Stocks Push Higher Amid Wall Street Turmoil: Live Markets Updates

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 on to 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, surged 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.

In the United States, the number of workers filing first-time claims for unemployment insurance surged, government data released on Thursday showed. Those figures do not reflect the sharp cuts made in the past few days as companies quickly scale down operations.

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.”

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 British government bonds and corporate bonds.

On Thursday, Treasury Secretary Steven Mnuchin said that the White House’s economic relief plan included 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 the latest company to take such measures 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.

President Trump said on Thursday that 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.

The Trump administration has in the past praised the surge in buybacks, including in the 2019 Economic Report of the President.

In an interview with the CNBC last year, Larry Kudlow, the director of Mr. Trump’s National Economic Council, called buybacks an “efficient” transfer of cash from corporations to individual investors.

“If the businesses don’t have use for it,” Mr. Kudlow said of companies’ cash, “or enough of a rate of return, why not give it back to their own investors who are the owners, and that money doesn’t go under a mattress — that money from the investors and the shareholders will be recycled into the economy and they will start new companies, new businesses.”

.

Many of the companies in line for potential bailouts have been enthusiastic repurchases of their own shares in recent years. The four biggest U.S. airlines — American, Delta, Southwest and United — collectively bought back $39 billion in stock from 2015 to 2019.

Over the same period, three large cruise lines — Carnival, Norwegian and Royal Caribbean — spent just over $8 billion on their own shares. Boeing alone spent $35 billion on stock buybacks over the past five years, halting the purchases in the middle of last year, after its 737 MAX planes were grounded worldwide.

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 surges 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 8-14, 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 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.

General Motors and Ford Motor 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.” Mayor Bill de Blasio of New York 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.

Tesla, the luxury electric carmaker, is expected to meet with city officials in Fremont, Calif., on Thursday about the company’s decision to continue running its factory there despite a county order limiting the operations of nonessential businesses.

Kimberly Petersen, the chief of the Fremont Police Department, and other city officials planned to meet with Tesla management to discuss compliance with the order, the department said on Twitter.

Tesla had told officials in Alameda County, which instituted the order, that it would reduce the number of employees working at the factory to 2,500 from 10,000, Ray Kelly, a county spokesman, told The New York Times on Wednesday.

Under the order, businesses deemed nonessential may continue “minimum basic operations,” provided that employees keep six feet from one another as much as possible.

In an email to staff on Wednesday night, Tesla asked only essential employees to report for duty at its Bay Area offices and said that those who did would get masks and have their temperature checked, according to Reuters.

The company’s position appears to be at contrast with traditional automakers like General Motors, Ford Motors and Fiat Chrysler, which said on Wednesday that they would suspend production in North America through at least the end of the month.

Tesla did not respond to multiple requests for comment.

Tesla’s chief executive, Elon Musk, has criticized the public reaction to the coronavirus outbreak, including on Thursday.

The Fremont police department and mayor’s office did not immediately respond to requests for comment.

  • 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.

  • Domino’s Pizza announced on Monday that it would hire 1,000 workers in the greater Chicago area — delivery drivers, customer service representatives and managers — to meet an increased demand for deliveries.

  • Uber rides fell by 45 percent from the previous year in Hong Kong at the height of the outbreak there, while in Seattle rides were down by 60 to 70 percent, the company said.

  • 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.

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.




Source link

Leave a Reply

Your email address will not be published. Required fields are marked *