Live updates: U.S. markets dive, trading suspended after Trump’s coronavirus travel ban fails to calm investors - The Washington Post

The Dow Jones industrial average plummeted nearly 1,700 points at the open following President Trump’s announcement that he would restrict all travel from Europe for 30 days to stem the spread of the pandemic. After the circuit-breaker pause, the blue-chip index briefly fell more than 1,900 points before rebounding slightly. By midmorning, it was down more than 1,800 points, or 7.6 percent. The S&P 500 also saw a small bump after the break, and was down 6.7 percent at midmorning. The tech-heavy Nasdaq was down 6.5 percent.

“The travel ban to Europe ex-UK was met with consternation, given that it is likely to put even more pressure on the travel industry and further reduce demand for oil,” Kristina Hooper, global market strategist at Invesco, said in an email to The Post. “In addition, we seem to be a long way from actual passage of a fiscal stimulus package at a time when the stock market is eager to see legislation passed that directly addresses the economic problems created by the spread of the coronavirus and efforts to contain it.”

Thursday’s dive comes on a frenetic week of trading that tipped the Dow into a bear market, reflecting a 20-percent fall from the all-time high it set in mid-February.

The S&P 500 triggered the first circuit breaker of the week on Monday after falling 7 percent early into the session. By the end of day, it had shed 7.6 percent and the Dow had lost a stunning 2,014 points, or 7.8 percent. The markets recovered somewhat Tuesday, posting across-the-board gains, only to recoil Wednesday after the World Health Organization declared the coronavirus a pandemic. The Dow cratered nearly 1,500 points to fall into a bear market, which marks a 20-percent drop its all-time high.

The pneumonia-like illness has spread to every continent save Antarctica since it first emerged in China late last year, sickening more than 120,000 people and claiming thousands of lives. The United States has more than 1,000 confirmed cases and more than 30 deaths.

The White House and Congress are at odds over what type of economic rescue package to assemble. The Trump administration has pushed the idea of new tax cuts and delayed tax filings as a way to boost the economy, as well as expanding sick leave benefits and helping the airline, hotel, and cruise industries. Democrats are moving ahead in the House of Representatives with a plan to expand unemployment insurance, provide more sick leave, and assure food benefits are available for people who lose their jobs and need emergency assistance.

“The bad news for the travel, entertainment, leisure, and energy industries resulting from the virus fears, initial unemployment claims are likely to move higher soon,” Ed Yardeni, president of Yardeni Research, wrote in commentary Thursday. “Measures of consumer and business confidence are likely to drop sharply soon as well. A recession isn’t inevitable, but it certainly is becoming more likely.”

March 12, 2020 at 11:41 AM EDT

European Central Bank’s Lagarde warns of 2008-style crisis if EU’s coronavirus response falls short

The European Central Bank announced new measures Thursday to bolster Europe’s slow-growing economy against the debilitating effects of the coronavirus. ECB President Christine Lagarde warned the union’s political leaders on a conference call this week that they would face a 2008-style financial crisis if they failed to launch coordinated actions.

The central bank said it would increase its bond purchases by 120 billion euros through the end of this year and approved a new lending program for banks designed to funnel cheap money to European businesses. The ECB surprised investors by opting not to further cut interest rates. Lagarde is releasing more details later Thursday.

The high-level ECB meeting comes as worries about Italian banks are becoming evident.

Since mid-February, the interest rate or yield that Italy pays on its government bonds has risen even as the United States, Germany and other nations have seen their borrowing costs fall. Likewise, investors now must pay twice as much to insure their government securities against a potential Italian default.

By David Lynch

March 12, 2020 at 11:24 AM EDT

Norwegian Cruise Line managers urged salespeople to spread falsehoods about coronavirus, emails show

Norwegian Cruise Line managers urged their sales teams to share false information about the novel coronavirus to help land bookings with potential customers, including that the virus can’t affect people in “tropical temperatures,” leaked emails from a company whistleblower show.

The emails, first reported by Miami New Times, show the lengths to which the U.S. cruise giant’s leaders have gone to protect the company against the devastating financial impact of the pandemic, which has infected more than 121,000 people around the world and killed more than 4,300.

The State Department has warned travelers against taking cruises during the pandemic, and U.S. health officials have prevented some ships from sailing. Cruise lines are expected to lose hundreds of millions of dollars this year because of mass cancellations and a slowdown in new trips. Two cruise lines, Princess and Viking, announced Thursday that they were canceling sailings for the next two months.

Norwegian Cruise Line’s stock plunged 26 percent Wednesday and has fallen nearly 75 percent from its January peak. The company did not respond to requests for comment.

In emails the whistleblower shared with The Washington Post, salespeople were given a list of one-liners to help “close your guests that are on the fence,” including that virus-related cancellations in Asia have “caused a huge surge in demand” for other trips. The recommended lines, written last month by a manager whose LinkedIn profile suggests the person has worked at the company for more than eight years, also compared the number of confirmed cases of the coronavirus with the flu and said, falsely, that the virus “cannot live in the amazingly warm and tropical temperatures that your cruise will be sailing to.”

By Drew Harwell

March 12, 2020 at 10:09 AM EDT

Corporate debt market has some analysts worried

While the 10-year Treasury note is getting all the attention because of its falling yield, some analysts are concerned that the corporate bond market could get in trouble if companies lose revenue due to the coronavirus pandemic.

Corporate bonds are held by millions of investors, banks and insurance companies as an income source and a stabilizer against stock swoons. Collin Martin, fixed income strategist at the Schwab Center for Financial Research, said the corporate bond market bears close watching.

There is more than $5 trillion in investment grade corporate bonds outstanding, and roughly $1.3 trillion in high-yield debt. Both amounts are up sharply over the past decade.

“The dual threats of covid-19 and the drop in the price of oil have pulled Treasury yields to historic lows,” Martin said in an email. “But we’re more concerned about the impact on the corporate bond market. Corporations have a lot of debt outstanding, and a potential economic slowdown can make it more difficult to pay back those debts."

Martin is counseling investors not to make rash moves.“ Our general advice to bond investors is to consider holding their positions right now,” Martin wrote. “Things could get worse before they get better. If you want to invest in fixed income right now because you lack exposure, we’d focus on shorter term bonds and hope for good news that leads yields to rise down the road.

By Thomas Heath

March 12, 2020 at 9:14 AM EDT

Airline stocks sink as carriers cut flights and earnings outlooks amid cratering demand

America’s major domestic air carrier stocks have tumbled this week as the airlines cut capacity, ax routes, trim financial outlooks and slash executive pay amid bottoming demand from the coronavirus.

The tourism industry has been among the hardest hit by the coronavirus. In a matter of weeks, hotels, airlines and convention centers have seen their bookings plummet as leisure travelers stay home and businesses discourage or cancel employee travel. And the latest updates from Delta, American and United airlines signal that their outlook for the coming months is equally bleak: as travelers cancel vacations, businesses discourage employees from leaving town, and conventions are canceled en mass, industry executives are comparing the outbreak’s fear factor to the aftermath of the Sept. 11, 2001, terrorist attacks.

Delta’s stock was down more than 13.5 percent in early trading. The Atlanta-based carrier cutting international flights by as much as 25 percent and domestic routes as much as 15 percent. The carrier also is withdrawing its 2020 financial outlook, instituting a hiring freeze and suspending its stock repurchase program.

American Airlines was down nearly 15.7 percent in early trading. The Fort Worth-based carrier is less vulnerable to declines in international business, but will scale back peak summer international flying by 10 percent, including a 55 percent reduction in trans-Pacific routes as the outbreak continues to exact a toll on China, South Korea and Japan. American will also reduce domestic flying in April by 7.5 percent.

United Airlines, which has seen a 70 percent plunge in domestic net bookings, was down nearly 16.5 percent in early trading. The Chicago-based carrier said Tuesday that its CEO and president will forgo their base salaries through at least the end of June, and that it plans to cut 20 percent of flights indefinitely until it sees demand pick up.

“We are in unprecedented territory,” Cowen’s Helane Becker wrote Tuesday in an analyst note. “Airlines have been quick to cut capacity and either park or accelerate retirement of older aircraft. … In the past, they would have waited to make these adjustments."

By Taylor Telford

March 12, 2020 at 8:28 AM EDT

The S&P 500 could slide into a bear market today

The Standard & Poor’s 500 has not yet entered a bear market, but the broad index has lost $5.3 trillion in value amid recent volatility and is down 19 percent from its February high. S&P 500 futures are calling for losses of more than 125 points, or 4.7 percent at open.

“If the S&P loses just 33 more points and hits 2,709 then the index will slide into a bear market and end the bull run that began in March 2009," Russ Mould, investment director at AJ Bell, wrote in a commentary Thursday. "It would also be the fastest bear market fall in since the Second World War for the S&P 500, at just 21 calendar days from the high of 19 February.”

A 7 percent decline in the S&P 500 on Thursday would trigger the New York Stock Exchange’s circuit breaker system for the second time this week. Regulators initiated circuit breakers following the 20 percent Black Monday crash of 1987. The pauses are designed to give traders time to catch their breath, pause and recalibrate in the middle of a sell-off.

The breakers kick in at 7 percent, 13 and 20 percent declines from the start of the day. If the S&P falls 20 percent, stocks will stop trading for the day.

By Taylor Telford

March 12, 2020 at 8:09 AM EDT

Trump meets Wall Street leaders as U.S. markets experience a historic slide

“All of us are providing relief to any customer that has an issue of being out of work for the virus,” said Brian Moynihan, the chief executive of Bank of America. “We’re here to help small businesses, medium-sized businesses, the core American economy run, and to help our consumer clients really weather the storm in case they’re directly affected by this.”

Wells Fargo is developing a program to help companies and their employees affected by the spread of the virus, including issues with “their fees, payments,” said the bank’s chief executive, Charles Scharf.

JPMorgan Chase, the country’s largest bank, has lent $26 billion to consumers and small businesses over the past 40 days, said Gordon Smith, the bank’s chief operating officer. The bank will “waive fees for consumers and small businesses who are under stress,” he said.

By Renae Merle

March 12, 2020 at 7:48 AM EDT

Oil prices under siege as Saudi-Russia standoff plays out

Oil markets remain under siege as the price war between Russia and Saudi Arabia drives prices so low that many companies may not make it through a contraction.

Brent crude, the global benchmark, and West Texas Intermediate were both trading in the low $30s, which is about half of what most private oil companies need to make some profit.

“Saudi Arabia has played a crucial role in causing the massive price drop,” said John Kilduff of Again Capital. “The kingdom has gone from being the oil market caretaker to being a homewrecker.

“Saudi Arabia is engaging in marketplace war fare, pure and simple, not missing an opportunity to make matters worse for its oil producing rivals, Russia and U.S. operators,” he said.

Claudio Galimberti, the head of demand, refining and agriculture analytics at S&P Global Platts, said in a Wednesday analysis that he sees “a very deep contraction, particularly in the first half of the year.” He also assumes the pandemic to be over by August.

The oil war, which may lower gasoline and fuel prices in the short term, could decimate the U. S.shale oil industry very quickly, putting millions out of work across oil, trucking and service industries.

Occidental Petroleum is one of the hardest hit U.S. oil companies; its stock fell 18 percent Wednesday. Oxy, as it is known, has seen its market value shrivel since its acquisition of Anadarko Petroleum last year. Its market cap is now below $11 billion, compared with $50 billion before the acquisition.

Activist investors Carl Icahn is seeking to increase his 10 percent stake in the oil company and take control, according to the Wall Street Journal.

“Aside from its immediate, stunning impact on the financial markets, the recent 25% drop in crude oil prices may have longer-term implications,” said PIMCO portfolio manager Greg Sharenow in a note. “We expect crude oil to remain under $40 per barrel (bbl) for some time, with risks to fall materially lower should the production increases endure for multiple quarters. This will have repercussions for many industries, notably U.S. shale oil, and for consumers around the world.”

By Thomas Heath

Let's block ads! (Why?)

https://www.washingtonpost.com/business/2020/03/12/markets-live-updates-coronavirus-economy/

2020-03-12 15:48:37Z
52780661379394

Bagikan Berita Ini