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Wall Street Climbs After Monday’s Slump: Live Updates Wall Street Wobbles After Monday’s Slump: Live Updates
(32 minutes later)
Stocks in the United States rebounded on Tuesday from the market’s sharpest drop since the outbreak of the coronavirus. Stocks were unsteady on Tuesday, as Wall Street attempted a rebound from its sharpest drop since the outbreak of the coronavirus while investors waited for lawmakers in Washington to take action to protect the economy from a recession that may have already begun.
The gains were relatively small, however, with the S&P 500 up more than 2 percent in early trading. The index had fallen 12 percent the day before, in what was also its biggest decline since the stock market crash of 1987. Stock benchmarks in Europe were mostly lower Tuesday. The early gains faded quickly, with the S&P 500 slipping back into negative territory soon after trading began. Stock benchmarks in Europe were mostly lower Tuesday.
Signs of a small recovery were evident in other markets too. The yield on the 10-year U.S. Treasury bond rose, and energy prices, which slid sharply on Monday, staged a very modest comeback. West Texas Intermediate, the American benchmark, was up 1.9 percent, to about $29.25 a barrel. The S&P 500 had fallen 12 percent on Monday, in what was also its biggest decline since the stock market crash of 1987.
Financial markets in the United States have been reeling for nearly a month, as investors sharply ratchet down their expectations for the economy and look to Washington to help businesses and workers threatened by efforts to contain the coronavirus. So far, the biggest steps have come from the Federal Reserve, which has slashed interest rates to near zero and announced other emergency measures to ensure the financial system keeps functioning. Financial markets have been reeling as investors sharply ratchet down their expectations for the economy and look to the White House and Congress to help businesses and workers threatened by efforts to contain the coronavirus pandemic.There are few historical parallels for the shock waves created by the outbreak. From still-closed factories in China, to Western nations where millions of people are living in a state of semi-house arrest, most of the engines that keep the global economy aloft have simultaneously sputtered to a halt.
But Washington has yet to authorize a large-scale plan to help. That could change, with Treasury Secretary Steven Mnuchin expected to make a pitch to Republican senators for additional fiscal firepower on Tuesday.
Volkswagen said Tuesday it would close most of its European factories because of the coronavirus, adding the world’s largest carmaker to the growing list of large manufacturers that have shut down production. So far, the biggest measures have come from the Federal Reserve, which has slashed interest rates to near zero and announced other emergency measures to ensure the financial system keeps functioning.
The aircraft manufacturer Airbus also said Tuesday it would suspend manufacturing in France and Spain for the next four days while it takes measures to prevent the spread of the virus. But the Fed hasn’t calmed investors’ nerves, and Washington has yet to authorize a large-scale plan to help.
Herbert Diess, the chief executive of Volkswagen, said during a news conference that Volkswagen would close plants in Spain, Italy, Portugal and Slovakia by the end of this week, and that most other European sites would prepare to close for several weeks. “The Fed has a lot of tools in its tool kit. A vaccine isn’t one of them,” said Rick Rieder, chief investment officer of global fixed income at BlackRock. “And I think the markets are realizing that it’s going to be uncertain for a period of time.”
Treasury Secretary Steven Mnuchin is expected to make a pitch to Republican senators for additional fiscal firepower on Tuesday, with the Trump administration preparing to ask for about $850 billion in additional stimulus to support the economy.
A group of Senate Democrats, led by Michael Bennet of Colorado, Cory Booker of New Jersey and Sherrod Brown of Ohio, is proposing legislation to send as much as $4,500 to nearly every adult and child in the United States this year, as part of a sustained government income-support program to counter the economic slowdown from coronavirus.
The plan would start with a $2,000 payment to individuals that would be made as quickly as possible, phasing down for only the highest-income taxpayers. Each individual would receive another payment of $1,500 in July and further payments in October if the virus was continuing to hurt the economy, as measured by the unemployment rate or by declarations from the Treasury and Health and Human Services Departments.
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Peugeot, Renault, Fiat and Ford have already closed some or all of their European plants. The German carmakers have resisted shutting down production, but Volkswagen’s decision was an indication that health concerns and supply chain issues have made it nearly impossible for manufacturers to continue operating normally. Senators in both parties have rapidly coalesced in recent days around the idea of direct cash assistance to help Americans weather the shutdowns spurred by the spread of the virus. On Monday, Senator Mitt Romney, Republican of Utah, proposed an immediate $1,000 payment to individuals.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said that the central bank still has “very powerful” emergency lending authorities left in its arsenal to help protect the economy against fallout from the coronavirus.Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said that the central bank still has “very powerful” emergency lending authorities left in its arsenal to help protect the economy against fallout from the coronavirus.
“Nothing is completely off the table,” Mr. Kashkari said on CNBC on Tuesday, adding that those tools exist “if” the Fed Chair and Treasury Department choose to use them. “We need to see what is necessary to keep the economy moving, and again, we’re going to do our part, but I can’t tell you right now what exactly is coming in the future.”“Nothing is completely off the table,” Mr. Kashkari said on CNBC on Tuesday, adding that those tools exist “if” the Fed Chair and Treasury Department choose to use them. “We need to see what is necessary to keep the economy moving, and again, we’re going to do our part, but I can’t tell you right now what exactly is coming in the future.”
While the Fed on Sunday slashed interest rates to near-zero and rolled out a package of other programs meant to safeguard imperiled economic growth, it has not tapped its emergency lending authorities, which require Treasury Department signoff. Analysts and economists speculate that it will need to do so soon in order to buy commercial paper and calm growing disorder in that market.While the Fed on Sunday slashed interest rates to near-zero and rolled out a package of other programs meant to safeguard imperiled economic growth, it has not tapped its emergency lending authorities, which require Treasury Department signoff. Analysts and economists speculate that it will need to do so soon in order to buy commercial paper and calm growing disorder in that market.
Major U.S. airlines are asking for more than $50 billion in government support, about a week after they said they could weather the economic storm. The speed and severity of the economic downturn means other industries are likely to follow, argues today’s DealBook newsletter. Airlines around the world are facing an unprecedented cash crunch and are in desperate need of government aid, the International Air Transport Association said Tuesday.
What form could the support take? Should strings be attached? Would it be better to give cash directly to workers? And as economists slash their forecasts to depression-like levels — a few now believe the U.S. economy will shrink by more than 10 percent in the second quarter — is there even time to haggle over all of this? “We are in a very, very tough liquidity crisis, so we ask the governments to act urgently,” Alexandre de Juniac, the chief executive of the group, said.
While a few large carriers stand out, the typical airline started the year with about two months of cash on hand and many could face near-term bankruptcies, the group warned. To save the industry, governments may need to spend between $150 billion and $200 billion on airline bailouts, Mr. de Juniac estimated.
In the United States, all four major airlines have taken out sizable loans in recent weeks, with Southwest Airlines announcing a $1 billion loan on Monday. A domestic industry group, Airlines for America, has called for more than $50 billion in grants, loans and tax relief, for U.S. carriers, a request for which the Trump administration has expressed support.
The speed and severity of the economic downturn means other industries are likely to follow in asking for bailouts, argues today’s DealBook newsletter.
Eight major financial-services firms are borrowing money from the Federal Reserve, a move that has long carried negative connotations but that the Fed is encouraging to help stave off a cash crunch.Eight major financial-services firms are borrowing money from the Federal Reserve, a move that has long carried negative connotations but that the Fed is encouraging to help stave off a cash crunch.
Morgan Stanley was the first within the group to tap the Fed’s so-called discount window on Monday, according to three people familiar with the matter. Other banks, including Goldman Sachs and JPMorgan Chase, are expected to borrow as early as Tuesday, the people said.Morgan Stanley was the first within the group to tap the Fed’s so-called discount window on Monday, according to three people familiar with the matter. Other banks, including Goldman Sachs and JPMorgan Chase, are expected to borrow as early as Tuesday, the people said.
The central bank has urged the firms to tap its short-term funding facility to make it easier for credit to continue flowing through the economy, destigmatizing the use of central bank funding at a tumultuous time. Banks have avoided borrowing from the central bank out of fear it will make them look as if they are on shaky footing.The central bank has urged the firms to tap its short-term funding facility to make it easier for credit to continue flowing through the economy, destigmatizing the use of central bank funding at a tumultuous time. Banks have avoided borrowing from the central bank out of fear it will make them look as if they are on shaky footing.
“While forum member institutions individually have substantial liquidity and multiple sources of funding, they believe it is important to lead by demonstrating the value of the Federal Reserve’s discount window facility,” the Financial Services Forum, an industry trade group, said in a statement late Monday.“While forum member institutions individually have substantial liquidity and multiple sources of funding, they believe it is important to lead by demonstrating the value of the Federal Reserve’s discount window facility,” the Financial Services Forum, an industry trade group, said in a statement late Monday.
Amazon said it would hire 100,000 new workers and raise pay by $2 an hour for many employees in response to a surge in delivery orders from people staying at home to combat the spread of the coronavirus.Amazon said it would hire 100,000 new workers and raise pay by $2 an hour for many employees in response to a surge in delivery orders from people staying at home to combat the spread of the coronavirus.
Amazon said the 100,000 new jobs would include both full and part-time positions across the United States to staff its warehouses and make deliveries. The company encouraged people who lost work as a result of coronavirus-related shutdowns and cancellations to apply. Amazon said the new jobs would include both full and part-time positions across the United States to staff its warehouses and make deliveries. The company encouraged people who lost work as a result of coronavirus-related shutdowns and cancellations to apply.
“We also know many people have been economically impacted as jobs in areas like hospitality, restaurants, and travel are lost or furloughed as part of this crisis,” the company said in a news release. “We want those people to know we welcome them on our teams until things return to normal and their past employer is able to bring them back.”“We also know many people have been economically impacted as jobs in areas like hospitality, restaurants, and travel are lost or furloughed as part of this crisis,” the company said in a news release. “We want those people to know we welcome them on our teams until things return to normal and their past employer is able to bring them back.”
Amazon said it would also spend $350 million to raise pay by $2 or more an hour for workers staffing its enormous logistics operation in the United States, Britain and parts of Europe. The raises would last at least through April. In the United States, such workers start at $15 an hour.Amazon said it would also spend $350 million to raise pay by $2 or more an hour for workers staffing its enormous logistics operation in the United States, Britain and parts of Europe. The raises would last at least through April. In the United States, such workers start at $15 an hour.
Companies that power the supply chain are taking steps to make sure food keeps flowing to Americans in the coming weeks and months.Companies that power the supply chain are taking steps to make sure food keeps flowing to Americans in the coming weeks and months.
United Natural Foods Inc., one of the nation’s largest distributors of food to supermarkets, is planning to hire potentially thousands of out-of-work warehouse workers to staff its 59 distribution centers, the company’s chief executive, Steven L. Spinner, said.United Natural Foods Inc., one of the nation’s largest distributors of food to supermarkets, is planning to hire potentially thousands of out-of-work warehouse workers to staff its 59 distribution centers, the company’s chief executive, Steven L. Spinner, said.
The distributor has been crushed by demand from grocery stores, but other food distributors like US Foods and Sysco, which supply restaurants and schools, are likely to experience significant layoffs as cities and states shut down public places.The distributor has been crushed by demand from grocery stores, but other food distributors like US Foods and Sysco, which supply restaurants and schools, are likely to experience significant layoffs as cities and states shut down public places.
UNFI, as the company is known, is making plans to hire the displaced workers to help relieve its employees, many of whom have been working 60 to 70 hours a week to keep up with the panic buying in supermarkets across the country. The hiring could take place as soon as next week.UNFI, as the company is known, is making plans to hire the displaced workers to help relieve its employees, many of whom have been working 60 to 70 hours a week to keep up with the panic buying in supermarkets across the country. The hiring could take place as soon as next week.
“We are going to do creative things and work out a way to use their folks,” Mr. Spinner said. “The beauty of a shared work force is that these people have already been hired and are screened. They are already trained to work in a warehouse.”
Facebook announced a $100 million grant program for small businesses around the world that are impacted by the coronavirus outbreak. The company said in a blog post that it would begin accepting applications in the coming weeks.Facebook announced a $100 million grant program for small businesses around the world that are impacted by the coronavirus outbreak. The company said in a blog post that it would begin accepting applications in the coming weeks.
Volkswagen said Tuesday it would close most of its European factories because of the coronavirus, adding the world’s largest carmaker to the growing list of large manufacturers that have shut down production. The aircraft manufacturer Airbus also said Tuesday it would suspend manufacturing in France and Spain for the next four days while it takes measures to prevent the spread of the virus.
The Philippine Stock Exchange on Tuesday became the first market to close over the coronavirus. In a memorandum on its website, it said trading would stop until further notice.The Philippine Stock Exchange on Tuesday became the first market to close over the coronavirus. In a memorandum on its website, it said trading would stop until further notice.
France will provide 45 billion euros (about $50 billion) in immediate financial aid to help businesses and employees make it through the coronavirus epidemic, and it is ready to nationalize companies if necessary to prevent them from potential collapse, Finance Minister Bruno LeMaire said Tuesday.France will provide 45 billion euros (about $50 billion) in immediate financial aid to help businesses and employees make it through the coronavirus epidemic, and it is ready to nationalize companies if necessary to prevent them from potential collapse, Finance Minister Bruno LeMaire said Tuesday.
Laura Ashley, the British brand known for feminine prints and home furnishings inspired by the English countryside, has filed for administration, a form of bankruptcy protection. The company blamed the coronavirus pandemic.Laura Ashley, the British brand known for feminine prints and home furnishings inspired by the English countryside, has filed for administration, a form of bankruptcy protection. The company blamed the coronavirus pandemic.
Alexandra Stevenson, Jack Ewing, Jeanna Smialek, Liz Alderman, Michael Corkery, Jack Nicas, Daniel Victor, Kevin Granville and Carlos Tejada contributed reporting. Alexandra Stevenson, Jack Ewing, Jeanna Smialek, Jim Tankersley, Niraj Chokshi, Liz Alderman, Michael Corkery, Jack Nicas, Daniel Victor, Kevin Granville and Carlos Tejada contributed reporting.