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Wall Street Plunges With Global Markets in Turmoil: Live Updates Wall Street Plunges With Global Markets in Turmoil: Live Updates
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Stocks tumbled on Wednesday as the coronavirus continued its relentless spread, governments ramped up efforts to contain it and investors continued to wait for lawmakers in Washington to take action on proposals to bolster the American economy.Stocks tumbled on Wednesday as the coronavirus continued its relentless spread, governments ramped up efforts to contain it and investors continued to wait for lawmakers in Washington to take action on proposals to bolster the American economy.
The S&P 500 fell more than 5 percent. Major European markets were also sharply lower, following a late-day slump in Asian shares.The S&P 500 fell more than 5 percent. Major European markets were also sharply lower, following a late-day slump in Asian shares.
Those significant drops represented another swing in sentiment on Wall Street. Stocks jumped on Tuesday as the White House called for urgent action to pump $1 trillion into the economy. But the calls so far haven’t been met with tangible action in the Senate. Treasury Secretary Steven Mnuchin met with Republican lawmakers on Tuesday and warned them that the unemployment rate in the United States could approach 20 percent without the intervention of robust economic stimulus measures. Those significant drops represented another swing in sentiment on Wall Street. Stocks jumped on Tuesday as the White House called for urgent action to pump $1 trillion into the economy. But the calls so far haven’t been met with tangible action in the Senate. Treasury Secretary Steven Mnuchin met with Republican lawmakers on Tuesday and warned them that the unemployment rate in the United States could approach 20 percent without the intervention of robust economic stimulus measures.
And the renewed selling showed how fragile any gains have become as long as the virus continues to spread and the number of cases continues to grow at a staggering rate. Analysts continue to downgrade their expectations for the global economy and corporate profits as measures to contain the virus become more extreme. The Trump administration’s $1 trillion proposal includes two rounds of direct payments to Americans, one in April and one in May, at a total cost of $500 billion, according to a summary obtained by The New York Times on Wednesday.
The renewed selling showed how fragile any gains have become as long as the virus continues to spread and the number of cases continues to grow at a staggering rate. Analysts continue to downgrade their expectations for the global economy and corporate profits as measures to contain the virus become more extreme.
“We remain of the view that equity prices are only likely to find a floor once evidence emerges that the measures to contain the virus are proving successful,” analysts at Capital Economics wrote in a note Tuesday. “That is what happened in China, where equities had started to recover after their sharp falls in January, before the virus spread rapidly elsewhere.”“We remain of the view that equity prices are only likely to find a floor once evidence emerges that the measures to contain the virus are proving successful,” analysts at Capital Economics wrote in a note Tuesday. “That is what happened in China, where equities had started to recover after their sharp falls in January, before the virus spread rapidly elsewhere.”
They noted that companies have yet to start revising their earnings expectations lower, and the global financial crisis showed that such revisions can take three months to show up after the stock markets’ peak. The analysts also attributed a recent tick up in bond yields partly to distressed selling, when companies need to get out of their holdings and dump them at any cost.They noted that companies have yet to start revising their earnings expectations lower, and the global financial crisis showed that such revisions can take three months to show up after the stock markets’ peak. The analysts also attributed a recent tick up in bond yields partly to distressed selling, when companies need to get out of their holdings and dump them at any cost.
Wednesday’s turmoil was evident in other markets as well. The British pound fell to its lowest level in 35 years against the American dollar, and oil prices tumbled.Wednesday’s turmoil was evident in other markets as well. The British pound fell to its lowest level in 35 years against the American dollar, and oil prices tumbled.
Rystad Energy, a consulting firm, said that supply of oil worldwide would exceed demand by about 3 million barrels a day in April as air travel and other transportation grind to a halt.Rystad Energy, a consulting firm, said that supply of oil worldwide would exceed demand by about 3 million barrels a day in April as air travel and other transportation grind to a halt.
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“With each day there seems to be yet another trap door lying beneath oil prices, and we expect to see prices continue to roil,” said Louise Dickson, a Rystad analyst.“With each day there seems to be yet another trap door lying beneath oil prices, and we expect to see prices continue to roil,” said Louise Dickson, a Rystad analyst.
The American oil benchmark West Texas Intermediate dropped to less than $24 a barrel in early trading, the lowest price since 2003, before recovering a tad. The global Brent benchmark fell below $27 a barrel, a level not seen since January 2016. Oil prices are roughly 60 percent below where they were at the beginning of the year.The American oil benchmark West Texas Intermediate dropped to less than $24 a barrel in early trading, the lowest price since 2003, before recovering a tad. The global Brent benchmark fell below $27 a barrel, a level not seen since January 2016. Oil prices are roughly 60 percent below where they were at the beginning of the year.
Andrew Ross Sorkin writes: The White House is asking Congress to allocate $500 billion for two separate waves of direct payments to American taxpayers in the coming weeks and an additional $300 billion to help small businesses continue to meet payroll, according to a Treasury Department proposal circulating on Capitol Hill and among lobbyists.
I chronicled the 2008 financial crisis and spent the past week on back-to-back telephone calls with many of the experts who crafted that bailout, as well as the programs put in place after 9/11, Katrina, the BP oil spill and other crises. Now here is a thought experiment that could prevent what is quickly looking like the next Great Recession or even, dare it be mentioned, depression. The outline, a copy of which was obtained by The New York Times, calls for a total of $1 trillion in spending for those programs, which would also include $50 billion for secured loans for the airline industry, and another $150 billion for secured loans or loan guarantees for other parts of the economy hard hit by the unfolding financial crisis.
The fix: The government could offer every American business, large and small, and every self-employed — and gig — worker a no-interest “bridge loan” guaranteed for the duration of the crisis to be paid back over a 5-year period. The only condition of the loan to businesses would be that companies continue to employ at least 90 percent of their work force at the same wage that they did before the crisis. And it would be retroactive, so any workers that have been laid off in the past two weeks because of the crisis would be reinstated. It would allow for the use of the Exchange Stabilization Fund, an emergency reserve account that is usually used for intervening in currency markets, to cover those costs, and also temporarily allow it to guarantee money market mutual funds.
Lawmakers were moving swiftly on Wednesday to try to incorporate the proposal and others from senators into legislation that could be put to a vote in the coming days. But the details remained far from complete.
The Treasury Department proposal calls for the authority to send two, $250 billion rounds of checks directly to American taxpayers, the first on April 6 and the second May 18. Payments would be fixed, and their size dependent on income and family size, the summary said.
The proposed program to increase loans to small businesses would allow any employer with 500 employees or fewer to receive loans equaling six weeks of their payroll up to $1,540 per employee under the condition that companies must keep paying their employees for eight weeks after receiving the loan.
President Trump is scheduled to meet with airline executives on Wednesday, as industry representatives lobbied Congress for a bailout for the industry.President Trump is scheduled to meet with airline executives on Wednesday, as industry representatives lobbied Congress for a bailout for the industry.
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The industry has proposed a more than $50 billion rescue package. The Trump administration has said that it wants to help airlines, and intends to include aid for them in a broader $850 billion package of economic stimulus measures that it is proposing as a response to the outbreak.The industry has proposed a more than $50 billion rescue package. The Trump administration has said that it wants to help airlines, and intends to include aid for them in a broader $850 billion package of economic stimulus measures that it is proposing as a response to the outbreak.
Separately, Democratic leaders in the House spoke with airline chief executives by phone Tuesday afternoon after hearing from Treasury Secretary Steven Mnuchin, who has been a central point of contact within the administration.
In Tuesday’s call, the airline executives and members of Congress specifically discussed limiting executive bonuses and share buybacks, and protecting employees from layoffs or furloughs. They also discussed protecting collective bargaining and reversing any union concessions when the industry recovers. The airlines indicated that furloughs would be a last resort, according to a person familiar with the call, but unauthorized to discuss it publicly.
As the effects of the coronavirus pandemic hit the U.S. job market, the damage to the labor market looks likely to be much deeper and longer lasting than seemed possible even a week ago.As the effects of the coronavirus pandemic hit the U.S. job market, the damage to the labor market looks likely to be much deeper and longer lasting than seemed possible even a week ago.
Most small businesses do not have the financial buffer to pay workers for long if revenue dries up. And while larger public companies may have access to cash, they also have shareholders who want executives to watch the bottom line.Most small businesses do not have the financial buffer to pay workers for long if revenue dries up. And while larger public companies may have access to cash, they also have shareholders who want executives to watch the bottom line.
“It’s simple math,” said Deborah Weinswig, founder of Coresight Research, an advisory and research firm that specializes in retail and technology. “You can’t have all expenses and no revenue.”“It’s simple math,” said Deborah Weinswig, founder of Coresight Research, an advisory and research firm that specializes in retail and technology. “You can’t have all expenses and no revenue.”
IHS Markit, an economic forecasting firm, said Monday that it expected the unemployment rate to rise to 6 percent by mid-2021, up from 3.5 percent in February. The Economic Policy Institute, a progressive research group, estimated on Tuesday that the outbreak could eliminate three million jobs by summer.IHS Markit, an economic forecasting firm, said Monday that it expected the unemployment rate to rise to 6 percent by mid-2021, up from 3.5 percent in February. The Economic Policy Institute, a progressive research group, estimated on Tuesday that the outbreak could eliminate three million jobs by summer.
The Federal Reserve has already slashed interest rates, promised to buy up massive amounts of government debt, and stepped into more esoteric markets to ensure that the financial system keeps functioning. The Federal Reserve has already slashed interest rates, promised to buy up huge amounts of government debt, and stepped into more esoteric markets to ensure that the financial system keeps functioning.
Now, two of the central bank’s former leaders have floated another idea to help bolster the American economy. In an opinion article published by the Financial Times, Ben S. Bernanke and Janet Yellen, who led the Fed through the 2008 financial crisis, suggested that the central bank should consider trying to buy corporate bonds as well.Now, two of the central bank’s former leaders have floated another idea to help bolster the American economy. In an opinion article published by the Financial Times, Ben S. Bernanke and Janet Yellen, who led the Fed through the 2008 financial crisis, suggested that the central bank should consider trying to buy corporate bonds as well.
That would help a crucial market to continue functioning normally, allowing companies to roll over their debt and get the cash that they need to function through tough times.That would help a crucial market to continue functioning normally, allowing companies to roll over their debt and get the cash that they need to function through tough times.
The suggestion is a dramatic one. Congress would have to change the law that empowers the Fed for the central bank to buy corporate debt, inviting partisan medding. The idea is something that current Fed chair Jerome H. Powell has said he’s not currently pursuing. The suggestion is a dramatic one. Congress would have to change the law that empowers the Fed for the central bank to buy corporate debt, inviting partisan meddling. The idea is something that current Fed chair Jerome H. Powell has said he’s not currently pursuing.
“We have not at all made a decision to request further tools or authorities from Congress, no,” Mr. Powell said in a call-in news conference on Sunday. “It’s not something we’re actively considering right now.”“We have not at all made a decision to request further tools or authorities from Congress, no,” Mr. Powell said in a call-in news conference on Sunday. “It’s not something we’re actively considering right now.”
It’s also notable that the former Fed chairs are weighing in at all. Both Mr. Bernanke and Ms. Yellen have generally avoided giving the central bank explicit advice on monetary policy. The fact that they are willing to make suggestions hints at how dire the economic fallout from coronavirus could become.It’s also notable that the former Fed chairs are weighing in at all. Both Mr. Bernanke and Ms. Yellen have generally avoided giving the central bank explicit advice on monetary policy. The fact that they are willing to make suggestions hints at how dire the economic fallout from coronavirus could become.
“If critical economic relationships are disrupted by months of low activity, the economy may take a very long time to recover,” they wrote.“If critical economic relationships are disrupted by months of low activity, the economy may take a very long time to recover,” they wrote.
The Trump administration has spoken with large technology companies about how their access to geolocation data from smartphones can aid in the response to the coronavirus pandemic.
At a recent meeting, a group of tech companies discussed the use of anonymous, aggregated geolocation data to respond to the spread of the virus with the White House and other administration officials, according to two people with knowledge of the matter. They also discussed how that would intersect with user privacy, the people said.
The Centers for Disease Control asked during the meeting about the prospect of using the data to track demand for hospitals around the country, which are expected to be deluged by patients, one of the people said. The conversations were first reported by The Washington Post.
The possible use of geolocation data raises questions about user privacy, especially as policymakers are increasingly asking about the power of major tech companies like Amazon, Facebook and Google.
The British government’s advice to avoid socializing has been a punch in the gut for brewers and pubs who rely on Britons congregating over a pint.The British government’s advice to avoid socializing has been a punch in the gut for brewers and pubs who rely on Britons congregating over a pint.
The government’s offer of interest-free loans on Tuesday did little to assuage their worries.The government’s offer of interest-free loans on Tuesday did little to assuage their worries.
Robert Wicks, who owns a small brewery and pub in Kent, in the south of England, said his industry had been “cut off at the knees,” and needed help paying salaries rather than loans.Robert Wicks, who owns a small brewery and pub in Kent, in the south of England, said his industry had been “cut off at the knees,” and needed help paying salaries rather than loans.
BMW of Germany became the last major European carmaker to shut down manufacturing in Europe, saying on Wednesday its factories would remain closed until April 19. The company will also stop production in South Africa. Toyota also said on Wednesday that it would close its European plants.BMW of Germany became the last major European carmaker to shut down manufacturing in Europe, saying on Wednesday its factories would remain closed until April 19. The company will also stop production in South Africa. Toyota also said on Wednesday that it would close its European plants.
A broad group of bankers and other mortgage industry participants is working on a plan to offer a temporary pause in payments on home loans, according to the Housing Policy Council, a trade group that includes Citigroup, Wells Fargo, JPMorgan Chase and Quicken Loans.A broad group of bankers and other mortgage industry participants is working on a plan to offer a temporary pause in payments on home loans, according to the Housing Policy Council, a trade group that includes Citigroup, Wells Fargo, JPMorgan Chase and Quicken Loans.
Philippine financial markets are set to reopen on Thursday, after becoming the first to shut down because of the coronavirus outbreak. The Philippine stock exchange, which shut on Tuesday, will keep reduced hours, it said in a statement.Philippine financial markets are set to reopen on Thursday, after becoming the first to shut down because of the coronavirus outbreak. The Philippine stock exchange, which shut on Tuesday, will keep reduced hours, it said in a statement.
ConocoPhillips said on Wednesday that it would cut its 2020 capital spending by $700 million, or about 10 percent. Late Tuesday, Halliburton, which provides drilling and related services to oil producers, said it would furlough 3,500 workers for 60. ConocoPhillips said on Wednesday that it would cut its 2020 capital spending by $700 million, or about 10 percent. Late Tuesday, Halliburton, which provides drilling and related services to oil producers, said it would furlough 3,500 workers for 60 days.
Reporting and research were contributed by Jack Ewing, David McCabe, Cecilia Kang, Alan Rappeport, Ben Casselman, Sapna Maheshwari, Nicholas Fandos, Jim Tankersley, Amie Tsang, Kate Conger, Adam Satariano, Mike Isaac, Jason Gutierrez, Carlos Tejada, Kevin Granville and Daniel Victor.Reporting and research were contributed by Jack Ewing, David McCabe, Cecilia Kang, Alan Rappeport, Ben Casselman, Sapna Maheshwari, Nicholas Fandos, Jim Tankersley, Amie Tsang, Kate Conger, Adam Satariano, Mike Isaac, Jason Gutierrez, Carlos Tejada, Kevin Granville and Daniel Victor.