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Stocks Rally as Traders Look for Economic Help: Live Market Updates Stocks Rally as Traders Look for Economic Help: Live Market Updates
(about 2 hours later)
Stocks rose on Monday, snapping back from one of the worst weeks for global markets since the 2008 financial crisis as investors seized on promises that the world’s governments would step in to help if the global economy is slammed by the outbreak of the coronavirus.Stocks rose on Monday, snapping back from one of the worst weeks for global markets since the 2008 financial crisis as investors seized on promises that the world’s governments would step in to help if the global economy is slammed by the outbreak of the coronavirus.
The French government confirmed on Monday that central bankers from the world’s biggest economies will join a conference call with G7 finance ministers on Tuesday to discuss the economic response to the virus outbreak. Stocks rallied on the announcement as it fueled expectations that governments might lower interest rates in tandem. The French government confirmed on Monday that central bankers from the world’s biggest economies will join a conference call with Group of 7 finance ministers on Tuesday to discuss the economic response to the virus outbreak. Stocks rallied on the announcement as it fueled expectations that governments might lower interest rates in tandem.
“It has already stoked expectations of a coordinated cut,” Roberto Perli, a former Fed researcher who is now an economist at Cornerstone Macro, said in an email. “If it doesn’t happen, it will only add to market volatility.”“It has already stoked expectations of a coordinated cut,” Roberto Perli, a former Fed researcher who is now an economist at Cornerstone Macro, said in an email. “If it doesn’t happen, it will only add to market volatility.”
But Mr. Perli did not see it as a sign that a simultaneous cut with other global central banks was necessarily coming. Nor did Seth Carpenter, another former Fed researcher now at UBS. “They could cut, but it doesn’t mean they will,” he said in an email. “The rally in equities today has perversely probably made it easier for the Fed to sit back and wait to see what happens.” But Mr. Perli did not see it as a sign that a simultaneous cut with other global central banks was necessarily coming. Nor did Seth Carpenter, another former Fed researcher, now at UBS. “They could cut, but it doesn’t mean they will,” he said in an email. “The rally in equities today has perversely probably made it easier for the Fed to sit back and wait to see what happens.”
Early Monday, both the Bank of Japan and Bank of England pledged to monitor markets closely and safeguard financial stability. Later, the International Monetary Fund and the World Bank issued a joint statement saying that the groups “stand ready to help our member countries address the human tragedy and economic challenge” posed by the virus, particularly “poor countries were health systems are the weakest and people are most vulnerable.” Early Monday, both the Bank of Japan and Bank of England pledged to monitor markets closely and safeguard financial stability. Later, the International Monetary Fund and the World Bank issued a joint statement saying that the groups “stand ready to help our member countries address the human tragedy and economic challenge” posed by the virus, particularly “poor countries where health systems are the weakest and people are most vulnerable.”
“Throughout the world you are seeing clearly a policy response,” said Rich Ross, a managing director at Evercore ISI. “That’s what’s helping to buoy the market.”“Throughout the world you are seeing clearly a policy response,” said Rich Ross, a managing director at Evercore ISI. “That’s what’s helping to buoy the market.”
As health officials have raced to contain the outbreak, factories have been shut and businesses squeezed across the globe. Companies are also readjusting annual profit expectations, and economists are lowering forecasts for global growth. In response, investors around the world dumped stocks last week with several major indexes falling more than 10 percent in just a few days.As health officials have raced to contain the outbreak, factories have been shut and businesses squeezed across the globe. Companies are also readjusting annual profit expectations, and economists are lowering forecasts for global growth. In response, investors around the world dumped stocks last week with several major indexes falling more than 10 percent in just a few days.
But on Monday, the S&P 500 was up nearly 3 percent by midday, and shares in Europe also recovered from losses earlier in the day. Most indexes in Asia had ended higher. But on Monday, the S&P 500 was up more than 2 percent, and shares in Europe also recovered from losses earlier in the day. Most indexes in Asia had ended higher.
Signs of caution about the economic outlook remained. Yields on the 10-year U.S. Treasury bond fell to 1.09 percent. The drop, driven by rising bond prices, suggests that investors are still looking for safe places to park their money, as well as a growing expectation that the Federal Reserve will cut interest rates to support the economy.Signs of caution about the economic outlook remained. Yields on the 10-year U.S. Treasury bond fell to 1.09 percent. The drop, driven by rising bond prices, suggests that investors are still looking for safe places to park their money, as well as a growing expectation that the Federal Reserve will cut interest rates to support the economy.
President Trump continued his browbeating of the Federal Reserve on Monday, saying the Fed chair, Jerome H. Powell, and his colleagues should quickly slash interest rates as the economic risk posed by the coronavirus becomes more stark.President Trump continued his browbeating of the Federal Reserve on Monday, saying the Fed chair, Jerome H. Powell, and his colleagues should quickly slash interest rates as the economic risk posed by the coronavirus becomes more stark.
“As usual, Jay Powell and the Federal Reserve are slow to act,” he wrote on Twitter. “Germany and others are pumping money into their economies. Other Central Banks are much more aggressive. The U.S. should have, for all of the right reasons, the lowest Rate.”
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The Fed has begun signaling that a rate cut is likely and most market participants fully expect a cut at its next policy meeting on March 17 and 18, if not before. “As usual, Jay Powell and the Federal Reserve are slow to act,” he wrote on Twitter. “Germany and others are pumping money into their economies. Other Central Banks are much more aggressive. The U.S. should have, for all of the right reasons, the lowest Rate.”
The Fed has begun signaling that a rate cut is likely, and most market participants fully expect a cut at its next policy meeting on March 17 and 18, if not before.
On Friday, Mr. Powell took the rare step of issuing a statement saying that the Fed was prepared to act “as appropriate to support the economy.”On Friday, Mr. Powell took the rare step of issuing a statement saying that the Fed was prepared to act “as appropriate to support the economy.”
But the Fed can only cut so much, given interest rates are already low, at a range between 1.5 percent and 1.75 percent. Most market participants expect a 50-basis-point cut in March, with some predicting an overall cut this year of 100 basis points — or 1 percent. But the Fed can cut only so much, given interest rates are already low, at a range between 1.5 percent and 1.75 percent. Most market participants expect a 50-basis-point cut in March, with some predicting an overall cut this year of 100 basis points — or 1 percent.
The European Central Bank, which runs monetary policy for Germany and other euro area countries, has joined most of its global counterparts in simply signaling vigilance in response to the virus. It was already buying bonds as part of an easing program.The European Central Bank, which runs monetary policy for Germany and other euro area countries, has joined most of its global counterparts in simply signaling vigilance in response to the virus. It was already buying bonds as part of an easing program.
The Trump administration is grappling with whether to encourage the export of critical medical products like face masks and surgical gear to China — or save those supplies for the United States.
In a notice issued to American businesses last week, the Commerce Department advertised a change in Chinese regulations that would temporarily make it easier for American businesses to export medical products that are useful in battling the coronavirus to China, including protective gear, hand sanitizers and mask manufacturing machines.
The notice came under fire from Lloyd Doggett, a Democratic congressman from Texas, who said that it “seemingly conflicts” with congressional testimony by Alex Azar, the health secretary, who said that there was a shortage of face masks for medical professionals to use in the event of a coronavirus epidemic in the United States.
“Consistent with Trump downplaying the severity of this crisis, his Commerce Department is encouraging the export of the very protective gear already in short supply,” Mr. Doggett said in a statement.
The Commerce Department did not immediately respond to comment. But internal department communications obtained by Mr. Doggett’s office appeared to show that the department had second thoughts about the flyer.
“Please keep China procurement service flyer internal,” said the subject line of an email from Commerce’s domestic health care team. “I got a little too eager to promote it — please hold close until we receive an updated version. More info to come,” the email read.
Global supplies of medical masks have been tight as governments, medical facilities and consumers rush to stockpile protective gear.
The Chinese government is pushing medical equipment manufacturers around the country back to work and offering generous subsidies to raise 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.
As the coronavirus disrupts travel plans, many airlines have reduced service and waived passenger fees for changes. Now the industry is seeking a waiver of its own.As the coronavirus disrupts travel plans, many airlines have reduced service and waived passenger fees for changes. Now the industry is seeking a waiver of its own.
Citing “serious declines in demand,” the International Air Transport Association said on Monday that it was asking governments to suspend rules obliging carriers to maintain minimum levels of service at individual airports.Citing “serious declines in demand,” the International Air Transport Association said on Monday that it was asking governments to suspend rules obliging carriers to maintain minimum levels of service at individual airports.
Rules at about 200 airports worldwide say airlines must use at least 80 percent of the runway capacity they are awarded or risk losing it. About 43 percent of all travelers leave from such “slot-controlled” airports, according to the association.Rules at about 200 airports worldwide say airlines must use at least 80 percent of the runway capacity they are awarded or risk losing it. About 43 percent of all travelers leave from such “slot-controlled” airports, according to the association.
“Research has shown that traffic has collapsed on key Asian routes and that this is rippling throughout the air transport network globally, even between countries without major outbreaks,” Alexandre de Juniac, chief executive of the association, said in a statement.“Research has shown that traffic has collapsed on key Asian routes and that this is rippling throughout the air transport network globally, even between countries without major outbreaks,” Alexandre de Juniac, chief executive of the association, said in a statement.
On Sunday, American Airlines said it was eliminating change fees for tickets booked through March 16, provided the changes are made at least two weeks before the scheduled travel. Last week, JetBlue and Alaska Airlines announced similar waivers.On Sunday, American Airlines said it was eliminating change fees for tickets booked through March 16, provided the changes are made at least two weeks before the scheduled travel. Last week, JetBlue and Alaska Airlines announced similar waivers.
The largest American banks have imposed new limits on their employees’ travel as cases of the coronavirus crop up in more countries. At Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo, employees now need senior managers to approve all international business trips. Only essential trips will be allowed.
“In relevant countries, we have implemented modified working arrangements, such as telecommuting, staggering work hours, and reducing travel between offices, which have proven effective at enabling Wells Fargo to continue business operations while reducing the risk to our employees,” Beth Richek, a Wells Fargo spokeswoman, said in an email.
Bank of America did not respond to requests for comment.
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.
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.”
The French 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.
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.
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 raise 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 because 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, the 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 increases in demand.
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. President Vladimir V. Putin of Russia suggested on Sunday that his country was willing to work with OPEC to try to stabilize prices.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. President Vladimir V. Putin of Russia suggested on Sunday that his country was willing to work with OPEC to try to stabilize prices.
Hopes that the gathering will lead to new and deeper production cuts helped lead to price rises on Monday, ending last week’s slide. Brent crude, the international benchmark, rose to more than $51 a barrel.Hopes that the gathering will lead to new and deeper production cuts helped lead to price rises on Monday, ending last week’s slide. Brent crude, the international benchmark, rose to more than $51 a barrel.
The Saudis and other OPEC members are likely to push for cuts of one million barrels a day.The Saudis and other OPEC members are likely to push for cuts of one million barrels a day.
But as the coronavirus continues to fan out across the globe, sapping economic activity, analysts were doubtful that a cut in production of that size would be enough stem the slide in prices.But as the coronavirus continues to fan out across the globe, sapping economic activity, analysts were doubtful that a cut in production of that size would be enough stem the slide in prices.
As retailers started to report fourth-quarter earnings in the past week, coronavirus has become a major topic for executives and analysts.As retailers started to report fourth-quarter earnings in the past week, coronavirus has become a major topic for executives and analysts.
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.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.
“We’re looking at, on average, production delays of about three weeks,” Mr. Rosenfeld said. The company will fly more goods, but it cannot transport everything via airfreight, which will delay shipments and affect sales, he added.
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.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.
Two Amazon employees in Milan have contracted the coronavirus, the company said. Amazon has indefinitely halted all travel, including trips within the United States.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.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.
The New York Times Company adjusted its expectation for digital advertising revenue this quarter to a decline of 10 percent, according to a Securities and Exchange Commission filing.The New York Times Company adjusted its expectation for digital advertising revenue this quarter to a decline of 10 percent, according to a Securities and Exchange Commission filing.
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.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, Niraj Chokshi, Karen Weise, Kevin Granville, Mike Isaac, Michael Corkery, Alexandra Stevenson, Sapna Maheshwari, Stanley Reed, Carlos Tejada, Vindu Goel and Karen Singh. Reporting was contributed by Stanley Reed, Jeanna Smialek, Liz Alderman, Alan Rappeport, Ana Swanson, Matt Phillips, Matt Goldstein, Jack Ewing, Niraj Chokshi, Karen Weise, Kevin Granville, Mike Isaac, Michael Corkery, Alexandra Stevenson, Sapna Maheshwari, Emily Flitter, Stanley Reed, Carlos Tejada, Vindu Goel and Karen Singh.