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Stocks Sink as Economic Damage Piles Up: Live Markets Updates Dow Erases ‘Trump Bump’ as Economic Damage Piles Up: Live Updates
(32 minutes later)
Policymakers have stepped in with promises to do whatever it takes to support their economies, and Senate Republicans are working on a $1 trillion economic stimulus bill. China is reporting that it has now contained the coronavirus’s spread, and the Japanese government is considering when to reopen schools — indications that the worst of the pandemic may be behind both of those countries.Policymakers have stepped in with promises to do whatever it takes to support their economies, and Senate Republicans are working on a $1 trillion economic stimulus bill. China is reporting that it has now contained the coronavirus’s spread, and the Japanese government is considering when to reopen schools — indications that the worst of the pandemic may be behind both of those countries.
That’s the good news. But the bad news is equally persistent: The number of confirmed infections in the United States continues to climb fast, California has imposed a “shelter in place” restriction on the state, New York’s governor told the state’s residents to stay indoors and ordered nonessential businesses to keep workers home, Britain is closing all of its bars, restaurants, and health clubs, and a wave of jobless claims is only just beginning to swell. That’s the good news. But the bad news is equally persistent: The number of confirmed infections in the United States continues to climb fast, California has imposed a “shelter in place” restriction on the state, New York’s governor told residents to stay indoors and ordered nonessential businesses to keep workers home, Britain is closing all of its bars, restaurants, and health clubs, and a wave of jobless claims is only just beginning to swell.
On Friday, traders clearly settled on the negative. The S&P 500 fell more than 3 percent in afternoon trading, after rising earlier in the day, as the mood in financial markets grew increasingly dour. On Friday, traders clearly focused on the negative. The S&P 500 fell about 4 percent, after rising earlier in the day, as the mood in financial markets grew increasingly dour.
It was another sharp turn in a market that has come to be characterized by dizzying changes in direction over the past month as investors have grappled with the barrage of developments.It was another sharp turn in a market that has come to be characterized by dizzying changes in direction over the past month as investors have grappled with the barrage of developments.
Analysts at the hedge fund Bridgewater on Thursday estimated a $4 trillion hit to corporate revenue in the United States. “That is a very dangerous decline, and, if not mitigated, it will lead to a long-lasting ripple,” they wrote on the fund’s website. The drop on Friday meant that the Dow Jones industrial average closed below where it stood on the day before President Trump was inaugurated, erasing the so-called ‘Trump bump’ that the president has trumpeted throughout his presidency as evidence of his success. The S&P 500 isn’t far from that mark as well.
If governments can’t fill that gap, they wrote, company spending on capital expenditures and mergers will plunge. Stocks have collapsed about 35 percent in a month, wiping out trillions in value.
“There will also be meaningful cuts in employment as companies cut back on hiring, which will flow through to the economy,” they wrote. Analysts at the hedge fund Bridgewater on Thursday estimated that corporate revenue in the United States — among public and private companies — could fall by $4 trillion. “That is a very dangerous decline, and, if not mitigated, it will lead to a long-lasting ripple,” they wrote on Bridgewater’s website.
Friday’s drop meant that the Dow Jones industrial average was poised to close below where it stood on the day before President Trump was inaugurated, erasing the so-called ‘Trump bump’ that the president has touted throughout his presidency as evidence of his success. The S&P 500 isn’t far from that mark as well. On Friday, United Airlines warned that it would have to lay off workers or lower wages if it did not get government assistance by the end of the month.
Oil prices, which have cratered along with expectations for economic growth this year, fell 10 percent on Friday, dragging shares of energy companies lower.
Investors in Europe fared better, with stocks in Paris and Frankfurt up more than 3 percent on Friday.
The European Commission on Friday triggered the so-called “general escape clause,” a panic button that lifts stringent spending rules and allows countries to run big deficits to respond to a crisis, turning to an emergency economic measure that would have been unimaginable just weeks ago.The European Commission on Friday triggered the so-called “general escape clause,” a panic button that lifts stringent spending rules and allows countries to run big deficits to respond to a crisis, turning to an emergency economic measure that would have been unimaginable just weeks ago.
The clause means Europe is abandoning its expectations that countries keep their deficits and debt loads small, and it’s the first time in the European Union’s history that it has turned to this measure.The clause means Europe is abandoning its expectations that countries keep their deficits and debt loads small, and it’s the first time in the European Union’s history that it has turned to this measure.
“Today — and this is new and never done before — we trigger the general escape clause,” Ursula von der Leyen, the president of the European Commission, said in a video posted on her Twitter account.“Today — and this is new and never done before — we trigger the general escape clause,” Ursula von der Leyen, the president of the European Commission, said in a video posted on her Twitter account.
“That means national governments can pump into the economy as much as they need. … We are relaxing the budgetary rules to enable them to do that,” she added.“That means national governments can pump into the economy as much as they need. … We are relaxing the budgetary rules to enable them to do that,” she added.
The 27 countries in the European Union and the institutions that run the world’s richest bloc of nations are scrambling to fight the coronavirus and mitigate its economic impact. Suspending rules that limit spending and cap how much state aid can be funneled to ailing businesses is a key part of the response.The 27 countries in the European Union and the institutions that run the world’s richest bloc of nations are scrambling to fight the coronavirus and mitigate its economic impact. Suspending rules that limit spending and cap how much state aid can be funneled to ailing businesses is a key part of the response.
Next in the European arsenal to combat the crisis will be a deeply political debate about the idea of issuing joint debt to fund the massive stimulus needed to cushion the economic catastrophe.Next in the European arsenal to combat the crisis will be a deeply political debate about the idea of issuing joint debt to fund the massive stimulus needed to cushion the economic catastrophe.
The Federal Reserve will backstop municipal money market mutual funds, helping to ensure that investment vehicles holding local debt can meet redemptions as people and businesses cash out their holdings.The Federal Reserve will backstop municipal money market mutual funds, helping to ensure that investment vehicles holding local debt can meet redemptions as people and businesses cash out their holdings.
The Fed will accept short-term, highly rated municipal debt as loan collateral in one of its emergency programs, it announced on Friday. That will give banks an incentive to buy such debt from money market mutual funds, allowing them to offload the securities to come up with cash quickly.The Fed will accept short-term, highly rated municipal debt as loan collateral in one of its emergency programs, it announced on Friday. That will give banks an incentive to buy such debt from money market mutual funds, allowing them to offload the securities to come up with cash quickly.
The move could keep the funds, which are popular investments among ordinary people and companies, from crashing as investors cash out. It could also help to soothe some pain in local bond markets, which have seen interest rates surge as investors flee amid coronavirus economic fears.The move could keep the funds, which are popular investments among ordinary people and companies, from crashing as investors cash out. It could also help to soothe some pain in local bond markets, which have seen interest rates surge as investors flee amid coronavirus economic fears.
That announcement expands a program the Fed announced earlier this week. The Fed said in a release late Wednesday night that it would establish a so-called Money Market Mutual Fund Liquidity Facility, backed by $10 billion from the Treasury Department.
Also on Friday, the Fed took another step to make sure dollars continue flowing around the world, teaming up with five partner central banks to make short-term currency swap operations more frequent.
President Trump said on Friday that he will demand that companies receiving government aid not be allowed to buy back their own shares.President Trump said on Friday that he will demand that companies receiving government aid not be allowed to buy back their own shares.
His comments, at a news conference, come as lawmakers debate what types of conditions, if any, to place on businesses that receive government funds to help alleviate the economic strain of the coronavirus.His comments, at a news conference, come as lawmakers debate what types of conditions, if any, to place on businesses that receive government funds to help alleviate the economic strain of the coronavirus.
American companies have spent about $1.4 trillion repurchasing their own shares over the past three years. The spending, which was boosted by corporate tax cuts that had been championed by Mr. Trump, can boost a company’s stock price.American companies have spent about $1.4 trillion repurchasing their own shares over the past three years. The spending, which was boosted by corporate tax cuts that had been championed by Mr. Trump, can boost a company’s stock price.
“I am fine with restricting buybacks,” Mr. Trump said. “I would demand that there would be no stock buybacks. I don’t want them to take hundreds of millions of dollars and buying back their stocks because that’s nothing.”“I am fine with restricting buybacks,” Mr. Trump said. “I would demand that there would be no stock buybacks. I don’t want them to take hundreds of millions of dollars and buying back their stocks because that’s nothing.”
Mr. Trump also criticized companies that used their 2017 tax savings to buy back their own shares.
“It was some companies that used that money to buy back stocks,” he said “driving up the stocks artificially in many cases. I don’t like it.”
However, the 2019 Economic Report of the President — written by White House economists and signed by Mr. Trump himself — praised the surge in buybacks by multinational corporations in the United States following the passage of the 2017 tax cuts.
Treasury Secretary Steven Mnuchin said on Friday that tax day will be moved to July 15 from April 15, giving all taxpayers an additional three months to file their returns.Treasury Secretary Steven Mnuchin said on Friday that tax day will be moved to July 15 from April 15, giving all taxpayers an additional three months to file their returns.
Mr. Mnuchin said that the decision was made at the direction of President Trump. Previously, the Treasury Department allowed individuals and companies to defer tax payments to July 15 but were still required to file their returns in April.Mr. Mnuchin said that the decision was made at the direction of President Trump. Previously, the Treasury Department allowed individuals and companies to defer tax payments to July 15 but were still required to file their returns in April.
The Treasury secretary encouraged all taxpayers who were expecting a refund to file on time so that they could get their money. Mr. Mnuchin has said that the delay would inject $300 billion of temporary liquidity into the United States economy.The Treasury secretary encouraged all taxpayers who were expecting a refund to file on time so that they could get their money. Mr. Mnuchin has said that the delay would inject $300 billion of temporary liquidity into the United States economy.
The orders by Gov. Gavin Newsom of California and Gov. Andrew M. Cuomo of New York that residents stay in their houses as much as possible effectively puts 60 million people on lockdown, raising profound implications for the American economy.The orders by Gov. Gavin Newsom of California and Gov. Andrew M. Cuomo of New York that residents stay in their houses as much as possible effectively puts 60 million people on lockdown, raising profound implications for the American economy.
California, with a population of 40 million, is a $3 trillion economy — the world’s fifth largest if it were a country. It is highly integrated with global commerce through its large export industries, its huge farming sector and its role as a hub of international trade. Most U.S. imports from China move through the state’s ports and airports before heading to inland warehouses and then being shipped by trucks and trains to supply auto dealers, factory floors and retailers across the United States.California, with a population of 40 million, is a $3 trillion economy — the world’s fifth largest if it were a country. It is highly integrated with global commerce through its large export industries, its huge farming sector and its role as a hub of international trade. Most U.S. imports from China move through the state’s ports and airports before heading to inland warehouses and then being shipped by trucks and trains to supply auto dealers, factory floors and retailers across the United States.
“We contribute an outsize share of federal income taxes, and are the port of entry to the nation,” said Stephen Levy, director of the Center for Continuing Study of the California Economy.“We contribute an outsize share of federal income taxes, and are the port of entry to the nation,” said Stephen Levy, director of the Center for Continuing Study of the California Economy.
New York, which has about 20 million residents, is the nation’s third-largest state economy, after California and Texas. New York City’s economy is dominated by finance, media and professional services like law and accounting, work that may be able to be done remotely in some form. But more than 300,000 New York City residents — and more than 600,000 statewide — work in bars and restaurants, and hundreds of thousands more work in hotels, retail stores and entertainment venues.New York, which has about 20 million residents, is the nation’s third-largest state economy, after California and Texas. New York City’s economy is dominated by finance, media and professional services like law and accounting, work that may be able to be done remotely in some form. But more than 300,000 New York City residents — and more than 600,000 statewide — work in bars and restaurants, and hundreds of thousands more work in hotels, retail stores and entertainment venues.
New York is also a major hub of international tourism, virtually all of which will come to a halt. The Port of New York and New Jersey is the nation’s second largest by tonnage, after the California ports of Los Angeles and Long Beach. And while the state is no longer known for its factories, upstate New York still has a substantial manufacturing sector.New York is also a major hub of international tourism, virtually all of which will come to a halt. The Port of New York and New Jersey is the nation’s second largest by tonnage, after the California ports of Los Angeles and Long Beach. And while the state is no longer known for its factories, upstate New York still has a substantial manufacturing sector.
They are a new class of emergency medical workers: the more than two million Americans reporting to work each day to sell food and other household staples amid the coronavirus pandemic.
As shoppers swarm stores, snapping up everything from milk to toilet paper, cashiers are there to ring them out. Stockroom employees replenish shelves as soon as shipments arrive. Their presence is a source of calm, signifying that, even as demand has surged, supply chains remain intact and the essentials that people need remain available.
But these same employees are growing tired and, because they constantly interact with customers, fearful of getting sick themselves.
Amy Askelson, a grocery worker in Kalamazoo, Mich., said she uses hand sanitizer after each interaction with a customer. But Ms. Askelson, 36, still feels vulnerable. She has multiple sclerosis, meaning her immune system is impaired. And she worries about passing the virus to her 72-year-old mother, who has been helping take care of her children.
“I’m going to work every day with the general public and coming over to look at my kids, and I know I’m giving her those germs,” she said. “We’re supposed to be standing six feet away, but I work in the self-checkout where you have to be right next to the customer.”
The two top executives at United Airlines asked employees in a letter on Friday to contact members of Congress and urge them to bail out the aviation industry. If government assistance doesn’t materialize by month’s end, the executives warned, the company would have to make cuts like laying off workers or lowering wages in line with the 60 percent reduction of flights for April.The two top executives at United Airlines asked employees in a letter on Friday to contact members of Congress and urge them to bail out the aviation industry. If government assistance doesn’t materialize by month’s end, the executives warned, the company would have to make cuts like laying off workers or lowering wages in line with the 60 percent reduction of flights for April.
WhatsApp, the global messaging service owned by Facebook, said on Friday it had partnered with the World Health Organization to distribute verified information about COVID-19. Users sign up for the program through a link on the W.H.O. website, and a chatbot then doles out up-to-date information about death statistics, the latest news and articles, and how to protect oneself from contracting the virus.WhatsApp, the global messaging service owned by Facebook, said on Friday it had partnered with the World Health Organization to distribute verified information about COVID-19. Users sign up for the program through a link on the W.H.O. website, and a chatbot then doles out up-to-date information about death statistics, the latest news and articles, and how to protect oneself from contracting the virus.
Bank employees are considered essential workers under the federal government’s emergency declaration, which means banks can require workers to keep coming into work. JPMorgan Chase on Friday told employees that it will pay anyone who is required to keep working and who normally makes less than $60,000 — or whose normal job is to work at one of its branches — up to $1,000 extra.Bank employees are considered essential workers under the federal government’s emergency declaration, which means banks can require workers to keep coming into work. JPMorgan Chase on Friday told employees that it will pay anyone who is required to keep working and who normally makes less than $60,000 — or whose normal job is to work at one of its branches — up to $1,000 extra.
Reporting and research were contributed by Alexandra Stevenson, Ben Dooley, Jason Karaian, Adam Satariano, Amie Tsang, Jeanna Smialek, Matina Stevis-Gridneff, Conor Dougherty, Emily Flitter, C.J. Hughes, Ben Casselman, Niraj Chokshi, Michael de la Merced, Mike Isaac, Daniel Victor and Kevin Granville.Reporting and research were contributed by Alexandra Stevenson, Ben Dooley, Jason Karaian, Adam Satariano, Amie Tsang, Jeanna Smialek, Matina Stevis-Gridneff, Conor Dougherty, Emily Flitter, C.J. Hughes, Ben Casselman, Niraj Chokshi, Michael de la Merced, Mike Isaac, Daniel Victor and Kevin Granville.