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Fed Unleashes Spending Power in New Bond-Buying Plan: Live Business Updates Stocks Fall Despite Fed Unleashing New Spending Power: Live Updates
(about 1 hour later)
The Federal Reserve said it would buy as much government-backed debt as it needs 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 needs 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 a massive 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 won’t limit its purchases, instead buying “in the amounts needed to support smooth market functioning.”The Fed resurrected a massive 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 won’t limit its purchases, instead buying “in the amounts needed to support smooth market functioning.”
The central bank will also try to bolster the corporate bond market, which has been under pressure as companies shut down in the face of the virus. The Fed said it would unveil a program intended to help companies continue to fund themselves and enable the trading of corporate debt in the secondary market. The point, according to the release, is “to support credit to large employers.”The central bank will also try to bolster the corporate bond market, which has been under pressure as companies shut down in the face of the virus. The Fed said it would unveil a program intended to help companies continue to fund themselves and enable the trading of corporate debt in the secondary market. The point, according to the release, is “to support credit to large employers.”
Wall Street was poised to open trading higher on Monday, with futures on the major U.S. indexes rebounding from a steep drop after the Fed unveiled its expansive new bond-buying program. Investors remained focused on the political stalemate in the U.S. Senate that has slowed a rescue plan for the American economy.
Markets in the U.S. had been set for another difficult day after global indexes tumbled on the news that a political stalemate in the U.S. Senate had stalled a rescue plan for the world’s largest economy. The S&P 500 fell as much as 3 percent in early trading, even after the Fed unveiled its new bond buying program.
Senate Democrats on Sunday blocked action on an emerging deal to prop up the American economy, halting the progress of a nearly $2 trillion government rescue package. They contended that the legislation failed to adequately protect workers or impose strict enough restrictions on bailed-out businesses. Traders, while welcoming the Fed’s expanded plans to buy assets, largely remained cautious about the central bank’s ability to shift the trajectory of an economy that appears to be in free-fall because of the coronavirus crisis.
Major indexes in Germany, Britain and France were lower, though they also recovered most of their losses. Most Asian markets closed down. “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.”
Senate Democrats on Sunday blocked action on an emerging deal to prop up the economy, halting the progress of a nearly $2 trillion government rescue package. They contended that the legislation failed to adequately protect workers or impose strict enough restrictions on bailed-out businesses.
Major indexes in Germany, Britain and France were lower and most Asian markets also fell.
SoftBank on Monday announced that it will sell down $41 billion in assets as it seeks to buy up its own shares, which have dropped precipitously in the last month amid investor concerns about the coronavirus’s impact on its holdings in top tech companies like Uber.SoftBank on Monday announced that it will sell down $41 billion in assets as it seeks to buy up its own shares, which have dropped precipitously in the last month amid investor concerns about the coronavirus’s impact on its holdings in top tech companies like Uber.
SoftBank, which controls a $100 billion tech investment fund, has bet heavily on tech companies — many offering services such as ride-sharing and hotel booking — that have seen their share prices plummet as consumers stay home amid the pandemic.SoftBank, which controls a $100 billion tech investment fund, has bet heavily on tech companies — many offering services such as ride-sharing and hotel booking — that have seen their share prices plummet as consumers stay home amid the pandemic.
In a statement on Monday, SoftBank said it would use 2 trillion yen from the sale of its assets to purchase its own shares. The amount is on top of a 500 billion yen buyback announced earlier this month.In a statement on Monday, SoftBank said it would use 2 trillion yen from the sale of its assets to purchase its own shares. The amount is on top of a 500 billion yen buyback announced earlier this month.
Since mid-February, the company’s share price have dropped by more than 50 percent.Since mid-February, the company’s share price have dropped by more than 50 percent.
On Thursday morning, Chuck Robbins, the chief executive of Cisco, signed on to a companywide video conference from his home office in Silicon Valley. The connection was stable, but the quality was not great.On Thursday morning, Chuck Robbins, the chief executive of Cisco, signed on to a companywide video conference from his home office in Silicon Valley. The connection was stable, but the quality was not great.
“I tell you,” he said in an earlier interview, “this whole teleworking thing — as much as we sell it to our customers, I’m not sure I want to do it 100 percent of the time.”“I tell you,” he said in an earlier interview, “this whole teleworking thing — as much as we sell it to our customers, I’m not sure I want to do it 100 percent of the time.”
As the coronavirus sweeps the globe, even chief executives — who normally flit from meetings to conferences in chauffeured SUVs and private jets — have been confined to spare rooms.As the coronavirus sweeps the globe, even chief executives — who normally flit from meetings to conferences in chauffeured SUVs and private jets — have been confined to spare rooms.
From there, they are working to keep their business afloat as the stock market plummets; managing supply chains upended by travel restrictions and labor shortages; and trying to keep their employees healthy and sane.From there, they are working to keep their business afloat as the stock market plummets; managing supply chains upended by travel restrictions and labor shortages; and trying to keep their employees healthy and sane.
American front-line medical personnel are running desperately short of masks and protective equipment as they battle the coronavirus outbreak. China, already the world’s largest producer of such gear by far, has ramped up factory output and is now signaling that it wants to help.American front-line medical personnel are running desperately short of masks and protective equipment as they battle the coronavirus outbreak. China, already the world’s largest producer of such gear by far, has ramped up factory output and is now signaling that it wants to help.
Reaching deals won’t be easy. Increasingly acrimonious relations between Washington and Beijing are complicating efforts to get Chinese-made masks to American clinics and hospitals. A breakdown over the last few days in the global business of moving goods by air around the world will make it costly and difficult as well.Reaching deals won’t be easy. Increasingly acrimonious relations between Washington and Beijing are complicating efforts to get Chinese-made masks to American clinics and hospitals. A breakdown over the last few days in the global business of moving goods by air around the world will make it costly and difficult as well.
At heart, the two countries, which only recently reached a truce in President Trump’s trade war, have some similar problems. Both face harsh questions over their missteps in responding to the outbreak. Washington and Beijing make handy foils for each other — and essential protective gear could get caught in the middle unless they reach an understanding.At heart, the two countries, which only recently reached a truce in President Trump’s trade war, have some similar problems. Both face harsh questions over their missteps in responding to the outbreak. Washington and Beijing make handy foils for each other — and essential protective gear could get caught in the middle unless they reach an understanding.
The American economy is facing a plunge into uncharted waters.The American economy is facing a plunge into uncharted waters.
Economists say there is little doubt that the nation is headed into a recession. But it is harder to foresee the bottom, or predict how long it will take to climb back. The abruptness of the descent — and the near-lockdown of major cities — is unheard-of in advanced economies, more akin to wartime privation than to the downturn that accompanied the financial crisis more than a decade ago, or even the Great Depression.Economists say there is little doubt that the nation is headed into a recession. But it is harder to foresee the bottom, or predict how long it will take to climb back. The abruptness of the descent — and the near-lockdown of major cities — is unheard-of in advanced economies, more akin to wartime privation than to the downturn that accompanied the financial crisis more than a decade ago, or even the Great Depression.
Smaller companies will be hit harder than large ones because they have limited access to credit and less cash in the bank; a wide swath will be unable to survive. And unemployment could hit 10 percent in April, a level unseen since the nadir of the last recession, with the possibility of even higher jobless rates in the following monthsSmaller companies will be hit harder than large ones because they have limited access to credit and less cash in the bank; a wide swath will be unable to survive. And unemployment could hit 10 percent in April, a level unseen since the nadir of the last recession, with the possibility of even higher jobless rates in the following months
A strong rebound — what economists call a V-shaped recovery, as opposed to a U-shaped one, with an extended low — would require a profound resurgence in confidence. But few see that on the horizon.A strong rebound — what economists call a V-shaped recovery, as opposed to a U-shaped one, with an extended low — would require a profound resurgence in confidence. But few see that on the horizon.
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.
Singapore Airlines joined other carriers in grounding virtually all of its fleet. It said on Monday it would ground 96 percent of its capacity until the end of April.Singapore Airlines joined other carriers in grounding virtually all of its fleet. It said on Monday it would ground 96 percent of its capacity until the end of April.
Drive-through testing sites were opened Sunday in Walmart parking lots in the Chicago area, part of the retailer’s collaboration with federal health officials, for health care workers and emergency personnel.Drive-through testing sites were opened Sunday in Walmart parking lots in the Chicago area, part of the retailer’s collaboration with federal health officials, for health care workers and emergency personnel.
In a letter to congressional leadership on Saturday, the chief executives of the major airlines, UPS and FedEx said that they would postpone mass layoffs and stock buybacks and dividends if a bailout large enough is passed.
Reporting was contributed by Jeanna Smialek, David Gelles, Keith Bradsher, Ana Swanson, Carlos Tejada, Ben Dooley, Vindu Goel, Kevin Granville and Daniel Victor.Reporting was contributed by Jeanna Smialek, David Gelles, Keith Bradsher, Ana Swanson, Carlos Tejada, Ben Dooley, Vindu Goel, Kevin Granville and Daniel Victor.