Here’s what you need to know:
U.S. stocks wobble in another turbulent day.
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 cases of coronavirus infections in the United States continues to climb fast, California has imposed a “shelter in place” restriction on the state and a wave of jobless claims is only just beginning to swell.
On Friday, traders seemed unable to decide which was more important, and the S&P 500 swung from gains to losses. The moves were relatively small, however, a welcome respite from a month that has seen markets take some head-spinning turns.
Investors in Europe fared better, with stocks in Paris and Frankfurt up more than 3 percent. In London, the FTSE 100 was up nearly 2 percent.
But the tone of trading in the United States was distinctly defensive.
For example, investors applauded some companies that have taken steps to clamp down on spending and conserve cash. Food and kitchen distribution giant SYSCO Corp. released a COVID-19 related update to its business plans on Friday morning saying, “we are taking decisive actions to manage our costs, capital spend and working capital to maintain a positive free cash flow position.” Its shares jumped more than 10 percent.
“If you can show some fiscal responsibility as a company, that’s being rewarded,” said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn.
It has been the worst week for U.S. markets in decades, and a month of selling that has brought major benchmarks back to levels last seen in 2017. A relentless barrage of troubling economic developments has battered stocks, bonds and oil prices.
The Labor Department on Thursday reported a surge in unemployment claims — 281,000 new claims — last week, one of the largest spikes on record. But Goldman Sachs analysts, in a research note, estimated that the claims for the week of March 15-21, which will be reported next Thursday, could hit more than two million.
“Even the most conservative assumptions suggest that initial jobless claims are likely to total over 1 million, which would easily surpass the highest level on record of 695,000 in 1982,” they wrote.
E.U. tells countries to spend “as much as they need.”
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.
“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.
The 27 European Union countries and the institutions that run the world’s richest bloc of nations are scrambling to fight the coronavirus and mitigate its economic impact and suspending rules that limit spending as well as how much state aid can be funneled to ailing businesses is a key part of the response.
Next order of business 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 coronavirus is bringing in its wake.
The Fed says it will backstop municipal money market funds.
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 move could keep the funds, 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.
Friday’s 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.
Tax Day moved to July 15.
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.
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 will inject $300 billion of temporary liquidity into the United States economy.
California’s lockdown is casting a further pall over the nation’s economy.
With Gov. Gavin Newsom ordering California’s 40 million people to stay in their houses as much as possible and most businesses to shut, there will be a profound impact not only on the state’s economy, but on the nation’s as well.
California’s $3 trillion economy is the world’s fifth largest, and 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.
China lifts quarantines, aiming for a return to work.
China is removing barriers to the movement of people and goods in much of the country after announcing that new cases of local coronavirus transmissions had fallen to zero.
The government will take measures to speed up the return to work for millions of people, including getting rid of mandatory quarantines for workers in parts of the country now considered “low-risk,” Li Keqiang, China’s No. 2 official, said in a statement.
China is eager to get the economic engines of the world’s second-largest economy up and running again after damaging government data pointed to the possibility that it will face its first economic contraction since 1976.
Earlier this week, the government said it reached a record number of imported cases of the virus, just as local cases in China dropped to zero. Chinese authorities are now focusing on travelers who are arriving from abroad who could potentially start a second wave of cases.
A torrent of job losses threatens to overwhelm the U.S. economy.
In an early sign of the coronavirus pandemic’s devastating impact on American workers, the Labor Department on Thursday reported a 30 percent increase in unemployment claims last week, one of the largest spikes on record.
The surge — 281,000 new claims — reflects a crushing new reality: Any hopes that businesses could keep their staffs largely intact have quickly evaporated.
Job losses have become so sensitive that the Trump administration is asking state labor officials to delay releasing the precise number of unemployment claims.
Coronavirus shipping delays are stalling construction.
When it comes to obtaining building materials, real estate developers often buy globally, not locally. But as the coronavirus spreads across the world, bringing countries to a standstill, the lack of access to overseas supplies is sending jitters through the construction industry.
Delayed so far at large-scale residential and commercial projects have been goods like marble, tile, paving stones, furniture, lighting equipment and elevators — and even models of buildings themselves, workers say.
Warning signs are appearing on multiple fronts. And the setbacks threaten jobs in an industry that employs millions of people. In many cases, no materials means no work, analysts say.
Catch up: Here’s what else is happening:
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.
The value of Japan’s SoftBank corporation has cratered. On Friday afternoon in Tokyo, shares of the company — which has used its $100 billion Vision Fund to become a kingmaker in Silicon Valley — were trading at just under half of their value a month ago.
Tesla said on Thursday that it would temporarily shut down production at its factory in the San Francisco Bay Area starting Monday. The company was under increasing pressure from local government officials and workers in recent days to stop making cars.
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, Daniel Victor and Kevin Granville.
https://www.nytimes.com/2020/03/20/business/stock-market-today-coronavirus.html
2020-03-20 17:09:43Z
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