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Markets Unsteady as Fed Signals Urgency of Economic Threat Markets Unsteady as Fed Signals Urgency of Economic Threat
(3 months later)
This briefing is no longer updating. Live coverage can be found here.This briefing is no longer updating. Live coverage can be found here.
Futures on the S&P 500 and crude oil prices signaled continued pessimism about the outlook for the economy at the start of trading in Asia on Monday, after the Federal Reserve took emergency measures to address the economic slowdown taking hold in the United States.Futures on the S&P 500 and crude oil prices signaled continued pessimism about the outlook for the economy at the start of trading in Asia on Monday, after the Federal Reserve took emergency measures to address the economic slowdown taking hold in the United States.
The Fed cut interest rates to near zero and said it would buy hundreds of billions of dollars in government debt, moves that are reminiscent of its actions during the financial crisis in 2008.The Fed cut interest rates to near zero and said it would buy hundreds of billions of dollars in government debt, moves that are reminiscent of its actions during the financial crisis in 2008.
The central bank’s moves are aimed at supporting the economy from the fast-spread of the coronavirus. But financial markets remained on edge.The central bank’s moves are aimed at supporting the economy from the fast-spread of the coronavirus. But financial markets remained on edge.
Asian markets were mostly lower in Monday trading. In Japan, the Nikkei 225 index was trading modestly higher, but it was the exception. Australia’s market was down 7.5 percent, leading major markets in the region. Hong Kong was down 2.2 percent. In mainland China, the Shanghai market was down 0.6 percent. South Korean shares were down 1.6 percent.Asian markets were mostly lower in Monday trading. In Japan, the Nikkei 225 index was trading modestly higher, but it was the exception. Australia’s market was down 7.5 percent, leading major markets in the region. Hong Kong was down 2.2 percent. In mainland China, the Shanghai market was down 0.6 percent. South Korean shares were down 1.6 percent.
Yields on U.S. Treasuries fell sharply on the Fed’s bond purchase plan. That news pushed bond prices sharply higher, and sent yields — which move in the opposite direction — down. The yield on the 10-year Treasury note fell 0.28 percentage points, to less than 0.7 percent in early trading.Yields on U.S. Treasuries fell sharply on the Fed’s bond purchase plan. That news pushed bond prices sharply higher, and sent yields — which move in the opposite direction — down. The yield on the 10-year Treasury note fell 0.28 percentage points, to less than 0.7 percent in early trading.
Benchmark global and American crude oil prices were also lower, signaling concern that global demand for crude would continue to fall as the world’s biggest economies temporarily shut down to fight the virus. Futures on the S&P 500 were also sharply lower.Benchmark global and American crude oil prices were also lower, signaling concern that global demand for crude would continue to fall as the world’s biggest economies temporarily shut down to fight the virus. Futures on the S&P 500 were also sharply lower.
Economists have been cutting forecasts for growth for weeks, as they consider how store closings, falling consumer spending and decreased travel will affect the United States.Economists have been cutting forecasts for growth for weeks, as they consider how store closings, falling consumer spending and decreased travel will affect the United States.
On Sunday, economists at Goldman Sachs said they now expected the American economy, the world’s largest, would record zero growth in the first quarter, and would shrink in the second quarter.On Sunday, economists at Goldman Sachs said they now expected the American economy, the world’s largest, would record zero growth in the first quarter, and would shrink in the second quarter.
Even with monetary and fiscal stimulus measures, “these shutdowns and rising public anxiety about the virus are likely to lead to a sharp deterioration in economic activity in the rest of March and throughout April,” Goldman’s economists wrote in a research note.Even with monetary and fiscal stimulus measures, “these shutdowns and rising public anxiety about the virus are likely to lead to a sharp deterioration in economic activity in the rest of March and throughout April,” Goldman’s economists wrote in a research note.
China posted record drops in retail sales, manufacturing activity and investment in the first two months of the year, official data released on Monday morning in Beijing confirmed, after coronavirus containment efforts brought the world’s No. 2 economy to a halt.China posted record drops in retail sales, manufacturing activity and investment in the first two months of the year, official data released on Monday morning in Beijing confirmed, after coronavirus containment efforts brought the world’s No. 2 economy to a halt.
Economic statistics for January and February had been expected to show a decline. But the data released on Monday was even worse than many economists had anticipated.Economic statistics for January and February had been expected to show a decline. But the data released on Monday was even worse than many economists had anticipated.
The Chinese economy was running fairly strongly up until the lockdown of Wuhan on Jan. 23. Then activity nose-dived, more than offsetting that three-and-a-half weeks.The Chinese economy was running fairly strongly up until the lockdown of Wuhan on Jan. 23. Then activity nose-dived, more than offsetting that three-and-a-half weeks.
“The epidemic has had a relatively big impact on current economic operations,” said Mao Shengyong, director general of the department of comprehensive statistics at the National Bureau of Statistics.“The epidemic has had a relatively big impact on current economic operations,” said Mao Shengyong, director general of the department of comprehensive statistics at the National Bureau of Statistics.
Zhu Chaoping, a global markets strategist in the Shanghai office of J.P. Morgan, said that the willingness of China’s statisticians to acknowledge steep declines in January and February made it increasingly likely that China would report an actual shrinkage of its economy in the first quarter of 2 or 3 percent and possibly more. “They have let us know the real situation,” he said.Zhu Chaoping, a global markets strategist in the Shanghai office of J.P. Morgan, said that the willingness of China’s statisticians to acknowledge steep declines in January and February made it increasingly likely that China would report an actual shrinkage of its economy in the first quarter of 2 or 3 percent and possibly more. “They have let us know the real situation,” he said.
Mr. Mao said that whether the economy shrinks in the first quarter would depend on what happens in March.Mr. Mao said that whether the economy shrinks in the first quarter would depend on what happens in March.
Retail sales tumbled 20.5 percent in the first two months of the year compared with a year ago, after authorities kept stores closed beyond January’s Lunar New Year holiday. Even when shops reopened, often under pressure from their landlords, they had almost no customers until early March as many people continued to stay home to avoid infection.Retail sales tumbled 20.5 percent in the first two months of the year compared with a year ago, after authorities kept stores closed beyond January’s Lunar New Year holiday. Even when shops reopened, often under pressure from their landlords, they had almost no customers until early March as many people continued to stay home to avoid infection.
Industrial production fell 13.5 percent. Many factories did not reopen until late February if at all. Tens of millions of workers had not yet returned from visits to their villages because of quarantines and roadblocks.Industrial production fell 13.5 percent. Many factories did not reopen until late February if at all. Tens of millions of workers had not yet returned from visits to their villages because of quarantines and roadblocks.
Fixed-asset investment slipped 24.5 percent. That category is expected to revive as provinces pour money into infrastructure projects this spring to restart economic growth.Fixed-asset investment slipped 24.5 percent. That category is expected to revive as provinces pour money into infrastructure projects this spring to restart economic growth.
The Fed’s interest rate cut on Sunday was its second emergency measure this month, reflecting its increasingly dire predictions about the economic impact of the coronavirus.The Fed’s interest rate cut on Sunday was its second emergency measure this month, reflecting its increasingly dire predictions about the economic impact of the coronavirus.
“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the central bank said in a statement on Sunday. “The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses.”“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the central bank said in a statement on Sunday. “The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses.”
The Fed cut its benchmark interest rate by a full percentage point, to a range of 0 to 0.25 percent, and said it would increase its holdings of Treasury securities by at least $500 billion and its holdings of government mortgage-backed securities by at least $200 billion “over coming months.”The Fed cut its benchmark interest rate by a full percentage point, to a range of 0 to 0.25 percent, and said it would increase its holdings of Treasury securities by at least $500 billion and its holdings of government mortgage-backed securities by at least $200 billion “over coming months.”
The Fed’s actions are aimed at making it easier for banks to lend money to businesses facing a steep and sudden drop in revenue as the virus forces them to curtail their activity or shut down.The Fed’s actions are aimed at making it easier for banks to lend money to businesses facing a steep and sudden drop in revenue as the virus forces them to curtail their activity or shut down.
In a sign of how urgent the Fed considered Sunday’s moves, the central bank’s chairman, Jerome H. Powell, said the Federal Open Market Committee would no longer hold its previously planned meeting scheduled for this week, saying this decision was “in lieu” of that.In a sign of how urgent the Fed considered Sunday’s moves, the central bank’s chairman, Jerome H. Powell, said the Federal Open Market Committee would no longer hold its previously planned meeting scheduled for this week, saying this decision was “in lieu” of that.
Financial markets have plunged in recent weeks as investors fixated on potential costs of the coronavirus outbreak. Stocks are down some 20 percent from their Feb. 19 high.Financial markets have plunged in recent weeks as investors fixated on potential costs of the coronavirus outbreak. Stocks are down some 20 percent from their Feb. 19 high.
On March 3, the Fed cut interest rates by a half percentage point in an emergency announcement. The U.S. stock market managed to rally only for roughly 15 minutes before falling sharply once again and finishing the day down nearly 3 percent.On March 3, the Fed cut interest rates by a half percentage point in an emergency announcement. The U.S. stock market managed to rally only for roughly 15 minutes before falling sharply once again and finishing the day down nearly 3 percent.
The volatility has only grown since then, with the S&P 500 posting its worst-single day loss since the Black Monday crash of 1987 on Thursday, before posting an extraordinary 9.3 percent gain to close the week on Friday.The volatility has only grown since then, with the S&P 500 posting its worst-single day loss since the Black Monday crash of 1987 on Thursday, before posting an extraordinary 9.3 percent gain to close the week on Friday.
The wild swings in prices extend well beyond stocks. At times last week, the market for Treasuries showed signs of trouble — a worrisome indicator because U.S. government bonds are considered the safest spot for investors to park their cash in times of stress.The wild swings in prices extend well beyond stocks. At times last week, the market for Treasuries showed signs of trouble — a worrisome indicator because U.S. government bonds are considered the safest spot for investors to park their cash in times of stress.
For weeks, forecasters have warned of the coronavirus’s potential to disrupt the American economy just as it has done elsewhere. But there was little hard evidence beyond delayed shipments of goods from China and stomach-churning volatility in financial markets.For weeks, forecasters have warned of the coronavirus’s potential to disrupt the American economy just as it has done elsewhere. But there was little hard evidence beyond delayed shipments of goods from China and stomach-churning volatility in financial markets.
Now the effects are showing up in downtown nightspots and suburban shopping centers from coast to coast.Now the effects are showing up in downtown nightspots and suburban shopping centers from coast to coast.
Updated June 12, 2020
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
Not since the attacks of Sept. 11, 2001, has a crisis enveloped so much of the economy so quickly. Broadway is dark. The college basketball tournaments are canceled and professional sports are on indefinite hold. Conferences, concerts and St. Patrick’s Day parades have been called off or postponed. Even Disneyland — which stayed open through a recession a decade ago that wiped out millions of American jobs and trillions of dollars in wealth — is shuttered.Not since the attacks of Sept. 11, 2001, has a crisis enveloped so much of the economy so quickly. Broadway is dark. The college basketball tournaments are canceled and professional sports are on indefinite hold. Conferences, concerts and St. Patrick’s Day parades have been called off or postponed. Even Disneyland — which stayed open through a recession a decade ago that wiped out millions of American jobs and trillions of dollars in wealth — is shuttered.
“This hits the heart of the economy, and it hits the economy on all sides,” said Diane Swonk, chief economist at Grant Thornton. “It’s not just that we’re slowing down things. We’re actually hitting the pause button, and there is no precedent, there is no mold for that.”“This hits the heart of the economy, and it hits the economy on all sides,” said Diane Swonk, chief economist at Grant Thornton. “It’s not just that we’re slowing down things. We’re actually hitting the pause button, and there is no precedent, there is no mold for that.”
Starbucks will eliminate seating at all of its company-owned stores in the United States for at least the next two weeks to encourage social distancing, the company announced on Sunday.Starbucks will eliminate seating at all of its company-owned stores in the United States for at least the next two weeks to encourage social distancing, the company announced on Sunday.
It will also temporarily close some stores in “high-social gathering locations,” like malls and college campuses. A Starbucks spokeswoman, Jaime Riley, said the company was still determining how many stores would be closed.It will also temporarily close some stores in “high-social gathering locations,” like malls and college campuses. A Starbucks spokeswoman, Jaime Riley, said the company was still determining how many stores would be closed.
At the stores that remain open, customers will be able to walk up to the counter to order, place delivery or pickup orders online or use drive-throughs where available.At the stores that remain open, customers will be able to walk up to the counter to order, place delivery or pickup orders online or use drive-throughs where available.
For the next two weeks, Starbucks employees who are unable to work or whose hours are reduced because of the store closures will be compensated for the shifts they would normally have worked.For the next two weeks, Starbucks employees who are unable to work or whose hours are reduced because of the store closures will be compensated for the shifts they would normally have worked.
At the end of that period, Starbucks will “reassess to make sure that our partners continue to be financially supported,” Ms. Riley said.At the end of that period, Starbucks will “reassess to make sure that our partners continue to be financially supported,” Ms. Riley said.
Seemingly every aspect of American life has been disrupted by the coronavirus pandemic, and the weekend ritual of watching a movie in the dark sitting with strangers has been no exception. Most cinemas in the United States remain open, with the two biggest chains, AMC and Regal, reducing seating capacity in auditoriums by 50 percent so that people could leave at least one empty seat between them. But fears about the coronavirus kept the masses at home: Domestic ticket sales totaled about $55.3 million, a 44 percent drop from last weekend, despite three new films — “Bloodshot,” “The Hunt” and “I Still Believe” — arriving in wide release.Seemingly every aspect of American life has been disrupted by the coronavirus pandemic, and the weekend ritual of watching a movie in the dark sitting with strangers has been no exception. Most cinemas in the United States remain open, with the two biggest chains, AMC and Regal, reducing seating capacity in auditoriums by 50 percent so that people could leave at least one empty seat between them. But fears about the coronavirus kept the masses at home: Domestic ticket sales totaled about $55.3 million, a 44 percent drop from last weekend, despite three new films — “Bloodshot,” “The Hunt” and “I Still Believe” — arriving in wide release.
It was the worst period for movie theaters in two decades, according to Comscore, which compiles box office data. The next lowest weekend was Sept. 15 to 17 in 2000, when ticket sales totaled $54.5 million and the primary draws were holdovers like “The Watcher,” a serial-killer movie, and “Nurse Betty,” a dark comedy starring Renée Zellweger. In today’s money, however, the 2000 weekend generated roughly $83 million in ticket sales.It was the worst period for movie theaters in two decades, according to Comscore, which compiles box office data. The next lowest weekend was Sept. 15 to 17 in 2000, when ticket sales totaled $54.5 million and the primary draws were holdovers like “The Watcher,” a serial-killer movie, and “Nurse Betty,” a dark comedy starring Renée Zellweger. In today’s money, however, the 2000 weekend generated roughly $83 million in ticket sales.
Just 30 minutes before trading on Wall Street came to a close on Friday, President Trump declared a national emergency and said he’d speed up testing for the coronavirus in the United States with the help of private companies.Just 30 minutes before trading on Wall Street came to a close on Friday, President Trump declared a national emergency and said he’d speed up testing for the coronavirus in the United States with the help of private companies.
Speaking outside the White House — surrounded by chief executives from a number of companies — Mr. Trump said Google would help create a website to screen coronavirus cases, and Walmart, Target and others would help with testing. (The president oversold that Google site.)Speaking outside the White House — surrounded by chief executives from a number of companies — Mr. Trump said Google would help create a website to screen coronavirus cases, and Walmart, Target and others would help with testing. (The president oversold that Google site.)
Investors had been waiting all week to see Washington take action, so they didn’t wait to hear the finer details: Stocks surged some 6 percent as the president spoke about the plans, to end the day up 9 percent.Investors had been waiting all week to see Washington take action, so they didn’t wait to hear the finer details: Stocks surged some 6 percent as the president spoke about the plans, to end the day up 9 percent.
Wynn Resorts to shut down for two weeks. The company said it would close its Wynn Las Vegas and Encore casino hotels on Tuesday at 6 p.m. for two weeks and is “committed” to paying its full-time employees during the shutdown. MGM Resorts said it would close its Las Vegas properties starting Tuesday and would reopen as soon as it is “safe to do so.”Wynn Resorts to shut down for two weeks. The company said it would close its Wynn Las Vegas and Encore casino hotels on Tuesday at 6 p.m. for two weeks and is “committed” to paying its full-time employees during the shutdown. MGM Resorts said it would close its Las Vegas properties starting Tuesday and would reopen as soon as it is “safe to do so.”
Retailers started closing stores: Apple said it would shutter more than 450 stores across 21 countries for two weeks. Nike said it would shut all of its stores in the United States, Canada, Western Europe, New Zealand and Australia for the same period.Retailers started closing stores: Apple said it would shutter more than 450 stores across 21 countries for two weeks. Nike said it would shut all of its stores in the United States, Canada, Western Europe, New Zealand and Australia for the same period.
Spain and France announced drastic restrictions: On Saturday, Spain ordered all citizens to confine themselves to their homes — and to leave only to buy food, go to work, seek medical care or assist the elderly and others in need. France announced the closing of all “non-indispensable” businesses as of midnight, including restaurants, bars and movie theaters.Spain and France announced drastic restrictions: On Saturday, Spain ordered all citizens to confine themselves to their homes — and to leave only to buy food, go to work, seek medical care or assist the elderly and others in need. France announced the closing of all “non-indispensable” businesses as of midnight, including restaurants, bars and movie theaters.
Saudi Aramco’s profit fell. The world’s largest oil company said on Sunday that its profit last year fell more than 20 percent, primarily because of lower oil prices.Saudi Aramco’s profit fell. The world’s largest oil company said on Sunday that its profit last year fell more than 20 percent, primarily because of lower oil prices.
Volkswagen will temporarily close a factory in Chattanooga, Tenn. The factory will close for the day on Monday as managers assess how to handle a shortage of workers who have child care problems.Volkswagen will temporarily close a factory in Chattanooga, Tenn. The factory will close for the day on Monday as managers assess how to handle a shortage of workers who have child care problems.
Jeanna Smialek, Ben Casselman, Jack Ewing, Stanley Reed, Jack Nicas, Liz Alderman, Brooks Barnes, David Yaffe-Bellany and Matt Phillips contributed reporting.Jeanna Smialek, Ben Casselman, Jack Ewing, Stanley Reed, Jack Nicas, Liz Alderman, Brooks Barnes, David Yaffe-Bellany and Matt Phillips contributed reporting.