European markets slump, but the Wall Street open looks upbeat.
European markets were mostly lower on Tuesday, but futures pointed to gain when trading opens in the United States as investors tried to grapple with a disastrous Monday on Wall Street.
Investors across Asia were more cautious earlier Tuesday about the state of global finance. Japan’s Nikkei 225 index finished the day just above zero. In mainland China, the Shanghai Composite Index was down 0.3 percent.
On Monday in the United States, the S&P 500 fell 12 percent, its worst daily decline since October 1987, when stocks plunged about 20 percent in what came to be known as Black Monday. For the technology heavy Nasdaq, the drop was its worst on record.
The sell-off came began after the Federal Reserve took extraordinary steps on Sunday to support the American economy as businesses shut down and borders were closed in an effort to contain the coronavirus. Investors saw the move as more evidence of just how bad things are.
Energy prices, which slid sharply on Monday, staged a very modest comeback on Tuesday. West Texas Intermediate, the American benchmark, was up more 1.9 percent, to about $29.25 a barrel.
In a positive sign, the yield on the 10-year U.S. Treasury bond rose, to about 0.8 percent, suggesting investors were warming to the idea of putting their money in riskier assets like stocks.
Volkswagen and Airbus to stop production.
Volkswagen said Tuesday it would close most of its European factories because of the coronavirus, adding the world’s largest carmaker to the growing list of large manufacturers that have shut down production.
The aircraft manufacturer Airbus also said Tuesday it would suspend manufacturing in France and Spain for the next four days while it takes measures to prevent the spread of the virus.
Herbert Diess, the chief executive of Volkswagen, said during a news conference that Volkswagen would close plants in Spain, Italy, Portugal and Slovakia by the end of this week, and that most other European sites would prepare to close for several weeks.
Peugeot, Renault, Fiat and Ford have already closed some or all of their European plants. The German carmakers have resisted shutting down production, but Volkswagen’s decision was an indication that health concerns and supply chain issues have made it nearly impossible for manufacturers to continue operating normally.
France may move to nationalize companies
France will provide 45 billion euros (about $50 billion) in immediate financial aid to help businesses and employees make it through the coronavirus epidemic, and it is ready to nationalize companies if necessary to prevent them from potential collapse, Finance Minister Bruno LeMaire said Tuesday.
The government will also provide guarantees for loans totaling 300 billion euros to assure liquidity to any companies that need it, Mr. Le Maire said, adding that France’s banks had the backing of the government and were “sound.”
As a nationwide clampdown on the free movement of people was set to go into effect at noon, the government revised its economic outlook for the year from one of strong growth to a contraction of at least 1 percent.
With the shares of French banks and other companies getting hammered in recent days, France has temporarily banned the short-selling of stocks, Mr. Le Maire said. It will also press its European partners to adopt such a ban for one month, he added.
The Philippine Stock Exchange on Tuesday became the first market to close over the coronavirus. In a memorandum on its website, it said trading would stop until further notice.
Even in a time of ailing financial markets, the country’s stock performance stands out. Its main index has plunged by nearly one-third from its January high, making it one of the worst performers in the Asia-Pacific region.
The closures came hours after President Rodrigo Duterte put big chunks of the country’s population under quarantine to stop the coronavirus outbreak. The country lists 142 confirmed infections and 12 deaths so far.
Big banks plan to borrow funds from the Fed.
Eight major financial-services firms are borrowing money from the Federal Reserve, a move that has long carried negative connotations but that the Fed is encouraging to help stave off a cash crunch.
Morgan Stanley was the first within the group to tap the Fed’s so-called discount window on Monday, according to three people familiar with the matter. Other banks, including Goldman Sachs and JPMorgan Chase, are expected to borrow as early as Tuesday, the people said.
The central bank has urged the firms to tap its short-term funding facility to make it easier for credit to continue flowing through the economy, destigmatizing the use of central bank funding at a tumultuous time. Banks have avoided borrowing from the central bank out of fear it will make them look as if they are on shaky footing.
“While forum member institutions individually have substantial liquidity and multiple sources of funding, they believe it is important to lead by demonstrating the value of the Federal Reserve’s discount window facility,” the Financial Services Forum, an industry trade group, said in a statement late Monday.
Amazon will hire more workers and raise pay as delivery orders surge.
Amazon said it would hire 100,000 new workers and raise pay by $2 an hour for many employees in response to a surge in delivery orders from people staying at home to combat the spread of the coronavirus.
Amazon said the 100,000 new jobs would include both full and part-time positions across the United States to staff its warehouses and make deliveries. The company encouraged people who lost work as a result of coronavirus-related shutdowns and cancellations to apply.
“We also know many people have been economically impacted as jobs in areas like hospitality, restaurants, and travel are lost or furloughed as part of this crisis,” the company said in a news release. “We want those people to know we welcome them on our teams until things return to normal and their past employer is able to bring them back.”
Amazon said it would also spend $350 million to raise pay by $2 or more an hour for workers staffing its enormous logistics operation in the United States, Britain and parts of Europe. The raises would last at least through April. In the United States, such workers start at $15 an hour.
S&P 500 has its worst day since the outbreak began.
Financial markets cratered on Monday, as investors were confronted with evidence that a steep decline in the world’s largest economies may have already begun.
The sell-off began after the Federal Reserve took extraordinary steps on Sunday afternoon to bolster the American economy, signaling that it saw an economic crisis unfolding as businesses shut down and borders are closed to contain the coronavirus. The financial downdraft was global, with major benchmarks in Asia, Europe and the United States all falling on Monday.
The S&P 500 fell 12 percent, its biggest drop since the coronavirus outbreak began to roil markets in the United States last month — and its worst daily decline since October 1987, when stocks plunged about 20 percent in what came to be known as Black Monday. For the technology heavy Nasdaq, the drop was its worst on record.
Energy prices also slid sharply as investors factored in significant slowdowns in economic activity.
Global oil prices plunged to below $30 a barrel, the lowest level in more than four years. Oil has fallen by half since the start of the year, and some analysts predict that oil prices could drop below $20 a barrel in the coming weeks.
The ‘Trump bump’ in stocks has deflated.
The decline of the stock market, which hit a record high less than a month ago, has wiped out many of the gains that President Trump has crowed about throughout his presidency.
Mr. Trump’s victory in 2016, along with the Republican Party’s control of Congress, set off a surge in share prices as investors looked forward to the prospect of steep cuts to corporate tax rates and an administration stocked with industry-friendly faces.
In December 2017, Mr. Trump delivered a sweeping tax overhaul. By the following month, the S&P 500 was up more than 30 percent, and the gains kept coming for much of the year. For Mr. Trump, this was a surefire barometer of his success as president.
There was one other nasty dip along the way: In late 2018, investors grew increasingly worried about Mr. Trump’s trade war with China and the prospect that the Federal Reserve would raise interest rates.
Stocks climbed 28.9 percent last year, thanks largely to the Fed’s decision to reverse course. But that rally has unraveled in the past month.
Though stocks have now given up most of their gains since the president was elected, the S&P 500 would have to fall another 12 percent for the entire Trump bump to be erased.
Food distributor plans to hire displaced workers.
Companies that power the supply chain are taking steps to make sure food keeps flowing to Americans in the coming weeks and months.
United Natural Foods Inc., one of the nation’s largest distributors of food to supermarkets, is planning to hire potentially thousands of out-of-work warehouse workers to staff in its 59 distribution centers, the company’s chief executive, Steven L. Spinner, said.
The distributor has been crushed by demand from grocery stores, but other food distributors like US Foods and Sysco, which supply restaurants and schools, are likely to experience significant layoffs as cities and states shut down public places.
UNFI, as the company is known, is making plans to hire the displaced workers to help relieve its employees, many of whom have been working 60 to 70 hour a week to keep up with the panic buying in supermarkets across the country. The hiring could take place as soon as next week.
This unusual industry effort where companies are essentially sharing their work force is also meant to ensure there is a larger pool of trained warehouse workers in case illness incapacitates some of them.
“We are going to do creative things and work out a way to use their folks,’‘ Mr. Spinner said. “The beauty of a shared work force is that these people have already been hired and are screened. They are already trained to work in a warehouse.”
Reporting was contributed by Alexandra Stevenson, Jack Ewing, Liz Alderman, Michael Corkery, Jack Nicas, Daniel Victor, Kevin Granville and Carlos Tejada.