this,” Mr. Kudlow said on the Fox Business Network. “This is not going to last forever.”
Mr. Kudlow said that the White House believes that this risk of something “very bad” happening in the United States is low and advised long-term investors to consider buying stocks on the basis that they are a relative bargain compared to a week ago.
“I don’t think people should panic,” said Mr. Kudlow, who used to dole out financial advice as a commentator on CNBC.
Speaking to reporters at the White House, Mr. Kudlow said that he has not seen evidence of “major supply chain disruptions” in regional Fed reports and that he believes the recent run on stocks is more the result of market psychology than facts on the ground.
Federal Reserve officials on Friday began to signal a willingness to cut interest rates if the outbreak worsens, laying out a scenario in which the central bank might respond as infections and quarantines spread globally.Federal Reserve officials on Friday began to signal a willingness to cut interest rates if the outbreak worsens, laying out a scenario in which the central bank might respond as infections and quarantines spread globally.
“Further policy rate cuts are a possibility if a global pandemic actually develops with health effects approaching the scale of ordinary influenza, but this is not the baseline case at this time,” said James Bullard, president of the Federal Reserve Bank of St. Louis, in prepared remarks on Friday. Mr. Bullard does not vote on monetary policy this year but participates in policy discussions.“Further policy rate cuts are a possibility if a global pandemic actually develops with health effects approaching the scale of ordinary influenza, but this is not the baseline case at this time,” said James Bullard, president of the Federal Reserve Bank of St. Louis, in prepared remarks on Friday. Mr. Bullard does not vote on monetary policy this year but participates in policy discussions.
Updated Feb. 26, 2020Updated Feb. 26, 2020
While his statement is far from a signal that the Fed will cut interest rates at its mid-March meeting, it does lay out what the path toward a response would look like. As coronavirus cases mount in countries outside of China and fuel worries that the world is staring down a pandemic mount, market probabilities have skyrocketed that the central bank will slash borrowing costs next month to cushion the economy. While his statement is far from a signal that the Fed will cut interest rates at its mid-March meeting, it does lay out what the path toward a response would look like. Expectations have skyrocketed that the central bank will slash borrowing costs next month to cushion the economy.
But rate cuts may have a limited effect: They work by stimulating demand, which could help if consumers and investors get spooked and stop spending. But cuts will do little to restart factories and correct supply problems.But rate cuts may have a limited effect: They work by stimulating demand, which could help if consumers and investors get spooked and stop spending. But cuts will do little to restart factories and correct supply problems.
The development with the most profound signal about the future of the global economy has not been the steep drop in the stock market over the last week. Instead, it’s what has been happening in the bond markets.
Global interest rates are plunging. The yield on the benchmark 10-year United States Treasury bonds fell to a record low of 1.16 percent in trading Friday morning, down from 1.9 percent at the start of the year and 2.7 percent one year ago. From Japan to Germany to Australia, every other major economy is experiencing a similar shift.
The bond market — which doesn’t dominate the headlines but is much bigger than the global stock market — has been growing rapidly in value. It isn’t merely reacting to the coronavirus: It is reflecting a perception that the global economy was vulnerable long before the disease emerged, because financial markets have never fully recovered from the last financial crisis.
Economic forecasters have cut their estimates of economic growth in the United States and around the world this year out of fear of effects from the coronavirus.
The projections vary widely, because economists are struggling to predict the spread of the virus and the resulting damage to growth. Bank of America researchers reduced their forecast for 2020 growth in the United States by 0.1 percent on Friday, to 1.6 percent overall, in a note titled “Gloom but not doom.” Goldman Sachs researchers also have marked down their forecast by 0.1 percent — with growth lagging in the first half of the year, then rebounding — but they said in a note this week that “the risks are clearly skewed to the downside until the outbreak is contained.”
Many researchers expect the Federal Reserve to quickly — and possibly deeply — cut interest rates in the face of worsening coronavirus news and market sell-offs. But researchers at Nomura warned on Friday that “there is little that monetary policy can do to limit the immediate downside risk for the U.S. economy.”
China, the site of the first cases and the world’s second largest economy, has ground to a halt as it struggles to contain the infection. Its factory shutdowns and quarantines have disrupted the global supply chain. Companies like Microsoft have warned that this will affect their sales, and Wall Street analysts have begun to factor those warnings into their expectations for profit growth this year.China, the site of the first cases and the world’s second largest economy, has ground to a halt as it struggles to contain the infection. Its factory shutdowns and quarantines have disrupted the global supply chain. Companies like Microsoft have warned that this will affect their sales, and Wall Street analysts have begun to factor those warnings into their expectations for profit growth this year.
More countries are reporting outbreaks, with over 83,000 people worldwide in at least 53 countries sickened so far. Hundreds of companies have begun taking measures to try to prevent the illness from afflicting their workers, including restricting travel and asking employees to work from home. All of these could curtail productivity.More countries are reporting outbreaks, with over 83,000 people worldwide in at least 53 countries sickened so far. Hundreds of companies have begun taking measures to try to prevent the illness from afflicting their workers, including restricting travel and asking employees to work from home. All of these could curtail productivity.
“The economic implications of the coronavirus are difficult to ascertain as government and personal reactions to the epidemic are unprecedented,” analysts at Keefe, Bruyette & Woods wrote in a research note to their clients. “We expect that economic conditions will rebound once quarantines are lifted, but there will be a certain amount of activity that will be lost." Investors are responding by selling stocks, as well as commodities like oil, as they anticipate the coming slump.
Investors are responding by selling stocks, as well as commodities like oil, as they anticipate the coming slump. The selling itself could help bring the slowdown along as it discourages spending by companies and individual investors alike. “To the degree that consumers change their behavior — so they stop going out to eat, they don’t take the vacation, they cancel the business trip — that consumption, that spending, personal consumption is 68 percent of G.D.P.,” said Scott Clemons, the chief investment strategist at Brown Brothers Harriman.
Investment bank economists issued increasingly glum predictions of how much the coronavirus outbreak would hurt economies around the world.
Scott Clemons, the chief investment strategist for private banking at Brown Brothers Harriman, said the outbreak’s potential to alter American consumers’ habits was at the heart of the Wall Street sell-off.
“To the degree that consumers change their behavior — so they stop going out to eat, they don’t take the vacation, they cancel the business trip — that consumption, that spending, personal consumption is 68 percent of G.D.P.,” Mr. Clemons said.
Over the past few days, companies as varied as United Airlines, Anheuser-BuschInBev, Mastercard and Pfizer have said that the outbreak poses a threat to their 2020 earnings, and the overall effect of the outbreak on global corporations could increase the chance of a broader economic slowdown, analysts say.Over the past few days, companies as varied as United Airlines, Anheuser-BuschInBev, Mastercard and Pfizer have said that the outbreak poses a threat to their 2020 earnings, and the overall effect of the outbreak on global corporations could increase the chance of a broader economic slowdown, analysts say.
“The more countries that are faced with fighting a pandemic, the wider the potential for economic disruption and potential for increased recessionary risks,” Tai Hui, the chief market strategist for Asia at J.P. Morgan Asset Management, said in a research note on Friday.
Baker McKenzie, the law firm based in Chicago, shut its London office, which houses about 1,000 people, after a potential coronavirus case.Baker McKenzie, the law firm based in Chicago, shut its London office, which houses about 1,000 people, after a potential coronavirus case.
The airline group IAG, which owns British Airways and Iberia, said that it expected earnings to be weaker because of the virus, but it could not give accurate profit guidance for the year because of the uncertainty of the situation.The airline group IAG, which owns British Airways and Iberia, said that it expected earnings to be weaker because of the virus, but it could not give accurate profit guidance for the year because of the uncertainty of the situation.
The Swiss government banned all gatherings of more than 1,000 people at least until March 15, forcing cancellation of the Geneva International Motor Show.The Swiss government banned all gatherings of more than 1,000 people at least until March 15, forcing cancellation of the Geneva International Motor Show.
Facebook canceled one of its advertising events, which is attended largely by employees, and its annual F8 conference in California — one of the company’s most anticipated events where it showcases its products and plans for the future to software developers.
Amie Tsang, Matt Phillips, Jack Ewing, Keith Bradsher, Alexandra Stevenson and Julie Creswell contributed reporting. Employees at Amazon’s worldwide operations — the company’s largest division, which runs the technology and operations for warehouses, deliveries, Prime membership and physical stores, among other things — were told that they should not travel domestically or internationally “until further notice,” according to emails viewed by The New York Times.
The U.S. Food and Drug Administration said Thursday evening that a drug maker had notified the agency of a shortage that it said was caused by manufacturing problems at a site in China affected by the coronavirus epidemic.
The agency declined to identify the drug in question, saying that to reveal the product would be disclosing “confidential commercial information.” The F.D.A. said that there were alternatives that could be used by patients, and that it was working with the manufacturer to mitigate the shortage.
Public health experts have been watching closely to see whether a shutdown of pharmaceutical ingredient factories in China because of the coronavirus will lead to shortages. The F.D.A. said this week that it was monitoring about 20 products that were either manufactured in China or that obtained their ingredients solely from China.
Amie Tsang, Matt Phillips, Jack Ewing, Keith Bradsher, Alexandra Stevenson, Alan Rappeport, Katie Thomas, Jim Tankersley, Karen Weise and Julie Creswell contributed reporting.