Wall Street whipsaws as investors weigh government action.
Stocks were volatile on Thursday as policymakers in the United States and Europe took more steps to offset the sharp decline gripping their economies.
The S&P 500 climbed into positive territory after earlier having fallen more than 3 percent, but it struggled to hold onto those gains. Shares in Europe also recovered after trading lower for most of the day. Oil prices, which had fallen by more than 20 percent on Wednesday, rebounded on Thursday.
The uneven trading followed a steep drop across financial markets on Wednesday and came as the steady drumbeat of bad news about the spread of the coronavirus continued. Speaking at a White House press briefing, President Trump acknowledged that the economy would experience a rapid fall before it climbs back. He also praised efforts to speed up the approval of potential treatments for Covid-19, the illness caused by the new coronavirus.
“I believe in the V curve,” Mr. Trump said, referring to how some economists describe a sharp falloff and rebound in economic growth. “When this is defeated, this hidden scourge is defeated, I think we’re going to go up very rapidly.”
In the United States, the number of workers filing first-time claims for unemployment insurance surged, government data released on Thursday showed. Those figures don’t reflect the sharp cuts made in the past few days as companies quickly scale down operations.
Overnight, the European Central Bank unveiled a huge bond-buying program aimed at preventing economic calamity, and the Fed presented a plan to support money market funds, which are threatened when there is a rush for cash. U.S. officials made progress on passage of stimulus efforts to keep the American economy running. The Bank of England on Thursday announced that it would reduce its benchmark interest rate to 0.1 percent and increase its buying of U.K. government bonds and corporate bonds.
On Thursday, Treasury Secretary Steven Mnuchin said that the White House’s economic relief plan includes sending checks of $1,000 for every American adult and $500 per child within three weeks. If the crisis continues, the plan would be to send checks of the same amounts again in May.
But news of efforts to bolster the economy has been matched by a sharp escalation in the number of coronavirus cases in Europe and the United States, and fresh evidence of the impact on businesses. On Thursday, Ford Motor said that it would suspend its dividend payment and draw down about $15 billion from two lines of credit to help offset the impact of coronavirus-related production shutdowns, becoming just the latest company to take such measures in order to cushion itself.
The waves of selling in the past month have put the Dow Jones industrial average back where it stood in January 2017, as Mr. Trump took office — erasing the gains that had become one of his primary measures of success in the White House.
Economists in recent days have made increasingly dire predictions about the likely damage to the job market, with many predicting that the unemployment rate would quickly surpass the 10 percent level it hit in the worst of the last recession.
“This is a body blow to the economy unlike anything we’ve experienced in recent memory,” said Patrick Anderson, an economist in East Lansing, Mich. “Even the Great Recession did not include shuttering of businesses by government order at the same time that people were being told to say home and distance themselves.”
Trump says he is open to tying restrictions on buybacks to government aid.
President Trump on Thursday said he would support placing restrictions on companies that receive government help to deal with the economic ramifications of the coronavirus, including limiting their ability to buy back their own shares.
“As far as I’m concerned, conditions like that would be OK,” Mr. Trump said at a news conference.
As Washington considers extending vast amounts of financial support to industries affected by the virus, many lawmakers have expressed concern that any bailouts come with significant strings attached, including limits on stock buybacks and executive compensation.
Those buybacks are good for shareholders, including senior executives, who tend to be big owners of their companies’ stock. A company purchasing its own shares helps bolster its stock price, and American businesses have spent about $1.4 trillion on buybacks over the past three years.
On Wednesday, Senator Chuck Schumer, the New York Democrat, said he told Treasury Secretary Steven Mnuchin that any fiscal rescue would have to dictate that money go to workers, not executives and shareholders.
“The one thing I did tell him as well, though, if there are going to be some of these corporate bailouts, we need to make sure workers and labor come first. That people are not laid off. That people’s salaries are not cut,” Mr. Schumer said. The four biggest U.S. airlines collectively bought back $39 billion in stock from 2015 to 2019 and paid out $6 billion in dividends, according to data from Capital IQ.
Worker claims for unemployment benefits surge.
Layoffs rose sharply last week as the effects of the coronavirus pandemic began to ripple through the economy. Some 281,000 Americans filed first-time claims for unemployment insurance, up by 33 percent from 211,000 the week before, the Labor Department said Thursday. On a percentage basis, the increase was among the largest one-week spikes on record.
The Labor Department said the increase was “clearly attributable to impacts from the Covid-19 virus” and noted that many states reported a rise in jobless claims from workers in food services, accommodation and travel.
Still, the data released Thursday was for claims filed from March 8 to 14, before the outbreak began to shut down restaurants, bars and retail stores in much of the country. The next report, which will reflect the first wave of closings, will almost certainly be much worse.
The Fed tries to keep dollars flowing globally with new agreements.
The Federal Reserve said Thursday it would extend currency swap lines to nine additional countries, an attempt to keep dollars flowing to banks around the world as the coronavirus disrupts every aspect of business, creating a cash crunch in many nations.
The Fed has a history of creating swap lines to help foreign central banks deliver U.S. dollar funding to financial institutions in their regions amid market stress. Such agreements were used extensively during the 2008 financial crisis. Indeed, the new arrangements are with the same countries the Fed struck such agreements with during that crisis: Singapore, South Korea, Brazil, Sweden, Australia, New Zealand, Mexico, Norway and Denmark.
It’s the latest in a series of steps by the central bank to keep the financial system functioning and prop up the economy as it spirals toward recession during the coronavirus pandemic. Late Wednesday night, the Fed said that it would offer emergency loans to money market mutual funds,
After announcing factory closings, automakers discuss making ventilators.
General Motors and Ford Motor have told the White House that they would be willing to produce ventilators if the administration was interested in mobilizing private businesses to manufacture equipment needed to respond to the coronavirus.
Neither company has detailed plans to produce the devices and said the discussions were preliminary. In a statement, G.M. said the topic came up on Wednesday when the company’s chief executive, Mary T. Barra, called to inform the White House that G.M. had decided to temporarily shut down plants to prevent the spread of the disease among workers.
Separately, Elon Musk, the chief executive of Tesla, said on Twitter that his electric car company would also produce ventilators “if there is a shortage.” New York City Mayor Bill de Blasio responded soon after, saying that the city was interested in buying ventilators and “could use your help.”
The discussions about automakers making ventilators hark back to World War II, when G.M., Ford, Chrysler and other manufacturers stopped producing automobiles and switched to weapons and other war-related supplies. Ford famously produced B-24 bombers at the Willow Run plant near Ypsilanti, Mich. G.M. made Sherman tanks as well as planes, guns and other weapons.
Americans grow increasingly worried about the virus impact.
As the effects of the coronavirus pandemic spread across the country last week, Americans grew increasingly worried about the impact the outbreak would have on them individually and on the economy.
Fifty-nine percent of Americans said last week that they were somewhat or very worried that they or a family member would be exposed to the virus, according to a poll conducted for The New York Times by the online research firm SurveyMonkey. That’s up from 49 percent who said the same a week earlier. Eighty-four percent said they were worried about the outbreak’s effect on the economy, up from 73 percent in the first week of March.
Americans grew more nervous as the week progressed: In interviews conducted from Monday to Thursday, 80 percent of respondents said they were concerned about the economy. From Friday through Sunday, that number rose to 85 percent.
Survey respondents have also become more confident in Mr. Trump’s handling of the crisis. In the first week of March, 47 percent said they approved of his performance; last week, 53 percent said so.
Uber rides in Seattle fall by up to 70 percent.
As Uber ridership has vanished, the company is seeking to reassure investors about how it will fare.
Dara Khosrowshahi, Uber’s chief executive, told investors during a conference call on Monday morning that Uber was preparing multiple models to gauge how it would fare as the pandemic continues, and that it had about $10 billion cash on hand to weather the storm.
“Our business is incredibly resilient and will bounce back,” Mr. Khosrowshahi said. “In some parts of our business, we are already seeing what we believe is the worst of the impact behind us.”
Uber did not update its revenue guidance, but revealed that in Hong Kong, rides had fallen by 45 percent from the previous year at the height of the outbreak there, before recovering slightly to a 30 percent decline. In Seattle, rides were down between 60 and 70 percent.
Catch up: Here’s what else is happening.
The European Central Bank will embark on an enormous wave of bond purchases intended to counter the “serious risks” to the eurozone caused by the coronavirus pandemic. The bank will buy up to 750 billion euros, or $820 billion, in government and corporate bonds and other assets, pumping cash into financial markets deeply rattled by the pandemic.
A reliable predictor of German economic growth, the Ifo Institute’s monthly survey of business managers, saw its biggest plunge since eastern and western Germany reunited almost three decades ago.
Reporting and research were contributed by Ben Casselman, Conor Dougherty, Emily Flitter, Isabella Kwai, Jack Ewing, Neal E. Boudette, Carlos Tejada, Kate Conger, Jason Karaian, Amie Tsang, Heather Murphy, Matt Phillips, Jeanna Smialek, Jim Tankersley, Mohammed Hadi and Katie Robertson.