Stocks Plunge as Investor Jitters Return: Live Updates

Stocks on Wall Street tumbled on Wednesday, as topsy-turvy trading throughout global markets signaled continued investor concern about how governments would deal with the coronavirus fallout.

In Europe, major indexes in London, Frankfurt and Paris fell, giving up early gains that had come after the Bank of England said it would cut interest rates to help British businesses. Shares in Asia also fell.

Investors are vacillating between the threat that the coronavirus poses to the global economy and the hopes that governments will unveil a series of measures to help businesses.

President Trump has signaled he would consider ways to stimulate the economy. Options include cutting payroll taxes and extending the American tax filing deadline past April 15. But so far, the White House has yet to announce any specific measures, and most experts say a payroll tax cut is not an effective way to combat the problems facing the economy.

In recent weeks, economists have sharply cut back their expectations for economic growth in the United States. On Tuesday, economists at Bank of America cut their 2020 forecast for growth of the U.S. gross domestic product to 1.2 percent from 1.6 percent.

The S&P 500 fell more than 2 percent in early trading Wednesday. Stocks tumbled nearly 8 percent on Monday, and rose nearly 5 percent on Tuesday.

Other markets signaled persistent investor jitters. Futures for gold, a traditional haven, edged higher. The yield on the 10-year Treasury bond fell, another indicator of investor nervousness.

Oil prices fell after the Saudi Arabian state oil company said for the second time this week that it would expand production capacity. The announcement signaled no let up in Saudi Arabia’s clash with Russia over oil supplies, which sent crude prices crashing earlier this week.

The Bank of England made an emergency cut to its key borrowing rate on Wednesday by half a percentage point before the opening of stock trading in London.

The move, which brings the rate down to one-quarter of a percent, was approved unanimously in an emergency meeting of the central bank’s policymaking board, the Bank of England said.

It is intended “to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance,” the bank said.

Wednesday’s move is the Bank of England’s first rate cut since the virus outbreak. The Federal Reserve did the same last week in the midst of a market sell-off.

The coronavirus stands to wipe out more than $820 billion in spending on global business travel, about half of it concentrated in China, where companies have all but eliminated employee trips, according to the Global Business Travel Association.

The estimate on Tuesday of the outbreak’s toll is significantly higher than a previous forecast of $560 billion issued by the group just two weeks ago.

“Business travel is slowing at an alarming rate,” Scott Solombrino, the group’s executive director, said in a statement. “The impact to the business travel industry — and to the broader economy — cannot be underestimated.”

As businesses cut back on travel, the aerospace industry is confronting one of its worst business disasters in recent decades. Bookings are down dramatically and airlines are drastically cutting routes. Delta said it would slash service by about 15 percent.

In what appears to be more jousting with Russia, Saudi Aramco, the national oil company of Saudi Arabia, said Wednesday that it had been directed by the country’s ministry of energy to increase its oil output capacity to 13 million barrels a day from the current 12 million barrels a day.

After Saudi Arabia and Russia failed to agree on new production cuts at a meeting in Vienna on Friday, the Saudis have been making highly visible preparations for a price war with Russia and other producers.

Over the weekend, Aramco offered its customers deep discounts on crude, and on Tuesday the company said that it would sell 12.3 million barrels a day in April, well over the 9.7 million barrels a day it has been producing.

The opening shots of what could be a prolonged battle have hit the oil market hard. Brent crude, the international benchmark, has plunged about 20 percent this week.

On Wednesday, the price was slowly rebounding until Aramco’s announcement. It was down about 3 percent to $36.08 a barrel.

Japan is keeping a close eye on the value of the yen. Investors have piled into the currency this week, seeking a safe haven against instability in global stock markets.

That has made the yen more valuable against other currencies, creating a new headache for Japanese policymakers. They fear that a strong yen could put additional pressure on the country’s fragile economy.

The coronavirus was already exacerbating the country’s economic woes as tourism has dried up and domestic demand has plummeted. The strong yen, which will eat into corporate profits earned abroad and make Japanese exports more expensive, could further raise the risk of Japan falling into recession.

The currency was trading at about 105 yen to the American dollar on Wednesday. A month earlier, it was at 110 to the dollar. If the currency strengthens to 100, that will most likely provoke an effort from the country’s central bank to curb the rise.

“Jeopardy” and “Wheel of Fortune” will now tape without a studio audience for the foreseeable future, according to two people familiar with the plans. The average audience for those shows skews older and tends to travel to Los Angeles from locations all over the country, prompting the temporary ban, those people said.

Alex Trebek, the “Jeopardy” host, has pancreatic cancer, putting him potentially at even greater risk to the virus, one of the people said.

The Norman Lear comedy “One Day At A Time” — which like “Jeopardy” and “Wheel of Fortune” is produced by Sony — also taped an episode on Tuesday without a studio audience present, according to one of the people.

Warner Bros., which produces shows like “The Ellen DeGeneres Show” and “Conan,” is not yet canceling studio audiences for its programs. But the studio said on Tuesday that it would begin screening prospective audience members and ask them to confirm that they or a member of their household have not traveled to countries with the Centers for Disease Control and Prevention level three designation in the last three weeks. That includes China, Italy, Iran and South Korea.

CBS and NBC, which also produce a number of talk shows, including “The Late Show With Stephen Colbert” and “The Tonight Show Starring Jimmy Fallon,” declined to comment.

Fiat Chrysler warned Wednesday that it might have to close some of its factories in Italy because of the coronavirus epidemic, which has hit the country especially hard.

Any closures would be for health reasons, not because of problems getting parts or raw materials needed to keep assembly lines running, a Fiat spokesman said.

Fiat’s announcement suggests that the need to keep workers from infecting each other could be a bigger problem for carmakers and other manufacturers than disruption to supply chains.

The coronavirus has public health officials talking about things like social distancing and self-quarantining to reduce the spread of the virus. And now it has corporate lawyers closely examining commercial contracts.

Big law firms have been churning out client notes advising business executives to start paying attention to force majeure clauses in contracts with vendors, subcontractors and insurers. Such clauses are common in contracts to protect parties in the event of a so-called act of God — earthquakes, hurricanes or floods — that prevent one side from completing its end of a deal, or disrupts a company’s business for an extended period.

But these clauses often do not include provisions for things like epidemics or pandemics. So will a force majeure clause provide legal protection to a company that cannot perform a contractual task because it had to effectively shut down because of the coronavirus?

Well, lawyers said, it often depends on the specific facts of each situation. Judges have tended to enforce such provisions narrowly and want to see evidence that a company did everything possible to keep up its end of the bargain. Courts are reluctant to interpret a force majeure clause as a “get out of jail free” card for a company that simply fails to perform.

Companies might want to protect themselves by coming up with contingency plans to demonstrate they did everything possible to complete a contractual obligation, Paul Weiss, the big New York law firm, said in a client note. “Ideally, business will be able to plan accordingly to avoid any disruption in their operations if the virus continues to spread,” the firm said.

Reporting was contributed by Alexandra Stevenson, Ben Dooley, Niraj Chokshi, Kevin Granville, Carlos Tejada, Matthew Goldstein, Jack Ewing and John Koblin.

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