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Stocks Slide as Caution Creeps Back Into Markets: Live Updates Airlines Tell Employees to Prepare for Difficult Times: Live Updates
(about 1 hour later)
Stocks fell on Friday as investors who initially cheered progress on a $2 trillion U.S. aid package saw further economic troubles ahead. The $2 trillion stimulus bill that President Trump signed on Friday will prevent mass layoffs at the nation’s biggest airlines but it will not prevent a major restructuring of the industry.
Congress gave final approval to the legislation on Friday, and President Trump was expected to sign it into law. The package delivers direct payments and jobless benefits for individuals, money for states and a huge bailout fund for businesses battered by the crisis. The legislation provides $50 billion in grants and loans to airlines, money that is meant to cover employee paychecks and forestall job cuts until October. But even as they welcomed the help, airline executives told their employees to prepare for difficult times, saying they would still have to make tough decisions to get through the coronavirus outbreak and its aftermath.
The pandemic could permanently alter the industry, United’s chief executive, Oscar Munoz, and president, Scott Kirby, warned employees in a memo on Friday. Also on Friday, Delta Air Line’s chief executive, Ed Bastian, asked his employees to consider taking unpaid leaves from the company.
“If the recovery is as slow as we fear, it means our airline and our work force will have to be smaller than it is today,” the United executives wrote in their memo.
The airline warned that it planned to cut service next month by more than 60 percent and still expected its flights to be largely empty. As a result, United is likely to have to cut its schedule even more in May and June.
Mr. Bastian, Delta’s chief executive, thanked the 21,000 Delta workers who have volunteered to take unpaid leave, but encouraged more to join them.
“While this assistance is welcome, it’s important to remember that the relief package is not a cure for the unprecedented challenges we face,” Mr. Bastian said.
On Thursday, American Airlines’ chief executive, Doug Parker, struck a slightly more optimistic tone in a recorded message for employees, saying that the stimulus and the cash available to the airline would allow it to “ride through even the worst of potential future scenarios.”
One airline chief executive, Gary Kelly of Southwest Airlines, went even further, saying he was not sure his company would end up taking any money from the government. “It gives us another option,” Mr. Kelly said. “We have opportunities to raise capital in the private markets and now we also have that opportunity with the federal government.”
Stocks fell on Friday as investors who initially cheered progress on the Washington’s aid package saw further economic trouble ahead.
The package delivers direct payments and jobless benefits for individuals, money for states and a huge bailout fund for businesses battered by the crisis. President Trump signed it into law soon after trading ended on Friday.
The plan is the largest emergency spending program in the nation’s history, but some economists have said it might not be enough to counter the potentially enormous economic damage from the coronavirus pandemic. And investors also faced fresh evidence of the economic impact of the pandemic in the form of a consumer sentiment reading that showed a sharp drop in confidence.The plan is the largest emergency spending program in the nation’s history, but some economists have said it might not be enough to counter the potentially enormous economic damage from the coronavirus pandemic. And investors also faced fresh evidence of the economic impact of the pandemic in the form of a consumer sentiment reading that showed a sharp drop in confidence.
The S&P 500 dropped more than 3 percent on Friday. Stocks in Europe were also lower.The S&P 500 dropped more than 3 percent on Friday. Stocks in Europe were also lower.
The selling reflected caution ahead of the weekend, when bad news about the virus’s spread or further efforts to contain it could overtake the positive sentiment stirred up by the passage of the stimulus bill, Steven Ricchiuto, the chief economist at Mizuho, said in a note to clients.The selling reflected caution ahead of the weekend, when bad news about the virus’s spread or further efforts to contain it could overtake the positive sentiment stirred up by the passage of the stimulus bill, Steven Ricchiuto, the chief economist at Mizuho, said in a note to clients.
“After the stimulus bill passes, and households and companies begin waiting for the government money to start flowing, news stories will resume a more negative tilt,” Mr. Ricchiuto wrote.“After the stimulus bill passes, and households and companies begin waiting for the government money to start flowing, news stories will resume a more negative tilt,” Mr. Ricchiuto wrote.
All told, it was a relatively good week for stock investors. Even after Friday’s drop, the S&P 500 remains up more than 10 percent this week, after a three-day romp for stocks on Tuesday, Wednesday and Thursday.All told, it was a relatively good week for stock investors. Even after Friday’s drop, the S&P 500 remains up more than 10 percent this week, after a three-day romp for stocks on Tuesday, Wednesday and Thursday.
But the decline on Friday suggests that there is still little clarity on whether the worst is over for the market after weeks in which benchmark indexes collapsed amid violent swings.But the decline on Friday suggests that there is still little clarity on whether the worst is over for the market after weeks in which benchmark indexes collapsed amid violent swings.
“We were oversold and we bounced,” said Jeff James, a portfolio manager at Driehaus Capital Management in Chicago, crediting the optimism about actions from the Fed and optimism about Congress’ stimulus bill for the rally earlier in the week.“We were oversold and we bounced,” said Jeff James, a portfolio manager at Driehaus Capital Management in Chicago, crediting the optimism about actions from the Fed and optimism about Congress’ stimulus bill for the rally earlier in the week.
Still, he thinks that the underlying cause of the recent market turmoil, the spread of the virus, will continue to gnaw at investors in the near future. “We need to see the cases stabilize and come down and that could take some time,” said Mr. James, who invests in small and medium-size companies.Still, he thinks that the underlying cause of the recent market turmoil, the spread of the virus, will continue to gnaw at investors in the near future. “We need to see the cases stabilize and come down and that could take some time,” said Mr. James, who invests in small and medium-size companies.
Consumer sentiment tumbled in March as the coronavirus pandemic wiped out millions of jobs and erased trillions of dollars in market value.Consumer sentiment tumbled in March as the coronavirus pandemic wiped out millions of jobs and erased trillions of dollars in market value.
The University of Michigan’s index of consumer sentiment showed the fourth-largest monthly drop in the survey’s 41-year history, according to data released Friday.The University of Michigan’s index of consumer sentiment showed the fourth-largest monthly drop in the survey’s 41-year history, according to data released Friday.
Richard Curtin, chief economist for the survey, noted that two of the larger monthly drops — in October 2008 and December 1980 — presaged long and deep recessions. The other came after Hurricane Katrina ravaged the Gulf Coast in 2005. The coronavirus is in some ways the equivalent of a hurricane hitting the entire country at once.Richard Curtin, chief economist for the survey, noted that two of the larger monthly drops — in October 2008 and December 1980 — presaged long and deep recessions. The other came after Hurricane Katrina ravaged the Gulf Coast in 2005. The coronavirus is in some ways the equivalent of a hurricane hitting the entire country at once.
Sentiment fell even further at the end of the month, putting April on track for the steepest decline on record.Sentiment fell even further at the end of the month, putting April on track for the steepest decline on record.
“As with so much else related to this episode, the numbers are going to get worse before they get better,” Stephen Stanley, chief economist for Amherst Pierpont, wrote in a note to clients.“As with so much else related to this episode, the numbers are going to get worse before they get better,” Stephen Stanley, chief economist for Amherst Pierpont, wrote in a note to clients.
The sharp drop in confidence is hardly a surprise. But it is another troubling sign of how the pandemic is rippling through the economy. If the economic collapse leads to a pullback in spending even among consumers who have not lost jobs and income, that could set off a downward spiral that could be hard to pull out of even when the immediate threat of the virus has passed.The sharp drop in confidence is hardly a surprise. But it is another troubling sign of how the pandemic is rippling through the economy. If the economic collapse leads to a pullback in spending even among consumers who have not lost jobs and income, that could set off a downward spiral that could be hard to pull out of even when the immediate threat of the virus has passed.
President Trump, who has expressed reluctance in recent days to use the Defense Production Act to mobilize private industry to produce critically needed ventilators, reversed himself Friday in a series of posts on Twitter.President Trump, who has expressed reluctance in recent days to use the Defense Production Act to mobilize private industry to produce critically needed ventilators, reversed himself Friday in a series of posts on Twitter.
Mr. Trump lashed out at General Motors on Twitter, blaming it for failing to begin work on new production of ventilators. He said that the company “MUST immediately open their stupidly abandoned Lordstown plant in Ohio, or some other plant, and START MAKING VENTILATORS, NOW!!!!!!Mr. Trump lashed out at General Motors on Twitter, blaming it for failing to begin work on new production of ventilators. He said that the company “MUST immediately open their stupidly abandoned Lordstown plant in Ohio, or some other plant, and START MAKING VENTILATORS, NOW!!!!!!
G.M. sold the Lordstown plant last year to a company that is planning to use it to make electric pickup trucks.G.M. sold the Lordstown plant last year to a company that is planning to use it to make electric pickup trucks.
Later on Friday, G.M. and Ventec Life Systems, which have been working together, said they would begin shipping ventilators as soon as next month. The automaker said it would use a factory in Kokomo, Ind., to make ventilators and Ventec said it would increase production at its plant in Bothell, Wash. G.M. will also manufacture surgical masks, ramping up to 50,000 masks per day within two weeks. The announcement said General Motors was “donating its resources at cost.”Later on Friday, G.M. and Ventec Life Systems, which have been working together, said they would begin shipping ventilators as soon as next month. The automaker said it would use a factory in Kokomo, Ind., to make ventilators and Ventec said it would increase production at its plant in Bothell, Wash. G.M. will also manufacture surgical masks, ramping up to 50,000 masks per day within two weeks. The announcement said General Motors was “donating its resources at cost.”
“Depending on the needs of the federal government, Ventec and GM are poised to deliver the first ventilators next month and ramp up to a manufacturing capacity of more than 10,000 critical care ventilators per month with the infrastructure and capability to scale further,” the statement from the companies said.“Depending on the needs of the federal government, Ventec and GM are poised to deliver the first ventilators next month and ramp up to a manufacturing capacity of more than 10,000 critical care ventilators per month with the infrastructure and capability to scale further,” the statement from the companies said.
An announcement with the White House had been planned for earlier in the week, but was canceled.An announcement with the White House had been planned for earlier in the week, but was canceled.
In a series of tweets, Mr. Trump accused the nation’s carmakers and others of dragging their feet, a contrast to his claim on Thursday that states were overstating their need for tens of thousands of ventilators. The carmakers note that they have not been given any contracts by the Federal Emergency Management Agency, and that the White House had failed to make a decision about who should be supplying the ventilators, which help critically ill patients breathe.In a series of tweets, Mr. Trump accused the nation’s carmakers and others of dragging their feet, a contrast to his claim on Thursday that states were overstating their need for tens of thousands of ventilators. The carmakers note that they have not been given any contracts by the Federal Emergency Management Agency, and that the White House had failed to make a decision about who should be supplying the ventilators, which help critically ill patients breathe.
Ford said in a statement that it was in “active conversations with the administration seeking guidance about approvals, scope, and distribution relating to a series of products, including ventilators.”Ford said in a statement that it was in “active conversations with the administration seeking guidance about approvals, scope, and distribution relating to a series of products, including ventilators.”
Google said it had removed the Infowars app from its Google Play store. The app is part of the media company owned by Alex Jones, a conspiracy theorist and conservative radio show host. Google removed the app on Friday after Mr. Jones posted a video disputing the need for social distancing and some of the isolation policies aimed at curbing the spread of the virus.Google said it had removed the Infowars app from its Google Play store. The app is part of the media company owned by Alex Jones, a conspiracy theorist and conservative radio show host. Google removed the app on Friday after Mr. Jones posted a video disputing the need for social distancing and some of the isolation policies aimed at curbing the spread of the virus.
Earlier this month, The New York State attorney general issued a cease-and-desist order to Mr. Jones because of false claims on his website that his diet supplements and toothpaste could be used to fight the coronavirus.Earlier this month, The New York State attorney general issued a cease-and-desist order to Mr. Jones because of false claims on his website that his diet supplements and toothpaste could be used to fight the coronavirus.
Google also said it was donating about $800 million in financial assistance to help small businesses secure capital and continue to advertise through the company. In a blog post on Friday, Sundar Pichai, chief executive of Google’s parent company, Alphabet, said it was providing $250 million in ad grants to more than 100 government agencies including the World Health Organization to disseminate information on how to prevent the spread of the coronavirus.Google also said it was donating about $800 million in financial assistance to help small businesses secure capital and continue to advertise through the company. In a blog post on Friday, Sundar Pichai, chief executive of Google’s parent company, Alphabet, said it was providing $250 million in ad grants to more than 100 government agencies including the World Health Organization to disseminate information on how to prevent the spread of the coronavirus.
In addition, the company said it was creating a $200 million investment fund to support nongovernmental organizations and financial institutions to provide capital to small businesses and was granting $340 million in ad credits to existing small and midsize business customers who have had an account with the company for more than a year. In addition, the company said it was creating a $200 million investment fund to support nongovernmental organizations and financial institutions to provide capital to small businesses and was granting $340 million in ad credits to existing small and midsize business customers who have had an account with the company for more than a year
The chief executives of American Airlines and Southwest Airlines — crosstown rivals in the Dallas area — sent very different messages to their employees on Friday about a proposed federal bailout for their industry working its way through Congress. American’s boss welcomed it while Southwest’s leader was not sure his company would take the money.
Doug Parker, the chief executive of American, the largest U.S. airline by total passengers, told employees that the company was pleased by what it expected would be $12 billion in federal aid, or about a fourth of the total set aside for passenger airlines in the stimulus bill.
“We are confident those funds along with our relatively high available cash position will allow us to ride through even the worst of potential future scenarios,” Mr. Parker said in a recorded message.
But Gary Kelly, the chief executive of Southwest, the largest airline by domestic passengers, was far more circumspect in a message he sent to employees. “It gives us another option,” Mr. Kelly said. “We have opportunities to raise capital in the private markets and now we also have that opportunity with the federal government.”
The bill provides passenger airlines with $25 billion in grants to cover employee pay and an equal amount in loans. In exchange, airlines must commit to maintaining staffing through September and limiting stock buybacks and dividends and executive pay.
Companies in the United States are rushing to develop easy-to-use, finger-prick blood tests that could be done on the spot in a doctor’s office or a pharmacy clinic and detect the presence of antibodies to the coronavirus within 15 minutes.Companies in the United States are rushing to develop easy-to-use, finger-prick blood tests that could be done on the spot in a doctor’s office or a pharmacy clinic and detect the presence of antibodies to the coronavirus within 15 minutes.
The preferred diagnostic approach involves testing genetic material for the virus extracted from deep nasal swabs. It can take hours or even a day for patients to obtain results, depending on whether specimens must be shipped to a diagnostic lab. The finger-prick blood tests, by contrast, are designed to quickly identify the presence of two antibodies that the body produces in response to the coronavirus.The preferred diagnostic approach involves testing genetic material for the virus extracted from deep nasal swabs. It can take hours or even a day for patients to obtain results, depending on whether specimens must be shipped to a diagnostic lab. The finger-prick blood tests, by contrast, are designed to quickly identify the presence of two antibodies that the body produces in response to the coronavirus.
Chembio Diagnostic Systems, a firm in Medford, N.Y., that has produced rapid tests for Ebola and Zika virus is developing a similar test for coronavirus. Last week, the company received a $4 million order to supply the finger-prick tests for the virus to Brazil’s Ministry of Health and said it also planned to apply for emergency authorization from the Food and Drug Administration to market the tests in the United States.Chembio Diagnostic Systems, a firm in Medford, N.Y., that has produced rapid tests for Ebola and Zika virus is developing a similar test for coronavirus. Last week, the company received a $4 million order to supply the finger-prick tests for the virus to Brazil’s Ministry of Health and said it also planned to apply for emergency authorization from the Food and Drug Administration to market the tests in the United States.
Another company, Scanwell Health, a start-up in Los Angeles that developed an at-home test for urinary tract infections, recently acquired the rights to a finger-stick blood test for the virus developed and approved in China.Another company, Scanwell Health, a start-up in Los Angeles that developed an at-home test for urinary tract infections, recently acquired the rights to a finger-stick blood test for the virus developed and approved in China.
Public health officials in Britain said this week that they were working to validate an at-home virus antibody test that could be made available to millions.Public health officials in Britain said this week that they were working to validate an at-home virus antibody test that could be made available to millions.
The United States government is poised to take on a huge amount of debt to contain the effects of the coronavirus pandemic, with budget deficits on a scale not seen since World War II looking likely.The United States government is poised to take on a huge amount of debt to contain the effects of the coronavirus pandemic, with budget deficits on a scale not seen since World War II looking likely.
But the only thing worse for the public debt outlook would be if it didn’t. That’s why a broad range of economic analysts — including even many fiscal conservatives who generally view high public debt as a long-term threat — support aggressive action.But the only thing worse for the public debt outlook would be if it didn’t. That’s why a broad range of economic analysts — including even many fiscal conservatives who generally view high public debt as a long-term threat — support aggressive action.
The very large deficits on the way in 2020 are more likely to leave the United States in a better fiscal situation for the years ahead than an alternative in which the government is more tightfisted but fails to prevent the widespread collapse of American businesses or help workers in desperate financial straits.The very large deficits on the way in 2020 are more likely to leave the United States in a better fiscal situation for the years ahead than an alternative in which the government is more tightfisted but fails to prevent the widespread collapse of American businesses or help workers in desperate financial straits.
The coronavirus pandemic has created an immediate need for wealthy benefactors to fund nonprofit organizations that support people in health or economic distress.The coronavirus pandemic has created an immediate need for wealthy benefactors to fund nonprofit organizations that support people in health or economic distress.
More than a dozen philanthropists, including Connie and Steven Ballmer and Michael Bloomberg, offered tips on how to make the most of charitable giving in a time of crisis to ensure donations have the biggest impact.More than a dozen philanthropists, including Connie and Steven Ballmer and Michael Bloomberg, offered tips on how to make the most of charitable giving in a time of crisis to ensure donations have the biggest impact.
Let someone else do the vetting. Give to established funds that act as clearinghouses to distribute donations. They have the experience and knowledge to mobilize quickly in a crisis.Let someone else do the vetting. Give to established funds that act as clearinghouses to distribute donations. They have the experience and knowledge to mobilize quickly in a crisis.
Double down on regular charities. Money is rushing into coronavirus-related charities, but most other nonprofit groups are lacking in funds, too. Most have canceled their spring fund-raising galas, which can account for a significant part of their annual budgets.Double down on regular charities. Money is rushing into coronavirus-related charities, but most other nonprofit groups are lacking in funds, too. Most have canceled their spring fund-raising galas, which can account for a significant part of their annual budgets.
Speed up long-term giving plans. Some of the largest gifts are made over several years. Now is the time to accelerate those donations.Speed up long-term giving plans. Some of the largest gifts are made over several years. Now is the time to accelerate those donations.
The food distribution company Sysco said on Friday that some of its employees who have been furloughed because of the coronavirus will have the option to work at Kroger locations for the next 30 days. Like many grocery stores, Kroger has seen a surge in demand over the last few week as panic-shopping customers have filled their shopping carts with shelf-stable supplies.
Walt Disney World in Florida and Disneyland in California will remain closed “until further notice,” Disney said on Friday. Tens of thousands of hourly workers at the parks will be paid through April 18. NBCUniversal, which operates Universal Studios theme parks, said earlier this week that its domestic properties would stay closed until at least April 19.Walt Disney World in Florida and Disneyland in California will remain closed “until further notice,” Disney said on Friday. Tens of thousands of hourly workers at the parks will be paid through April 18. NBCUniversal, which operates Universal Studios theme parks, said earlier this week that its domestic properties would stay closed until at least April 19.
L Brands, the owner of Bath & Body Works and Victoria’s Secret, said on Friday that it would furlough most store associates “plus those who are not currently working to support the online businesses or who cannot work from home” starting April 5. Associates will receive pay and benefits through April 4. Senior executives will also take a pay cut.L Brands, the owner of Bath & Body Works and Victoria’s Secret, said on Friday that it would furlough most store associates “plus those who are not currently working to support the online businesses or who cannot work from home” starting April 5. Associates will receive pay and benefits through April 4. Senior executives will also take a pay cut.
The coronavirus could cause job cuts of more than one million workers in the global oil field services industry, according to a forecast from Rystad Energy. The Norway-based consulting firm estimated that the industry employs more than five million people, including drillers, engineers and technicians, and that firms will cut people because of plummeting demand, low prices for oil and safety reasons.The coronavirus could cause job cuts of more than one million workers in the global oil field services industry, according to a forecast from Rystad Energy. The Norway-based consulting firm estimated that the industry employs more than five million people, including drillers, engineers and technicians, and that firms will cut people because of plummeting demand, low prices for oil and safety reasons.
The average national price for gasoline fell on Friday to a penny under $2 a gallon for the first time since March 2016, according to GasBuddy, the travel and navigation app. Gasoline prices have been falling steadily since late February as the coronavirus outbreak has curtailed business and leisure driving.The average national price for gasoline fell on Friday to a penny under $2 a gallon for the first time since March 2016, according to GasBuddy, the travel and navigation app. Gasoline prices have been falling steadily since late February as the coronavirus outbreak has curtailed business and leisure driving.
Reporting was contributed by Ben Casselman, Sapna Maheshwari, Stanley Reed, Clifford Krauss, David E. Sanger, Niraj Chokshi, Natasha Singer, David Streitfeld, Daisuke Wakabayashi, Mary Williams Walsh, Vindu Goel, Amie Tsang, Carlos Tejada, Kevin Granville and Daniel Victor.Reporting was contributed by Ben Casselman, Sapna Maheshwari, Stanley Reed, Clifford Krauss, David E. Sanger, Niraj Chokshi, Natasha Singer, David Streitfeld, Daisuke Wakabayashi, Mary Williams Walsh, Vindu Goel, Amie Tsang, Carlos Tejada, Kevin Granville and Daniel Victor.