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Stocks Fall Despite Fed Unleashing New Spending Power: Live Updates Stocks Fall Despite Fed Unleashing New Spending Power: Live Updates
(32 minutes 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.”
Investors remained focused on the political stalemate in the U.S. Senate that has slowed a rescue plan for the American economy.Investors remained focused on the political stalemate in the U.S. Senate that has slowed a rescue plan for the American economy.
The S&P 500 fell as much as 3 percent in early trading, even after the Fed unveiled its new bond buying program.The S&P 500 fell as much as 3 percent in early trading, even after the Fed unveiled its new bond buying program.
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.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.
“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.”
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.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.Major indexes in Germany, Britain and France were lower and most Asian markets also fell.
On Monday, 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.On Monday, 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 now expect 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 now expect 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.
Treasury Secretary Steven Mnuchin touted the new Federal Reserve programs and called on the Senate to quickly pass the bill that he spent the weekend negotiating with lawmakers.Treasury Secretary Steven Mnuchin touted the new Federal Reserve programs and called on the Senate to quickly pass the bill that he spent the weekend negotiating with lawmakers.
“We are using all the tools we have and we’ve told Congress we need additional tools ASAP,” Mr. Mnuchin said on the Fox Business Network. “I hope the Senate passes this bill today.”“We are using all the tools we have and we’ve told Congress we need additional tools ASAP,” Mr. Mnuchin said on the Fox Business Network. “I hope the Senate passes this bill today.”
Mr. Mnuchin said that he believed an agreement was close and that Republicans and Democrats would put partisanship aside for the good of the economy.Mr. Mnuchin said that he believed an agreement was close and that Republicans and Democrats would put partisanship aside for the good of the economy.
The Treasury secretary dismissed speculation that President Trump will have to shut down the entire economy as “fake news” and pushed back against accusations that the government is implementing a corporate welfare program.The Treasury secretary dismissed speculation that President Trump will have to shut down the entire economy as “fake news” and pushed back against accusations that the government is implementing a corporate welfare program.
“There are no bailouts,” Mr. Mnuchin said. “This is not about bailing anybody out.”“There are no bailouts,” Mr. Mnuchin said. “This is not about bailing anybody out.”
Mr. Mnuchin suggested that it is possible that the government could end up taking equity stakes in struggling businesses such as major airline companies and said that taxpayers should be compensated for taking on risk related to that.Mr. Mnuchin suggested that it is possible that the government could end up taking equity stakes in struggling businesses such as major airline companies and said that taxpayers should be compensated for taking on risk related to that.
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. Amazon has always guaranteed fast delivery times for items. That’s changing with the coronavirus.
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. 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.
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. 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.
Since mid-February, the company’s share price have dropped by more than 50 percent. “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,” said Keri Bertolino, an Amazon spokeswoman, in an emailed statement. “This has resulted in some of our delivery promises being longer than usual.”
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. Recode earlier reported the news of Amazon’s delivery delays.
“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 small businesses such as restaurants, bars, gyms and hair salons are forced by the coronavirus pandemic to go dark and lay off millions of employees, frantic owners are desperate for government aid to help them salvage enterprises that can’t survive for long without customers.
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. But the main federal lifeline offered so far — low-interest disaster loans — is unappealing to many people running on thin margins and leery of taking on debt they can’t afford to repay.
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. Congress authorized up to $7 billion early this month for small business disaster loans through the Small Business Administration. But defaulting can have catastrophic consequences: The agency asks those seeking more than $25,000 — and most small business loans are at least that much — to put up collateral, preferably real estate.
“All we do is make enough money to make it through the off-season,” said Donna Benefiel, who owns the Sunset Produce Market in Banks, Ore., and a grocery store on the Oregon coast. “We’re not that profitable. We don’t have any reserves. How do we borrow a year’s worth of money and then have to pay it back?”
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.
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 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.
General Electric said on Monday that it will 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 on Monday that it will 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.
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.
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.
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. Germany will infuse hundreds of billions of euros in support into the economy to ensure its survival. The stimulus package was approved on Monday by Chancellor Angela Merkel’s government and is expected to pass Parliament later this week.
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. Reporting was contributed by Jeanna Smialek, David Gelles, Stacey Cowley, Tiffany Hsu, Davey Alba, Niraj Chokshi, Jim Tankersley, Alan Rappeport, Keith Bradsher, Ana Swanson, Carlos Tejada, Ben Dooley, Vindu Goel, Melissa Eddy, 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.