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Markets Live Updates: Stocks Wobble as Investors Look for Coronavirus Help Stocks Whipsaw as Investors Look for Coronavirus Help: Live Updates
(about 3 hours later)
Stocks were unsteady in global markets on Monday as investors bet that the world’s governments and central banks would step in to help a global economy slammed by the coronavirus outbreak. Stocks rose on Wall Street in early trading on Monday as investors bet that the world’s governments and central banks would step in to help a global economy slammed by the coronavirus outbreak.
In Europe, stock markets started the day with gains, but those began to fade as trading continued with shares in Germany and France falling by early afternoon. The S&P 500 climbed in early trading, and shares in Europe fluctuated between gains and losses. Most indexes in Asia had ended higher.
Most Asian indexes finished the trading session higher. Futures markets indicated that investors expect Wall Street to open lower later on Monday. Oil prices rose on Monday, reversing last week’s slide, as confidence grew that the Organization of the Petroleum Exporting Countries and Russia would agree to a cut in production this week.
Oil prices rose on Monday, reversing last week’s slide, as confidence grew that the Organization of the Petroleum Exporting Countries and Russia would agree to a cut in production this week.
Investors were heartened by separate statements from the Bank of Japan and Bank of England, both pledging to monitor markets closely and protect monetary stability.Investors were heartened by separate statements from the Bank of Japan and Bank of England, both pledging to monitor markets closely and protect monetary stability.
Yields on the 10-year U.S. Treasury bond fell to 1.08 percent. The drop, driven by rising bond prices, suggests that investors are still looking for safe places to park their money, as well as growing expectation that the Federal Reserve will cut interest rates to support the economy. But signs of caution about the economic outlook remained. Yields on the 10-year U.S. Treasury bond fell to 1.08 percent. The drop, driven by rising bond prices, suggests that investors are still looking for safe places to park their money, as well as growing expectation that the Federal Reserve will cut interest rates to support the economy.
The steadier opening for stocks followed one of the worst weeks for global markets since the 2008 financial crisis, with several major indexes around the world falling more than 10 percent in a few days — a stunning decline that came as investors grappled with the potential economic toll that the outbreak could take.
The virus, now detected in at least 61 countries, has shuttered factories and squeezed businesses across the globe. Companies are also readjusting their annual profit expectations, economists are lowering their forecasts for global growth, and policymakers have signaled that they are ready, if needed, to act to stabilize the economy.The virus, now detected in at least 61 countries, has shuttered factories and squeezed businesses across the globe. Companies are also readjusting their annual profit expectations, economists are lowering their forecasts for global growth, and policymakers have signaled that they are ready, if needed, to act to stabilize the economy.
The selling has left markets in their most precarious state since stocks started climbing in March 2009 after the financial crisis. In such cases, investors tend to sell to limit their losses or wait for clarity to emerge, which in this case could take weeks, if not months. The volatile opening for stocks followed one of the worst weeks for global markets since the 2008 financial crisis, with several major indexes around the world falling more than 10 percent in a few days — a stunning decline that came as investors grappled with the potential economic toll that the outbreak could take.
Here’s how the major indexes fared last week:
S&P 500 in United States: ⬇️ 11%
FTSE 100 in Britain: ⬇️ 11%
DAX in Germany: ⬇️ 12%
KOSPI in South Korea: ⬇️ 8%
Hang Seng Index in Hong Kong: ⬇️ 4%
Nikkei 225 in Japan: ⬇️10%
A major multinational economic group cut its outlook for 2020 as coronavirus cases show up around the globe, suggesting that global growth could be cut in half if infections spread more widely outside China.A major multinational economic group cut its outlook for 2020 as coronavirus cases show up around the globe, suggesting that global growth could be cut in half if infections spread more widely outside China.
The Organization for Economic Cooperation and Development said that if the outbreak swept widely through the Asia-Pacific region, Europe and North America, global growth could fall to 1.5 percent this year, far less than the 3 percent it had projected before the virus surfaced.The Organization for Economic Cooperation and Development said that if the outbreak swept widely through the Asia-Pacific region, Europe and North America, global growth could fall to 1.5 percent this year, far less than the 3 percent it had projected before the virus surfaced.
Updated Feb. 26, 2020
Even if the outbreak is mild and mostly contained outside China — the O.E.C.D.’s expected scenario — global growth could be lowered about half a percentage point relative to previous forecasts, according to an update the group released on Monday ominously titled “Coronavirus: The World Economy at Risk.”Even if the outbreak is mild and mostly contained outside China — the O.E.C.D.’s expected scenario — global growth could be lowered about half a percentage point relative to previous forecasts, according to an update the group released on Monday ominously titled “Coronavirus: The World Economy at Risk.”
In France, Finance Minister Bruno LeMaire said the virus outbreak would probably have “a much more significant” impact on the French economy than first estimated. The government last week lowered its growth forecast to 1.2 percent for this year, down from 1.3 percent, but the figure is likely to be more, he said, without giving a number.In France, Finance Minister Bruno LeMaire said the virus outbreak would probably have “a much more significant” impact on the French economy than first estimated. The government last week lowered its growth forecast to 1.2 percent for this year, down from 1.3 percent, but the figure is likely to be more, he said, without giving a number.
Rising expectations that some of the world’s major oil producers will agree to production cuts appeared to steady oil prices on Monday. For weeks, global supplies of medical masks have been tight as governments, medical facilities and consumers rush to stockpile protective gear against the spread of the coronavirus.
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But much of the world’s supply is already under lockdown.
Hubei and its provincial capital, Wuhan, the now-quarantined ground zero for the coronavirus, is a major producer of surgical masks, gowns, face shields, bandages and other protective gear for the health care industry. Several manufacturers are based in Xiantao, China, about 100 kilometers west of Wuhan.
The Chinese government is pushing medical equipment manufacturers around the country back to work and offering generous subsidies to boost their production of products like masks. China’s Ministry of Industry and Information Technology said last week that its daily production capacity for masks had reached 70 million, up from 20 million at the beginning of February.
But few of those products may make their way to the United States. The face masks that are available appear to have been commandeered by Chinese local governments before they can be exported, which some health experts say is understandable since China remains the center of the outbreak.
American officials have not looked kindly on the restrictions. In an interview with Fox Business Network on Feb. 24, White House economic adviser Peter Navarro accused China of putting up barriers to prevent medical products from coming to the United States.
Companies like 3M, Honeywell and Alpha Pro Tech have said they are ramping up mask production globally to help meet spikes in demand.
The U.S. Centers for Disease Control and Prevention say that masks most effectively stop the spread of disease when worn by people who are already sick, not those that are healthy. They have urged the public to leave masks for medical workers and the patients who need them most.
India’s carmakers have been hit by shortages in parts, as the impact of China’s efforts to control the coronavirus outbreak ripple through supply chains.
Mumbai-based Tata Motors said on Sunday that the outbreak affected vehicle production, blaming the disruptions for a one-third drop in sales last month. Other carmakers, like Mahindra and Mahindra, have also said that their supply of parts from China had been crimped.
China accounts for roughly one quarter of India’s imports of automotive components, according to ICRA, an Indian credit rating firm.
Hyundai, the South Korean automaker, temporarily closed plants last month for a similar reason. So far, North American automakers haven’t been affected.
Supply chain disruptions and a manufacturing downturn could add to the economic problems already facing India, which is in its biggest slump in more than a decade.
Analysts at Fitch Ratings, a credit rating firm, on Monday lowered its estimate of India’s economic growth to a rate of 4.9 percent for the current year from its previous outlook of 5.1 percent.
Rising expectations that some of the world’s major oil producers will agree to production cuts appeared to steady oil prices on Monday.
Officials from the Organization of the Petroleum Exporting Countries and Russia are expected to meet in Vienna this week to try to halt plunging oil prices, which sank about 14 percent last week alone. While the spreading coronavirus epidemic is cutting into demand for oil and weakening OPEC’s clout, the meeting will still be watched closely by market participants because countries representing roughly 40 percent of world oil supplies will be present.Officials from the Organization of the Petroleum Exporting Countries and Russia are expected to meet in Vienna this week to try to halt plunging oil prices, which sank about 14 percent last week alone. While the spreading coronavirus epidemic is cutting into demand for oil and weakening OPEC’s clout, the meeting will still be watched closely by market participants because countries representing roughly 40 percent of world oil supplies will be present.
Hopes that the gathering will lead to new and deeper production cuts helped spark sharp price rises on Monday, ending last week’s slide. Brent crude, the international benchmark, rose by about 1.5 percent to $50.45 a barrel. Hopes that the gathering will lead to new and deeper production cuts helped spark sharp price rises on Monday, ending last week’s slide. Brent crude, the international benchmark, rose to more than $51 a barrel.
President Vladimir V. Putin of Russia bolstered those hopes by suggesting on Sunday that his country was willing to work with OPEC to try to stabilize prices. The markets have been unsettled in recent weeks by Russia’s reluctance to join OPEC in an emergency meeting to discuss output trims to offset the effects of the coronavirus on demand.President Vladimir V. Putin of Russia bolstered those hopes by suggesting on Sunday that his country was willing to work with OPEC to try to stabilize prices. The markets have been unsettled in recent weeks by Russia’s reluctance to join OPEC in an emergency meeting to discuss output trims to offset the effects of the coronavirus on demand.
Russian officials have argued that it was too early to understand the full impact of the coronavirus and that a shortfall of about 1 million barrels a day, caused by political turmoil in Libya, was helping to offset reduced demand from the virus outbreak.Russian officials have argued that it was too early to understand the full impact of the coronavirus and that a shortfall of about 1 million barrels a day, caused by political turmoil in Libya, was helping to offset reduced demand from the virus outbreak.
Rumors swirled on Friday that the biggest central banks might make take coordinated action over the weekend to soothe tumultuous markets, though several economists said chances had dimmed after Federal Reserve Chair Jerome H. Powell released a statement late Friday afternoon pledging to act as needed.Rumors swirled on Friday that the biggest central banks might make take coordinated action over the weekend to soothe tumultuous markets, though several economists said chances had dimmed after Federal Reserve Chair Jerome H. Powell released a statement late Friday afternoon pledging to act as needed.
“Some have speculated that globally coordinated easing could come as early as this weekend, and we would certainly welcome that,” economists at Evercore ISI wrote in a note on Friday. “But we think of the Powell statement as probably a substitute for such early concrete action.”
No such coordinated intervention took place on Monday, but the Bank of England and Bank of Japan both said they were monitoring the situation closely.No such coordinated intervention took place on Monday, but the Bank of England and Bank of Japan both said they were monitoring the situation closely.
Bank of Japan said in a statement that it would “strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases.” It did not announce any significant actions.Bank of Japan said in a statement that it would “strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases.” It did not announce any significant actions.
The Bank of England pledged to “ensure all necessary steps are taken to protect financial and monetary stability.” The bank said in a statement that it was working closely with the Treasury, international partners and the Financial Conduct Authority.The Bank of England pledged to “ensure all necessary steps are taken to protect financial and monetary stability.” The bank said in a statement that it was working closely with the Treasury, international partners and the Financial Conduct Authority.
Central bank coordination is rare and reserved for moments of major concern. The major central banks cut interest rates simultaneously as markets collapsed in October 2008. Central bank coordination is rare and reserved for moments of major concern. The major central banks cut interest rates simultaneously as markets collapsed in October 2008. Even if the world’s major central banks do take action, lowering borrowing costs will get the global economy only so far.
Even if the world’s major central banks do take action, lowering borrowing costs will get the global economy only so far.
Rates are historically low across advanced economies. They are negative across Europe, where infections are rapidly mounting, and in Japan. Officials in those economies had been trying to coax households and businesses to spend amid lackluster growth by buying huge quantities of bonds.Rates are historically low across advanced economies. They are negative across Europe, where infections are rapidly mounting, and in Japan. Officials in those economies had been trying to coax households and businesses to spend amid lackluster growth by buying huge quantities of bonds.
And it is unclear whether monetary policy is the ammunition needed to fight this type of economic threat, at least at the outset. Policymakers cut rates to ward off a downturn — or to contain one that has already arrived — by making it cheaper to borrow money, assuming that it will help prod the economy.
Rate cuts, or even hints that they are coming, can help calm markets and keep credit flowing. But a rate cut can do little to restart production lines hobbled by workers placed in quarantine or told to stay home. Nor can central banks do much to lure tourists back to back to Venice or encourage people to fly again.Rate cuts, or even hints that they are coming, can help calm markets and keep credit flowing. But a rate cut can do little to restart production lines hobbled by workers placed in quarantine or told to stay home. Nor can central banks do much to lure tourists back to back to Venice or encourage people to fly again.
Two Amazon employees in Europe have contracted the coronavirus, the company said, and other tech companies have begun introducing strong measures to prevent their employees around the world from being affected by the outbreak. As retailers started to report fourth quarter earnings in the past week, coronavirus has become a major topic for executives and analysts.
An Amazon spokesman, Drew Herdener, said on Sunday that the internet retailer was “supporting the affected employees, who were in Milan and are now in quarantine.” Northern Italy has become a center of the outbreak. The shoe company Steve Madden said that it expected lower sales and earnings for the year, in part because of the virus, noting that 88 percent of its products were made in China in 2019. Ed Rosenfeld, Steve Madden’s chief executive, said on a Thursday earnings call that the brand was mainly seeing an impact on its supply chain, which was leading to production delays.
He added that Amazon, which is based in Seattle, did not know of any employees in the United States who had become sick. “We’re looking at, on average, production delays of about three weeks,” Mr. Rosenfeld said. While the company will fly more goods, it can’t transport everything via airfreight, which will delay shipments and affect sales, he added.
Late last week, Amazon, the second largest private employer in the United States, indefinitely halted all travel, including trips within the U.S. Several chains, like Big Lots and Foot Locker, emphasized that their forecasts for the year did not yet include potential effects from the outbreak and that they were monitoring the crisis closely.
Over the weekend, Facebook said in an internal memo that it would no longer allow social visits from non-employees at any of the company’s global offices. And Twitter said in a blog post on Sunday that it would restrict all nonessential business travel for its employees and partners. Others, like J.C. Penney, said that any potential challenges could be mitigated by moves away from China after last year, when concern mounted around new potential tariffs on Chinese imports.
Fear of the coronavirus has presented a business opportunity for people promoting dubious products and bogus cures.Fear of the coronavirus has presented a business opportunity for people promoting dubious products and bogus cures.
LinkedIn, the professional networking website, began looking into a company called “coronavirus masks” that created an employer post on its platform. The post directed traffic to a website where orders could be placed for masks and other preventive gear.LinkedIn, the professional networking website, began looking into a company called “coronavirus masks” that created an employer post on its platform. The post directed traffic to a website where orders could be placed for masks and other preventive gear.
But the contact email for the company did not work, and the mailing address listed on the page was an apartment complex in Washington, D.C.But the contact email for the company did not work, and the mailing address listed on the page was an apartment complex in Washington, D.C.
By day’s end, the LinkedIn posting was disabled. Fred Han, a LinkedIn spokesman, said the page had been removed for violating its policy against inappropriately promotional content. “We appreciate you flagging it to us so our teams could investigate,” he wrote in an email.By day’s end, the LinkedIn posting was disabled. Fred Han, a LinkedIn spokesman, said the page had been removed for violating its policy against inappropriately promotional content. “We appreciate you flagging it to us so our teams could investigate,” he wrote in an email.
Companies and regulators have dealt with other scams already.
Amazon said on Thursday that it had barred more than 1 million products from being sold on its platform because the sellers had made inaccurate claims about the product being able to cure or protect against the coronavirus. And Tuesday, the Securities and Exchange Commission suspended trading in shares of a company called Eastgate Biotech, which claimed to have the “international marketing rights to an approved coronavirus treatment.”Amazon said on Thursday that it had barred more than 1 million products from being sold on its platform because the sellers had made inaccurate claims about the product being able to cure or protect against the coronavirus. And Tuesday, the Securities and Exchange Commission suspended trading in shares of a company called Eastgate Biotech, which claimed to have the “international marketing rights to an approved coronavirus treatment.”
Reporting was contributed by Jeanna Smialek, Liz Alderman, Alan Rappeport, Matt Phillips, Matt Goldstein, Jack Ewing, Karen Weise, Kevin Granville, Mike Isaac, Michael Corkery, Alexandra Stevenson and Carlos Tejada. Two Amazon employees in Milan have contracted the coronavirus, the company said. Amazon has indefinitely halted all travel, including trips within the United States.
A major energy conference in Houston was canceled. CERAWeek, run by IHS Markit, had been scheduled for the week of March 9, with executives and experts from over 80 countries attending.
Facebook said in an internal memo that it would no longer allow social visits from non-employees at any of the company’s global offices. And Twitter said in a blog post on Sunday that it would restrict all nonessential business travel.
Reporting was contributed by Stanley Reed, Jeanna Smialek, Liz Alderman, Alan Rappeport, Ana Swanson, Matt Phillips, Matt Goldstein, Jack Ewing, Karen Weise, Kevin Granville, Mike Isaac, Michael Corkery, Alexandra Stevenson, Sapna Maheshwari, Carlos Tejada, Vindu Goel and Karen Singh.