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Boeing to Temporarily Shut Washington Factories: Live Business Updates Wall Street Struggles as the Fed Acts and Congress Stalls: Live Updates
(32 minutes later)
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. With a recession looming and the economy breaking down day by day in the face of the global coronavirus pandemic, investors have been looking to leaders in Washington to cushion the economic impact of business closures, factory shutdowns and mass layoffs.
On Monday, they got some help, but not enough.
The Federal Reserve said it would vastly expand its efforts to shore up businesses and keep markets functioning, but lawmakers hit another wall in their attempt to push a record-breaking fiscal stimulus package through Congress.
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.
“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.
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.
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.
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.
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, 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.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. 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.
Boeing workers in Washington have been complaining about the conditions on the factory floors, where employees often work in close proximity and cleaning supplies are scarce, according to three current employees who spoke on the condition of anonymity. A petition to shut down a plant in Everett, the company’s largest facility, has received more than 8,200 signatures. Boeing workers in Washington have been complaining about the conditions on the factory floors, where employees often work in close proximity and cleaning supplies are scarce, according to three employees who spoke on the condition of anonymity. A petition to shut down a plant in Everett, the company’s largest facility, has received more than 8,200 signatures.
“There are people who leave that campus and go all over the state of Washington. They all go back to their communities and families possibly sick,” Crissy Stipkovich, who created the petition, said in an interview. Ms. Stipkovich does not work for Boeing but has family members and friends who work at the factory. “It is a hotbed for infection right now and the employees are not being protected.”“There are people who leave that campus and go all over the state of Washington. They all go back to their communities and families possibly sick,” Crissy Stipkovich, who created the petition, said in an interview. Ms. Stipkovich does not work for Boeing but has family members and friends who work at the factory. “It is a hotbed for infection right now and the employees are not being protected.”
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 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 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.”
Stocks on Wall Street were unsteady on Monday as investors remained focused on the political stalemate in the U.S. Senate that has slowed a rescue plan for the American economy.
At its lowest point on Monday, the S&P 500 was down nearly 5 percent, 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.
“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.
On Monday, Treasury Secretary Steven Mnuchin 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.”
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.
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.
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.
“Economic activity has come to a near standstill in March,” they wrote.
One of the issues the Fed is trying to address with its expanded spending is distress in the corporate and municipal bond market.One of the issues the Fed is trying to address with its expanded spending is distress in the corporate and municipal bond market.
In short, as the risk of a deep recession has grown the cost of borrowing has risen for all but the safest borrower — the Federal government — as investors demand higher interest rates to compensate for the growing chance of suffering losses on their investment. For companies and local governments, that adds a financial burden to an already deep economic downturn As the risk of a deep recession has grown the cost of borrowing has risen for all but the Federal government. For companies and local governments, that adds a financial burden to an already deep economic downturn
The Fed is trying to lower this added cost. Still, the key measure of how much more smaller borrowers have to pay — credit spreads — actually increased slightly on Monday, even after the Fed’s announcement, said Brian Reynolds, chief market strategist at Reynolds Strategy.The Fed is trying to lower this added cost. Still, the key measure of how much more smaller borrowers have to pay — credit spreads — actually increased slightly on Monday, even after the Fed’s announcement, said Brian Reynolds, chief market strategist at Reynolds Strategy.
At the same time the increase of the spreads was less than the blowouts seen in recent weeks, suggesting that the Fed’s support might be helping market conditions that would have been much worse without the central bank putting its unlimited buying power in play.At the same time the increase of the spreads was less than the blowouts seen in recent weeks, suggesting that the Fed’s support might be helping market conditions that would have been much worse without the central bank putting its unlimited buying power in play.
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.
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.
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.
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.
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,” said Keri Bertolino, an Amazon spokeswoman, 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,” said Keri Bertolino, an Amazon spokeswoman, 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 will provide short-term financing to mutual funds and hedge funds to stave off financial problems for investors in securities cobbled together from residential mortgages. A federal housing regulator took steps Monday to help renters living in large apartment complexes and boost the mutual funds and hedge funds that invest in securities cobbled together from mortgages.
The Federal Housing Finance Agency authorized two government-backed mortgage finance firms — Fannie Mae and Freddie Mac — to begin making short-term loans to investors in mortgage-backed securities to provide them ability to meet payments to banks and other lenders, according to two people familiar with the agency’s plan who were not authorized to speak publicly. 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.
The financing provided by Fannie and Freddie is intended to be a two-day bridge loan that will permit mortgage investors to avoid having to sell off assets in order to raise cash. 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.
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. Also Monday, the agency ordered Fannie and Freddie to begin making short-term loans to investors in mortgage-backed securities, the investment vehicles comprised of bundled mortgages, according to two people familiar with the agency’s plan who were not authorized to speak publicly.
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.
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.
The International Monetary Fund expects “a recession at least as bad as during the global financial crisis or worse” this year, the fund’s managing director, Kristalina Georgieva, said Monday. She added that she expected a recovery in 2021: “The faster the virus stops, the quicker and stronger the recovery will be.”
General Electric said 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 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.
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 Natalie Kitroeff, Jeanna Smialek, David Gelles, Stacey Cowley, Tiffany Hsu, Davey Alba, Niraj Chokshi, 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 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.