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Grim News Blunts Federal Reserve’s Crisis Response: Live Updates Grim News Blunts Federal Reserve’s Crisis Response: Live Updates
(about 1 hour later)
The Federal Reserve unveiled a vast expansion of its efforts to shore up businesses and keep markets functioning. But the brief boost for Wall Street was soon wiped away as Washington lawmakers failed again to come together on a nearly $2 trillion rescue package.The Federal Reserve unveiled a vast expansion of its efforts to shore up businesses and keep markets functioning. But the brief boost for Wall Street was soon wiped away as Washington lawmakers failed again to come together on a nearly $2 trillion rescue package.
Across the landscape of American business, grim news abounded Monday as the coronavirus pandemic paralyzed the country.Across the landscape of American business, grim news abounded Monday as the coronavirus pandemic paralyzed the country.
Boeing said it was temporarily idling 70,000 factory workers in Washington State after about 30 employees tested positive for Covid-19. Twitter said its revenue would take a hit as advertising has declined. Nordstrom, its cash diminished, drew down $800 million in credit. And General Electric said it would cut 10 percent of workers in its aviation unit. Boeing said it was temporarily idling 70,000 factory workers in Washington State after about 30 employees tested positive for Covid-19. Twitter said its revenue would take a hit as advertising has declined. Nordstrom, its cash diminished, drew down $800 million in credit. And General Electric said it would cut 10 percent of workers in its aviation unit.
The biggest factor again driving markets was Congress, which hit another wall in its attempt to push through a fiscal stimulus package.The biggest factor again driving markets was Congress, which hit another wall in its attempt to push through a fiscal stimulus package.
Senate Democrats blocked the progress of the nearly $2 trillion government rescue package for a second time as they continued to negotiate for stronger protections for workers and restrictions for bailed-out businesses.Senate Democrats blocked the progress of the nearly $2 trillion government rescue package for a second time as they continued to negotiate for stronger protections for workers and restrictions for bailed-out businesses.
The S&P 500 fell about 3 percent Monday, adding to a 15 percent plunge last week as traders remained cautious about the Fed’s ability to shift the trajectory of an economy that appears to be in free-fall because of the coronavirus crisis.The S&P 500 fell about 3 percent Monday, adding to a 15 percent plunge last week as traders remained cautious about the Fed’s ability to shift the trajectory of an economy that appears to be in free-fall because of the coronavirus crisis.
“It is hard for the Fed to stimulate underlying demand. For that, fiscal stimulus is needed,” Randy Watts, chief investment strategist at William O’Neil, an equity research and advisory firm, wrote in an email. “The deal in the Senate of the fiscal stimulus bill is obviously disappointing.”“It is hard for the Fed to stimulate underlying demand. For that, fiscal stimulus is needed,” Randy Watts, chief investment strategist at William O’Neil, an equity research and advisory firm, wrote in an email. “The deal in the Senate of the fiscal stimulus bill is obviously disappointing.”
There was more reason to worry on Monday as well. The International Monetary Fund’s managing director, Kristalina Georgieva, said she expected “a recession at least as bad as during the global financial crisis or worse” this year, with a rebound in 2021. “The faster the virus stops, the quicker and stronger the recovery will be,” she added.There was more reason to worry on Monday as well. The International Monetary Fund’s managing director, Kristalina Georgieva, said she expected “a recession at least as bad as during the global financial crisis or worse” this year, with a rebound in 2021. “The faster the virus stops, the quicker and stronger the recovery will be,” she added.
And forecasters at Morgan Stanley offered one of the grimmest assessments for how much damage the coronavirus could inflict on the American economy in the months to come.And forecasters at Morgan Stanley offered one of the grimmest assessments for how much damage the coronavirus could inflict on the American economy in the months to come.
The economists said in a research note that they expected the economy to contract at an annualized rate of 2.4 percent in the first quarter of the year and a 30 percent rate in the second quarter — which would be the worst single-quarter drop recorded in modern American economic statistics.The economists said in a research note that they expected the economy to contract at an annualized rate of 2.4 percent in the first quarter of the year and a 30 percent rate in the second quarter — which would be the worst single-quarter drop recorded in modern American economic statistics.
In that scenario, the unemployment rate would approach 13 percent, which would also be a record.In that scenario, the unemployment rate would approach 13 percent, which would also be a record.
“Economic activity has come to a near standstill in March,” they wrote.“Economic activity has come to a near standstill in March,” they wrote.
Trading was volatile again Monday, with stocks falling as much as 5 percent. Major indexes in Europe were also lower, while stocks in Asia had already ended the day lower before the Fed announced its new plans. In the first 10 days of March, some of the commentators on Fox News and Fox Business played down the threat of what would soon be recognized as a pandemic.
Many of the networks’ elderly, pro-Trump viewers responded to the coverage and the president’s public statements by taking the virus less seriously than others.
But one elderly Fox News viewer, a crucial supporter of President Trump, took the threat seriously: The channel’s chairman, Rupert Murdoch, who was to celebrate his 89th birthday on March 11.
On March 8, as the virus was spreading, the Murdoch family called off a planned party out of concern for the patriarch’s health, according to a person familiar with the cancellation. There were about 20 people on the guest list.
The canceled party is perhaps the most glaring instance of the gap between the elite, globally minded family owners of Fox — who took the crisis seriously as reports emerged in January in their native Australia — and many of their nominal stars, who treated the virus as a political assault on Mr. Trump, before zigzagging, along with the president, toward a focus on the enormity of the public health risk.
Boeing plans to announce on Monday that it will temporarily shut down its operations in Washington State, where the company has two major factories and several smaller sites, in an effort to slow the spread of the coronavirus among its tens of thousands of employees in the region, according to three people familiar with the matter.Boeing plans to announce on Monday that it will temporarily shut down its operations in Washington State, where the company has two major factories and several smaller sites, in an effort to slow the spread of the coronavirus among its tens of thousands of employees in the region, according to three people familiar with the matter.
The factories will close for two weeks and all of the 70,000 employees will continue to receive paychecks during that time, according to two of the people, who spoke on condition of anonymity to discuss internal decisions. Boeing is in contact with the Pentagon to determine how to handle its work on the KC-46 tanker and P-8 military aircraft, which are made in the Washington factories.The factories will close for two weeks and all of the 70,000 employees will continue to receive paychecks during that time, according to two of the people, who spoke on condition of anonymity to discuss internal decisions. Boeing is in contact with the Pentagon to determine how to handle its work on the KC-46 tanker and P-8 military aircraft, which are made in the Washington factories.
For now, the company’s other major production facilities, in Missouri, South Carolina, Arizona and Pennsylvania, will remain open.For now, the company’s other major production facilities, in Missouri, South Carolina, Arizona and Pennsylvania, will remain open.
Last week, the company instructed all employees to telecommute if they could, but stopped short of suspending manufacturing because it is difficult to ramp up production after an assembly line has been halted.
More than 30 Boeing employees have tested positive for the coronavirus, with the majority in Washington State, the company said. Nearly 2,000 workers have been sent home to remain in isolation after possible exposure.
The Federal Reserve said it would buy as much government-backed debt as it needed to keep financial markets functioning, and unrolled a series of programs meant to shore up both large and small businesses, in a staggering, whatever-it-takes-effort to cushion the economic blow of coronavirus.The Federal Reserve said it would buy as much government-backed debt as it needed to keep financial markets functioning, and unrolled a series of programs meant to shore up both large and small businesses, in a staggering, whatever-it-takes-effort to cushion the economic blow of coronavirus.
“Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate,” the central bank said in a Monday morning statement, adding that “the Federal Reserve is using its full range of authorities to provide powerful support for the flow of credit to American families and businesses.”“Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate,” the central bank said in a Monday morning statement, adding that “the Federal Reserve is using its full range of authorities to provide powerful support for the flow of credit to American families and businesses.”
The Fed resurrected an enormous bond-buying program — last used in response to the financial crisis — earlier this month, saying it would spend $700 billion on Treasury securities and $200 billion in mortgage-backed debt. But on Monday, the central bank said it would not limit its purchases, instead buying “in the amounts needed to support smooth market functioning.”The Fed resurrected an enormous bond-buying program — last used in response to the financial crisis — earlier this month, saying it would spend $700 billion on Treasury securities and $200 billion in mortgage-backed debt. But on Monday, the central bank said it would not limit its purchases, instead buying “in the amounts needed to support smooth market functioning.”
While the rest of the economy is tanking from the crippling impact of the coronavirus, business at the biggest technology companies is holding steady — even thriving.While the rest of the economy is tanking from the crippling impact of the coronavirus, business at the biggest technology companies is holding steady — even thriving.
Amazon said it was hiring 100,000 warehouse workers to meet surging demand. Mark Zuckerberg, Facebook’s chief executive, said traffic for video calling and messaging had exploded. Microsoft said the number of people using its software for online collaboration had climbed nearly 40 percent in a week.Amazon said it was hiring 100,000 warehouse workers to meet surging demand. Mark Zuckerberg, Facebook’s chief executive, said traffic for video calling and messaging had exploded. Microsoft said the number of people using its software for online collaboration had climbed nearly 40 percent in a week.
With people told to work from home and stay away from others in an attempt to slow the virus’s spread, the pandemic has deepened reliance on services from the technology industry’s biggest companies while accelerating trends that were already benefiting them.With people told to work from home and stay away from others in an attempt to slow the virus’s spread, the pandemic has deepened reliance on services from the technology industry’s biggest companies while accelerating trends that were already benefiting them.
“The largest tech companies could emerge on the other side of this much stronger,” said Daniel Ives, managing director of equity research at Wedbush Securities.“The largest tech companies could emerge on the other side of this much stronger,” said Daniel Ives, managing director of equity research at Wedbush Securities.
But beyond the biggest companies, it is more of a struggle. Communication tools like the videoconferencing service Zoom are now essential, but ride-hailing firms like Uber and Lyft and property-rental sites like Airbnb are seeing customers vanish.But beyond the biggest companies, it is more of a struggle. Communication tools like the videoconferencing service Zoom are now essential, but ride-hailing firms like Uber and Lyft and property-rental sites like Airbnb are seeing customers vanish.
More people are using Twitter, with daily visitors up 8 percent from the final quarter of 2019 and 23 percent from a year ago. But that increase hasn’t translated into advertising — the lifeblood of the company. Twitter had estimated that its revenue this quarter would be between $825 million and $885 million. Now the company expects revenue to decline from the same quarter a year ago, when it made $787 million.More people are using Twitter, with daily visitors up 8 percent from the final quarter of 2019 and 23 percent from a year ago. But that increase hasn’t translated into advertising — the lifeblood of the company. Twitter had estimated that its revenue this quarter would be between $825 million and $885 million. Now the company expects revenue to decline from the same quarter a year ago, when it made $787 million.
Over the past five days, executives from the largest American clothing brands and department stores have been engaged in urgent late-night phone calls and marathon video conferences in which they game out scenarios for their future in a world with a coronavirus pandemic.Over the past five days, executives from the largest American clothing brands and department stores have been engaged in urgent late-night phone calls and marathon video conferences in which they game out scenarios for their future in a world with a coronavirus pandemic.
In the end, they have decided to request a stimulus package from the United States government that would defray the worst of the effects for both big and small businesses alike, framing it as a “bridge,” not a “bailout.”In the end, they have decided to request a stimulus package from the United States government that would defray the worst of the effects for both big and small businesses alike, framing it as a “bridge,” not a “bailout.”
The discussion of coming economic carnage as municipal and federal shutdowns have changed lives and businesses has primarily focused on the airlines and the cruise ships, on restaurants and hotels.The discussion of coming economic carnage as municipal and federal shutdowns have changed lives and businesses has primarily focused on the airlines and the cruise ships, on restaurants and hotels.
On Monday, Nordstrom announced several precautionary measures, including suspending its quarterly cash dividend, suspending share repurchases and drawing down $800 million on its revolving line of credit. “We are proactively taking steps to strengthen our financial flexibility to help us navigate through this unprecedented situation,” said Erik Nordstrom, the retailer’s chief executive. On Monday, Nordstrom announced several precautionary measures, including suspending its quarterly cash dividend, suspending share repurchases and drawing down $800 million on its revolving line of credit.
Amazon has always guaranteed fast delivery times for items. That’s changing with the coronavirus.Amazon has always guaranteed fast delivery times for items. That’s changing with the coronavirus.
Over the weekend and on Monday, Amazon sellers and customers of its Prime service found that delivery times for nonessential items were showing a much later delivery time of April 21. Typically, Amazon Prime deliveries take one or two days to reach customers in the United States.Over the weekend and on Monday, Amazon sellers and customers of its Prime service found that delivery times for nonessential items were showing a much later delivery time of April 21. Typically, Amazon Prime deliveries take one or two days to reach customers in the United States.
Last week, the online retail giant said that to focus on the surge in demand for household staples and medical supplies, it would pull back on stocking items like consumer electronics and toys.Last week, the online retail giant said that to focus on the surge in demand for household staples and medical supplies, it would pull back on stocking items like consumer electronics and toys.
“To serve our customers while also helping to ensure the safety of our associates, we’ve changed our logistics, transportation, supply chain, purchasing, and third-party seller processes to prioritize stocking and delivering items that are a higher priority for our customers,” Keri Bertolino, an Amazon spokeswoman, said in an emailed statement. “This has resulted in some of our delivery promises being longer than usual.”“To serve our customers while also helping to ensure the safety of our associates, we’ve changed our logistics, transportation, supply chain, purchasing, and third-party seller processes to prioritize stocking and delivering items that are a higher priority for our customers,” Keri Bertolino, an Amazon spokeswoman, said in an emailed statement. “This has resulted in some of our delivery promises being longer than usual.”
Recode earlier reported the news of Amazon’s delivery delays.Recode earlier reported the news of Amazon’s delivery delays.
A federal housing regulator took steps Monday to help renters living in large apartment complexes and strengthen the mutual funds and hedge funds that invest in securities cobbled together from mortgages.
The Federal Financial Housing Agency ordered the two big government-backed mortgage-finance giants — Fannie Mae and Freddie Mac — to offer multifamily properties a break on mortgage payments if they hold off on evictions of renters who’ve lost a job or income because of government shutdowns.
Some cities have already enacted limits on evictions during the coronavirus crisis, but the federal agency’s order should offer relief to millions of renters worried about losing their homes during the crisis. The agency had already issued orders about single-family mortgages backed by Fannie and Freddie, imposing a foreclosure moratorium and allowing those in financial trouble to get a reprieve on mortgage payments for up to a year.
Also Monday, the agency ordered Fannie and Freddie to begin making short-term loans to investors in mortgage-backed securities, the investment vehicles comprising bundled mortgages, according to two people familiar with the agency’s plan who were not authorized to speak publicly.
General Electric said that it would lay off 10 percent of the U.S. staff, about 2,500 people, from its aviation unit, which makes engines for military and commercial aircraft. The company has already frozen hiring and merit raises and reduced nonessential spending.General Electric said that it would lay off 10 percent of the U.S. staff, about 2,500 people, from its aviation unit, which makes engines for military and commercial aircraft. The company has already frozen hiring and merit raises and reduced nonessential spending.
Dollar General said it would hire up to 50,000 employees by the end of April, nearly doubling its hiring rate, as it tries to meet increased demand from shoppers.Dollar General said it would hire up to 50,000 employees by the end of April, nearly doubling its hiring rate, as it tries to meet increased demand from shoppers.
Reporting was contributed by Kate Conger, Jim Kerstetter, Natalie Kitroeff, Jeanna Smialek, David Gelles, Stacey Cowley, Tiffany Hsu, Davey Alba, Niraj Chokshi, Daisuke Wakabayashi, Jack Nicas, Steve Lohr, Mike Isaac, Jim Tankersley, Matthew Goldstein, Alan Rappeport, Keith Bradsher, Ana Swanson, Sapna Maheshwari, Vanessa Friedman, Carlos Tejada, Ben Dooley, Vindu Goel, Melissa Eddy, Kevin Granville and Daniel Victor. Reporting was contributed by Ben Smith, Kate Conger, Jim Kerstetter, Natalie Kitroeff, Jeanna Smialek, David Gelles, Stacey Cowley, Tiffany Hsu, Davey Alba, Niraj Chokshi, Daisuke Wakabayashi, Jack Nicas, Steve Lohr, Mike Isaac, Jim Tankersley, Matthew Goldstein, Alan Rappeport, Keith Bradsher, Ana Swanson, Sapna Maheshwari, Vanessa Friedman, Carlos Tejada, Ben Dooley, Vindu Goel, Melissa Eddy, Kevin Granville and Daniel Victor.