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Stocks Tumble After the Fed Cuts Rates Stocks Tumble After the Fed Cuts Rates
(6 days later)
The Federal Reserve delivered the emergency rate cut investors had been clamoring for at 10 a.m. on Tuesday. The market rally that followed lasted about 15 minutes.The Federal Reserve delivered the emergency rate cut investors had been clamoring for at 10 a.m. on Tuesday. The market rally that followed lasted about 15 minutes.
By the end of trading on Tuesday, stocks were sharply lower and bond yields had plummeted to previously unthinkable lows, suggesting that there’s little the Federal Reserve can do to keep the coronavirus from hammering the U.S. economy.By the end of trading on Tuesday, stocks were sharply lower and bond yields had plummeted to previously unthinkable lows, suggesting that there’s little the Federal Reserve can do to keep the coronavirus from hammering the U.S. economy.
The S&P 500 fell about 2.8 percent, undoing much of Monday’s 4.6 percent surge. The yield on the 10-year Treasury note dropped below 1 percent for a time.The S&P 500 fell about 2.8 percent, undoing much of Monday’s 4.6 percent surge. The yield on the 10-year Treasury note dropped below 1 percent for a time.
Both moves suggest investors see growing threats to the outlook for economic growth and corporate profits over the next 10 months.Both moves suggest investors see growing threats to the outlook for economic growth and corporate profits over the next 10 months.
“In the short term, there’s only so much that the Fed can actually do because you’re dealing with a totally exogenous variable that it has no control over: the virus,” said Julian Emanuel, chief equity and derivatives strategist at the brokerage firm BTIG.“In the short term, there’s only so much that the Fed can actually do because you’re dealing with a totally exogenous variable that it has no control over: the virus,” said Julian Emanuel, chief equity and derivatives strategist at the brokerage firm BTIG.
After shrugging off risks related to the spreading coronavirus for weeks, investors in the United States are now fixated on every development in the outbreak as the number of cases outside of China has grown.After shrugging off risks related to the spreading coronavirus for weeks, investors in the United States are now fixated on every development in the outbreak as the number of cases outside of China has grown.
The key question is how much measures to contain the drift of the outbreak — from travel bans, to canceled conferences, to the potential for school closures — could hurt consumer spending in developed nations, as global supply chains in China continue to struggle.The key question is how much measures to contain the drift of the outbreak — from travel bans, to canceled conferences, to the potential for school closures — could hurt consumer spending in developed nations, as global supply chains in China continue to struggle.
Economists around the globe sharply downgraded their economic growth expectations for the year. JPMorgan Chase economists and market analysts estimated that the low interest rates in the Treasury market suggest investors are pricing in a 90 percent chance of recession, according to a research note published Tuesday afternoon.Economists around the globe sharply downgraded their economic growth expectations for the year. JPMorgan Chase economists and market analysts estimated that the low interest rates in the Treasury market suggest investors are pricing in a 90 percent chance of recession, according to a research note published Tuesday afternoon.
In the face of the growing threat to the economy, the Federal Reserve slashed interest rates by half a point on Tuesday, saying in a statement that the coronavirus posed “evolving risks to economic activity.”In the face of the growing threat to the economy, the Federal Reserve slashed interest rates by half a point on Tuesday, saying in a statement that the coronavirus posed “evolving risks to economic activity.”
For the past week, long-term government bonds have been flashing a warning.For the past week, long-term government bonds have been flashing a warning.
Yields on these bonds have fallen as global investors have rushed to safety. U.S. government bonds are considered the safest financial investment you can make — the security blanket of choice for investors worldwide — and when investors are buying these bonds, their yields fall.Yields on these bonds have fallen as global investors have rushed to safety. U.S. government bonds are considered the safest financial investment you can make — the security blanket of choice for investors worldwide — and when investors are buying these bonds, their yields fall.
The drop in bond yields is a highly visible sign that investors believe economic growth in the United States and around the world would decelerate quickly.The drop in bond yields is a highly visible sign that investors believe economic growth in the United States and around the world would decelerate quickly.
“Global G.D.P. is getting clobbered,” said Steven Ricchiuto, chief U.S. economist at Mizuho Securities USA. “That’s what people are focusing on, and that’s what the bond market is focusing on.”“Global G.D.P. is getting clobbered,” said Steven Ricchiuto, chief U.S. economist at Mizuho Securities USA. “That’s what people are focusing on, and that’s what the bond market is focusing on.”
But there’s a silver lining: Treasury yields are the foundation for all sorts of borrowing costs, so, all else being equal, the drop in yields should help support the U.S. economy as they filter through to consumers and corporations over the next year.But there’s a silver lining: Treasury yields are the foundation for all sorts of borrowing costs, so, all else being equal, the drop in yields should help support the U.S. economy as they filter through to consumers and corporations over the next year.
Mortgage rates could fall to new levels of affordability. Interest rates on car loans could decrease. Corporate borrowing could get cheaper.Mortgage rates could fall to new levels of affordability. Interest rates on car loans could decrease. Corporate borrowing could get cheaper.
Before the Fed’s announcement, central bankers and political leaders of the world’s economic powers on Tuesday expressed their resolve to combat economic damage from the coronavirus, but stopped short of promising interest rate cuts or other immediate rescue measures.Before the Fed’s announcement, central bankers and political leaders of the world’s economic powers on Tuesday expressed their resolve to combat economic damage from the coronavirus, but stopped short of promising interest rate cuts or other immediate rescue measures.
The joint statement of solidarity showed that the leaders of the so-called G7 nations, which also includes Britain, Canada, France, Germany, Italy and Japan, are capable of cooperation. But the statement fell short of the more aggressive action that investors have been hoping for and that many economists say is needed to prevent the virus outbreak from undermining global growth.The joint statement of solidarity showed that the leaders of the so-called G7 nations, which also includes Britain, Canada, France, Germany, Italy and Japan, are capable of cooperation. But the statement fell short of the more aggressive action that investors have been hoping for and that many economists say is needed to prevent the virus outbreak from undermining global growth.
Earlier Tuesday, the Reserve Bank of Australia cut its interest rates to a record low, while Malaysia’s Bank Negara cut its key lending rate for a second time this year.Earlier Tuesday, the Reserve Bank of Australia cut its interest rates to a record low, while Malaysia’s Bank Negara cut its key lending rate for a second time this year.
As governments seek to contain the economic damage from the coronavirus outbreak, prominent economists and some lawmakers are starting to wrestle with how the government might use its power to tax and spend to mitigate the economic pain.As governments seek to contain the economic damage from the coronavirus outbreak, prominent economists and some lawmakers are starting to wrestle with how the government might use its power to tax and spend to mitigate the economic pain.
The attention to fiscal policy reflects the little room remaining for the Federal Reserve to cut interest rates. The complexities of responding to a pandemic and the desire of lawmakers to show they are getting something done in an election year could strengthen the case for a fiscal boost.The attention to fiscal policy reflects the little room remaining for the Federal Reserve to cut interest rates. The complexities of responding to a pandemic and the desire of lawmakers to show they are getting something done in an election year could strengthen the case for a fiscal boost.
Talk of fiscal stimulus is still in the earliest phases, reflecting the suddenness with which signs have emerged that the new coronavirus will hurt the economy. Those who closely track the machinations of Washington believe there will be a meaningful push for some fiscal action if the economic outlook deteriorates.Talk of fiscal stimulus is still in the earliest phases, reflecting the suddenness with which signs have emerged that the new coronavirus will hurt the economy. Those who closely track the machinations of Washington believe there will be a meaningful push for some fiscal action if the economic outlook deteriorates.
The list of reasons that the Federal Reserve should not have cut interest rates on Tuesday is long.The list of reasons that the Federal Reserve should not have cut interest rates on Tuesday is long.
Lower rates will do nothing to address the cause of potential economic distress, namely supply disruptions and halted economic activity caused by the coronavirus outbreak. It comes as the Fed is already low on firepower to offset an economic slump, because of perpetually low interest rates.Lower rates will do nothing to address the cause of potential economic distress, namely supply disruptions and halted economic activity caused by the coronavirus outbreak. It comes as the Fed is already low on firepower to offset an economic slump, because of perpetually low interest rates.
Updated June 30, 2020 Updated July 7, 2020
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
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.
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
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.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
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.
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.)
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.
But the thinking behind the decision is not complicated. It was a judgment that just because you don’t have the right tools for a job doesn’t mean you shouldn’t use the tools that you do have to try to make things better.But the thinking behind the decision is not complicated. It was a judgment that just because you don’t have the right tools for a job doesn’t mean you shouldn’t use the tools that you do have to try to make things better.
The Fed cannot stop supply chains from being disrupted or certain types of business activity, like travel and tourism, from freezing up. What rate cuts can do, however, is try to help prevent those disruptions from spiraling into a recession.The Fed cannot stop supply chains from being disrupted or certain types of business activity, like travel and tourism, from freezing up. What rate cuts can do, however, is try to help prevent those disruptions from spiraling into a recession.
The global outbreak has caused upheaval in stock markets and disrupted supply chains around the world. But so far, there have been few signs of widespread economic damage, at least in the United States.The global outbreak has caused upheaval in stock markets and disrupted supply chains around the world. But so far, there have been few signs of widespread economic damage, at least in the United States.
Economists say a pandemic could clearly cause a recession in the United States. But for that to happen, the effects would have to spread beyond manufacturing, travel and other sectors directly affected by the disease. The real sign of trouble, said Tara Sinclair, an economist at George Washington University, would be if companies with no direct connection to the virus started reporting a slump in business.Economists say a pandemic could clearly cause a recession in the United States. But for that to happen, the effects would have to spread beyond manufacturing, travel and other sectors directly affected by the disease. The real sign of trouble, said Tara Sinclair, an economist at George Washington University, would be if companies with no direct connection to the virus started reporting a slump in business.
“The key is to watch big macro numbers rather than obsessively watching things tied to virus and supply chains,” Ms. Sinclair said. “If people aren’t getting haircuts anymore, that’s a bad sign.”“The key is to watch big macro numbers rather than obsessively watching things tied to virus and supply chains,” Ms. Sinclair said. “If people aren’t getting haircuts anymore, that’s a bad sign.”
A recession is more than just a dip in gross domestic product. As most economists think of it, a recession involves a cycle that feeds on itself: Job cuts lead to less income, which leads to less spending, which leads to more job cuts.A recession is more than just a dip in gross domestic product. As most economists think of it, a recession involves a cycle that feeds on itself: Job cuts lead to less income, which leads to less spending, which leads to more job cuts.
Some companies have already taken precautions like limiting travel to affected countries or big international conferences. Others have asked employees to stay home because they visited a country with a more serious outbreak.Some companies have already taken precautions like limiting travel to affected countries or big international conferences. Others have asked employees to stay home because they visited a country with a more serious outbreak.
But with new unexplained cases being reported in the United States — and the first domestic death from the illness reported on Saturday — a growing number of American workers could soon be asked to alter their routines, or just stay home.But with new unexplained cases being reported in the United States — and the first domestic death from the illness reported on Saturday — a growing number of American workers could soon be asked to alter their routines, or just stay home.
Exactly how that affects you will depend on many factors, including the generosity of your employer’s benefits and where you live. U.S. workers are less likely to be covered by a paid sick leave policy than those in other developed countries.Exactly how that affects you will depend on many factors, including the generosity of your employer’s benefits and where you live. U.S. workers are less likely to be covered by a paid sick leave policy than those in other developed countries.
Google said on Tuesday that it was canceling its annual developers conference because of concerns related to coronavirus. The Google I/O event was scheduled to take place May 12-14 in Mountain View, Calif.Google said on Tuesday that it was canceling its annual developers conference because of concerns related to coronavirus. The Google I/O event was scheduled to take place May 12-14 in Mountain View, Calif.
Amazon learned that an employee in one of its office buildings in the South Lake Union neighborhood of Seattle tested positive for the virus, the company said in an email to its staff late Tuesday. “We are supporting the affected employee, who remains in quarantine,” said Drew Herdener, an Amazon spokesman.Amazon learned that an employee in one of its office buildings in the South Lake Union neighborhood of Seattle tested positive for the virus, the company said in an email to its staff late Tuesday. “We are supporting the affected employee, who remains in quarantine,” said Drew Herdener, an Amazon spokesman.
Robinhood, a free trading app with more than 10 million users, experienced a systemwide shutdown for a second straight day, leaving many investors angry that they were unable to make trades in a rapidly moving market. The outage was resolved on Tuesday.Robinhood, a free trading app with more than 10 million users, experienced a systemwide shutdown for a second straight day, leaving many investors angry that they were unable to make trades in a rapidly moving market. The outage was resolved on Tuesday.
Foxconn, the Taiwan-based electronics manufacturer and a crucial partner in Apple’s supply chain, said on Tuesday that it was producing at only half its required capacity for this time of the year.Foxconn, the Taiwan-based electronics manufacturer and a crucial partner in Apple’s supply chain, said on Tuesday that it was producing at only half its required capacity for this time of the year.
Late on Monday, Hyatt Hotels withdrew its financial forecasts for 2020, in part because of the impact of travel restrictions imposed by companies since the virus outbreak, saying its ability to assess the impact of the virus “continues to be limited because of quickly changing circumstances and uncertain consumer demand for travel.”Late on Monday, Hyatt Hotels withdrew its financial forecasts for 2020, in part because of the impact of travel restrictions imposed by companies since the virus outbreak, saying its ability to assess the impact of the virus “continues to be limited because of quickly changing circumstances and uncertain consumer demand for travel.”
British Airways canceled 216 flights from London to New York, Italy, France, Germany, Belgium, Austria and Ireland from March 16 to 28. The airline had previously canceled flights to mainland China and reduced service to Italy. Ryanair, the Irish discount airline, canceled a quarter of its flights to and from Italy, from March 17 to April 8.British Airways canceled 216 flights from London to New York, Italy, France, Germany, Belgium, Austria and Ireland from March 16 to 28. The airline had previously canceled flights to mainland China and reduced service to Italy. Ryanair, the Irish discount airline, canceled a quarter of its flights to and from Italy, from March 17 to April 8.
Twitter, which had already closed offices in Japan and South Korea and banned nonessential travel, on Monday encouraged all of its employees in the United States and other countries to work from home. And its chief executive, Jack Dorsey, pulled out of a speaking engagement at South by Southwest, an annual technology conference and music festival scheduled to be held in two weeks in Austin, Tex.Twitter, which had already closed offices in Japan and South Korea and banned nonessential travel, on Monday encouraged all of its employees in the United States and other countries to work from home. And its chief executive, Jack Dorsey, pulled out of a speaking engagement at South by Southwest, an annual technology conference and music festival scheduled to be held in two weeks in Austin, Tex.
Reporting was contributed by Matt Phillips, Jeanna Smialek, Tara Siegel Bernard, Ben Casselman, Geneva Abdul, Kate Conger, Neil Irwin, Alexandra Stevenson, Raymond Zhong, Kevin Granville, Carlos Tejada, Karen Weise, Daisuke Wakabayashi and Jack Ewing.Reporting was contributed by Matt Phillips, Jeanna Smialek, Tara Siegel Bernard, Ben Casselman, Geneva Abdul, Kate Conger, Neil Irwin, Alexandra Stevenson, Raymond Zhong, Kevin Granville, Carlos Tejada, Karen Weise, Daisuke Wakabayashi and Jack Ewing.