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Stocks Drop and Oil Crashes as Investor Alarm Persists: Live Updates Stocks Drop and Oil Crashes as Investor Alarm Persists: Live Updates
(32 minutes later)
Financial markets reeled again on Wednesday, as the coronavirus continued its relentless spread, governments ramped up efforts to contain it and investors waited for lawmakers in Washington to take action on proposals to bolster the American economy. Financial markets reeled again on Wednesday, as the coronavirus continued its relentless spread, governments ramped up efforts to contain it and investors waited for lawmakers in Washington to take action on proposals to bolster the American economy.
The selling reflected another extreme 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.The selling reflected another extreme 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.
Stocks did recoup some losses late in the day Wednesday, as the Senate began to vote on a bill to provide sick leave, jobless benefits, free coronavirus testing and other aid. President Trump is expected to sign it. But when all was said and done, the S&P 500 fell about 5 percent, stocks in Europe were sharply lower and oil prices cratered.Stocks did recoup some losses late in the day Wednesday, as the Senate began to vote on a bill to provide sick leave, jobless benefits, free coronavirus testing and other aid. President Trump is expected to sign it. But when all was said and done, the S&P 500 fell about 5 percent, stocks in Europe were sharply lower and oil prices cratered.
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.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.
The turmoil on Wednesday was evident in other markets as well. The British pound fell to its lowest level in 35 years against the American dollar.The turmoil on Wednesday was evident in other markets as well. The British pound fell to its lowest level in 35 years against the American dollar.
The American oil benchmark, West Texas Intermediate, dropped 24 percent to just over $21 a barrel, the lowest price since 2003. The global Brent benchmark fell to just above $25 a barrel, a level just below January 2016. Oil prices are more than 60 percent below where they were at the beginning of the year.The American oil benchmark, West Texas Intermediate, dropped 24 percent to just over $21 a barrel, the lowest price since 2003. The global Brent benchmark fell to just above $25 a barrel, a level just below January 2016. Oil prices are more than 60 percent below where they were at the beginning of the year.
Rystad Energy, a consulting firm, said that supply of oil worldwide would exceed demand by about three million barrels a day in April as air travel and other transportation ground to a halt.Rystad Energy, a consulting firm, said that supply of oil worldwide would exceed demand by about three million barrels a day in April as air travel and other transportation ground to a halt.
“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 economy is poised for the worst quarterly contraction ever, with a sudden slowdown in economic activity that is more akin to what happened in wartime Europe than during previous American slowdowns like the financial crisis more than a decade ago or even the Great Depression.The American economy is poised for the worst quarterly contraction ever, with a sudden slowdown in economic activity that is more akin to what happened in wartime Europe than during previous American slowdowns like the financial crisis more than a decade ago or even the Great Depression.
Greg Daco, chief U.S. economist at Oxford Economics, thinks the economy could shrink by 12 percent next quarter, with unemployment hitting 10 percent in April.Greg Daco, chief U.S. economist at Oxford Economics, thinks the economy could shrink by 12 percent next quarter, with unemployment hitting 10 percent in April.
As it rose to record heights, the stock market had perhaps no bigger cheerleader than President Trump, who has seen the rally as an endorsement of his economic policies and crowed about the gains throughout his presidency.As it rose to record heights, the stock market had perhaps no bigger cheerleader than President Trump, who has seen the rally as an endorsement of his economic policies and crowed about the gains throughout his presidency.
But stocks have been falling for a month, and the severity of that drop has all but wiped out the gains that followed Mr. Trump’s inauguration. In intraday trading on Wednesday, the Dow Jones industrial average fell below its pre-inauguration closing level 19,732 before recovering slightly to end the day less than one percent above its Jan. 19, 2017 close.But stocks have been falling for a month, and the severity of that drop has all but wiped out the gains that followed Mr. Trump’s inauguration. In intraday trading on Wednesday, the Dow Jones industrial average fell below its pre-inauguration closing level 19,732 before recovering slightly to end the day less than one percent above its Jan. 19, 2017 close.
The S&P 500, a better measure of the broader market, is about 6 percent above its pre-inauguration level.The S&P 500, a better measure of the broader market, is about 6 percent above its pre-inauguration level.
Mr. Trump’s victory in 2016, along with the Republican Party’s control of Congress, set off a surge in share prices as investors looked forward to the prospect of steep cuts to corporate tax rates and an administration stocked with industry-friendly faces.Mr. Trump’s victory in 2016, along with the Republican Party’s control of Congress, set off a surge in share prices as investors looked forward to the prospect of steep cuts to corporate tax rates and an administration stocked with industry-friendly faces.
In December 2017, Mr. Trump delivered a sweeping tax overhaul. By the following month, the S&P 500 was up more than 30 percent, and the gains kept coming for much of the year. For Mr. Trump, this was a surefire barometer of his success as president.In December 2017, Mr. Trump delivered a sweeping tax overhaul. By the following month, the S&P 500 was up more than 30 percent, and the gains kept coming for much of the year. For Mr. Trump, this was a surefire barometer of his success as president.
There was one other nasty dip along the way: In late 2018, investors grew increasingly worried about Mr. Trump’s trade war with China and the prospect that the Federal Reserve would raise interest rates. But with the economy still growing, the job market strong, and the Fed reversing course on its plan to raise interest rates, the market overcame that dip and climbed nearly 30 percent.There was one other nasty dip along the way: In late 2018, investors grew increasingly worried about Mr. Trump’s trade war with China and the prospect that the Federal Reserve would raise interest rates. But with the economy still growing, the job market strong, and the Fed reversing course on its plan to raise interest rates, the market overcame that dip and climbed nearly 30 percent.
The Treasury Department and the Internal Revenue Service formally announced a three-month delay of tax payments for most Americans on Wednesday, projecting that the move will inject $300 billion of temporary liquidity into the economy.The Treasury Department and the Internal Revenue Service formally announced a three-month delay of tax payments for most Americans on Wednesday, projecting that the move will inject $300 billion of temporary liquidity into the economy.
According to the new guidance, individual taxpayers can defer up to $1 million of federal income tax, which would have been due on April 15, until July 15 of this year. Companies can also defer up to $10 million of tax payments through that date.According to the new guidance, individual taxpayers can defer up to $1 million of federal income tax, which would have been due on April 15, until July 15 of this year. Companies can also defer up to $10 million of tax payments through that date.
There will be no penalties or interest payments for deferrals, but all taxpayers must still file their returns by April 15. The Treasury Department wants taxpayers to file on time so that those who are owed refunds receive them.There will be no penalties or interest payments for deferrals, but all taxpayers must still file their returns by April 15. The Treasury Department wants taxpayers to file on time so that those who are owed refunds receive them.
Ford Motor and General Motors said on Wednesday that they would close their plants in the United States, Canada and Mexico until at least March 30, a decision that comes as automakers are under intense pressure to protect workers from the spreading coronavirus. Fiat Chrysler is planning to do the same, according to a person familiar with the matter. The whole point of having a diversified group of investments is because they shouldn’t all go down at the same time. In general, when stocks tumble, prices for super-safe government bonds rise.
Not lately. As the stock market suffered another brutal decline bond prices also plummeted, sending yields on long-term Treasury securities sharply higher. (Bond prices and yields move in opposite directions, as a convention the bond market tends to focus on yields rather than prices.)
The yield on the 10-year Treasury note rose to 1.25 percent. It was the second day in which when Treasury yields moved sharply higher.
It’s unclear exactly what’s going on here, but it may have something to do with investors penciling in rising costs of government spending needed to fight the recessionary wave about to swallow up the American economy.
Financing that government spending will likely require the Treasury department to raise the amount of debt it sells, flooding the market with new bonds, and pushing prices lower, and yields, which move in the opposite direction, up. The recent rise in rates might reflect that reality.
Fiat Chrysler, Ford Motor and General Motors said on Wednesday that they would close their plants in the United States, Canada and Mexico until at least the end of March, a decision that comes as automakers are under intense pressure to protect workers from the spreading coronavirus.
Ford said in a statement that it would shut down factories after the end of Thursday evening shifts. G.M. quickly followed suit, saying it would stagger plant closings to “ensure that production stops in a safe and orderly fashion.”Ford said in a statement that it would shut down factories after the end of Thursday evening shifts. G.M. quickly followed suit, saying it would stagger plant closings to “ensure that production stops in a safe and orderly fashion.”
“We have been taking extraordinary precautions around the world to keep our plant environments safe and recent developments in North America make it clear this is the right thing to do now,” G.M.’s chief executive, Mary Barra, said in a statement.“We have been taking extraordinary precautions around the world to keep our plant environments safe and recent developments in North America make it clear this is the right thing to do now,” G.M.’s chief executive, Mary Barra, said in a statement.
The company also said sales had been slowing, a trend it expects to continue as more people confine themselves to their homes to avoid contracting or spreading the virus.The company also said sales had been slowing, a trend it expects to continue as more people confine themselves to their homes to avoid contracting or spreading the virus.
The United Automobile Workers union has called on the three Detroit carmakers to shut down manufacturing plants across the United States for two weeks to prevent the spread of the coronavirus. The three automakers employ 151,000 U.A.W. members.The United Automobile Workers union has called on the three Detroit carmakers to shut down manufacturing plants across the United States for two weeks to prevent the spread of the coronavirus. The three automakers employ 151,000 U.A.W. members.
Europe’s auto manufacturing was brought virtually at a standstill after Daimler, Ford Motor and Nissan joined Volkswagen and most other major carmakers in shutting down.Europe’s auto manufacturing was brought virtually at a standstill after Daimler, Ford Motor and Nissan joined Volkswagen and most other major carmakers in shutting down.
Fox News’s biggest star, Sean Hannity, has suggested the coronavirus may be a “fraud.” Guests of the network have implied it could be a weapon cooked up by North Korea. A “Fox and Friends” anchor said it was still safe to fly.Fox News’s biggest star, Sean Hannity, has suggested the coronavirus may be a “fraud.” Guests of the network have implied it could be a weapon cooked up by North Korea. A “Fox and Friends” anchor said it was still safe to fly.
Now, the cable news network, controlled by the media mogul Rupert Murdoch, will be free so that “every person in America can access the latest national and local news regarding Coronavirus,” the company said Wednesday. Lachlan Murdoch, the chief executive, added that the company’s duty “is to provide the individuals and communities we serve with information and analysis to help educate and protect them during dangerous times.”Now, the cable news network, controlled by the media mogul Rupert Murdoch, will be free so that “every person in America can access the latest national and local news regarding Coronavirus,” the company said Wednesday. Lachlan Murdoch, the chief executive, added that the company’s duty “is to provide the individuals and communities we serve with information and analysis to help educate and protect them during dangerous times.”
Despite playing down the outbreak earlier, the cable channel has more recently reported on the seriousness of the pandemic.Despite playing down the outbreak earlier, the cable channel has more recently reported on the seriousness of the pandemic.
Since World War II, the S&P 500 has entered a bear market — a drop of 20 percent from its peak — 12 times, including the one we are in. There have been as many recessions in that time.Since World War II, the S&P 500 has entered a bear market — a drop of 20 percent from its peak — 12 times, including the one we are in. There have been as many recessions in that time.
However, not every bear market preceded a recession. The stock market isn’t an indicator of economic activity, and therefore isn’t necessarily a predictor of recessions.However, not every bear market preceded a recession. The stock market isn’t an indicator of economic activity, and therefore isn’t necessarily a predictor of recessions.
But steep declines in the stock market have often coincided with a downturn in the economy. Of the bear markets that came before the current one, three occurred without a recession afterward.But steep declines in the stock market have often coincided with a downturn in the economy. Of the bear markets that came before the current one, three occurred without a recession afterward.
President Trump said Wednesday that he would not drop tariffs on more than $360 billion worth of Chinese goods as part of an economic response to the virus, despite the urging of business groups who say the measure would help amid a pronounced economic slowdown. Republican senators and Trump administration officials are considering a proposal by a pair of conservative economists that would extend potentially $1 trillion in assistance to small businesses to keep them afloat during the pandemic and keep workers on their payrolls.
“China’s paying us billions and billions of dollars in tariffs, and there’s no reason to do that,” Mr. Trump said. “China hasn’t asked me to do that.” The loans would come from commercial banks, which would lend as much as 12 weeks of revenue to small firms, according to a copy of the proposal obtained by The New York Times. The federal government would then agree to pay off those loans in full — but only if the company did not lay off workers.
The Trump administration still maintains tariffs on more than $360 billion of Chinese goods, a legacy of a protracted trade war with China. On Wednesday, 160 businesses and organizations sent a letter to the president calling on him to suspend tariffs as part of his emergency measures to help the economy. The plan comes from Glenn Hubbard of Columbia University, a former adviser to President George W. Bush, and Michael R. Strain of the American Enterprise Institute. It estimates the possible cost to the government at $1 trillion, but promises a more precise cost estimate to come.
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. Intercontinental Exchange said that the New York Stock Exchange would close its trading floor temporarily on Monday and move to fully electronic trading. Trading and regulatory oversight will continue without interruption.
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.
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.
A Google spokeswoman said on Wednesday that the company was deferring performance reviews for the current period. The reason, according to a copy of the email announcement sent by Eileen Naughton, Google’s vice president of people operations, which was seen by The New York Times, was to help the internet company’s more than 100,000 workers focus on their “most important, mission-critical activities” during the coronavirus pandemic.
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.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.
Delta Air Lines told employees on Wednesday that it would slash 70 percent of its flights until further notice in an effort to save more than $4 billion, according to a memo sent by the company’s chief executive, Ed Bastian. About 10,000 employees have already taken voluntary leave, he said, urging more to consider joining them.Delta Air Lines told employees on Wednesday that it would slash 70 percent of its flights until further notice in an effort to save more than $4 billion, according to a memo sent by the company’s chief executive, Ed Bastian. About 10,000 employees have already taken voluntary leave, he said, urging more to consider joining them.
Verizon, AT&T and T-Mobile have all shut hundreds of stores, while keeping some open, in attempt to halt the spread of the coronavirus. All companies have cut back on retail hours with limited staffing. AT&T and T-Mobile said they would continue to pay their retail workers. Verizon did not comment on its employees.Verizon, AT&T and T-Mobile have all shut hundreds of stores, while keeping some open, in attempt to halt the spread of the coronavirus. All companies have cut back on retail hours with limited staffing. AT&T and T-Mobile said they would continue to pay their retail workers. Verizon did not comment on its employees.
Reporting and research were contributed by Jack Ewing, Ana Swanson, David McCabe, Cecilia Kang, Alan Rappeport, Ben Casselman, Davey Alba, Clifford Krauss, Sapna Maheshwari, Nicholas Fandos, Jim Tankersley, Amie Tsang, Kate Conger, Adam Satariano, Matthew Goldstein, Mike Isaac, Jason Gutierrez, Edmund Lee, Carlos Tejada, Kevin Granville, Daniel Victor and Nelson Schwartz.Reporting and research were contributed by Jack Ewing, Ana Swanson, David McCabe, Cecilia Kang, Alan Rappeport, Ben Casselman, Davey Alba, Clifford Krauss, Sapna Maheshwari, Nicholas Fandos, Jim Tankersley, Amie Tsang, Kate Conger, Adam Satariano, Matthew Goldstein, Mike Isaac, Jason Gutierrez, Edmund Lee, Carlos Tejada, Kevin Granville, Daniel Victor and Nelson Schwartz.