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Markets decline again after worst week since 2008.
U.S. stock futures fell 5 percent on Sunday evening, their limit outside of regular market hours, suggesting that investors were in for a difficult start to the week, as lawmakers in Washington struggled to come to together on a nearly $2 trillion economic stabilization package.
Last-minute fighting over the details of legislation to aid families and businesses devastated by the coronavirus pandemic left the sweeping legislation teetering on the brink on Sunday. After days of bipartisan negotiations, the Senate failed to muster enough votes to move forward on the $1.8 trillion package.
Wall Street is coming off its worst week since 2008 as the threat of a severe recession appeared ever more likely in the face of the spreading coronavirus. The S&P 500 fell 15 percent last week, and the Dow Jones industrial average ended trading on Friday below where it stood on the day before President Trump was inaugurated, erasing the so-called Trump bump that the president has played up throughout his presidency as evidence of his success.
Over the past month, stocks have collapsed more than 30 percent, wiping out trillions in value and ending an 11-year bull market. Oil prices, which have collapsed this year, also fell on Sunday evening.
A recession looms as the economic outlook darkens daily.
The American economy is facing a plunge into uncharted waters.
Economists say there is little doubt that the nation is headed into a recession. But it is harder to foresee the bottom, or predict how long it will take to climb back. The abruptness of the descent — and the near-lockdown of major cities — is unheard-of in advanced economies, more akin to wartime privation than to the downturn that accompanied the financial crisis more than a decade ago, or even the Great Depression.
Smaller companies will be hit harder than large ones because they have limited access to credit and less cash in the bank; a wide swath will be unable to survive. And unemployment could hit 10 percent in April, a level unseen since the nadir of the last recession, with the possibility of even higher jobless rates in the following months
A strong rebound — what economists call a V-shaped recovery, as opposed to a U-shaped one, with an extended low — would require a profound resurgence in confidence. But few see that on the horizon.
“There is a risk that the psychology has changed,” said Torsten Slok, chief economist at Deutsche Bank Securities. “People will be very reluctant to do a lot of travel and spending and may want to save for another day. There will be more caution.”
G.O.P. proposal would give Fed more room to bolster companies.
Senate Republicans have proposed giving the Federal Reserve access to $425 billion in funding that it could use to extend emergency support to flailing businesses or struggling localities — giving it more room to soothe troubled markets.
Republican lawmakers proposed increasing a Treasury Department fund that would be used to cover losses on the Fed’s emergency lending programs. The actual scale of those programs could far exceed $425 billion, since the central bank needs the funds only as a guarantee against any losses it might incur in making loans. The plan, part of a broader rescue package that failed to advance on Sunday evening, is most likely a template for what lawmakers will eventually approve.
During the 2008 financial crisis, the Fed used its emergency lending powers to inject money into Bear Stearns and American International Group, which were on the verge of collapse. The programs drew such intense political backlash that Congress, in the 2010 Dodd-Frank law, stripped the central bank of the ability to bail out specific institutions.
Economists have speculated that this time the Fed could use its emergency lending powers to buy corporate debt or state or local bonds to help shore up a range of businesses and agencies and stabilize markets.
Computing power is made available to researchers.
A coalition of tech companies and outside laboratories will work to provide computing resources to researchers trying to treat the coronavirus, the White House announced on Sunday night. Researchers will apply for access to the computing power of private companies like IBM, Google and Amazon, along with several national laboratories and academic institutions. President Trump said at a news conference that the consortium would help “researchers discover new treatments and vaccines.”
“These high-performance computing systems allow researchers to run very large numbers of calculations in epidemiology, bioinformatics and molecular modeling,” Dario Gil, the director of IBM research, said in a blog post. He said the same calculations would take months on slower systems.
In total, the technical systems mobilized as part of the effort announced Sunday include more than 775,000 CPU cores, a central processing component of a computer, according to IBM; the most powerful MacBook Pro laptop has eight.
Shipping workers are worried about the health of their workplaces.
Hour after hour, day after day, the packages keep arriving: food, medicine, clothes, toys and a million other items brought to the doorsteps and building lobbies of Americans who are hunkering down as the coronavirus spreads and shuts down certain stores.
An increasing number of the workers sorting, loading and transporting those boxes have fallen sick, suffering from coughs, sore throats, aches and fevers consistent with the coronavirus. Yet they are still reporting for their shifts in crowded shipping facilities and warehouses and truck depots, fearful of what will happen if they don’t. More than 30 employees of UPS, FedEx and XPO Logistics said in interviews and emails that they were worried that their warehouses and trucks had become breeding grounds for the virus.
The shipping companies say they have urged employees to take any illnesses seriously and provided information and supplies to help them manage health risks.
This is not a normal crisis. A normal rescue won’t be enough.
This crisis is different from almost any economic shock before it — and the government rescue must also break the mold.
Concerns that have guided economists in the past, like whether emergency policies discourage people from working, do not apply in the same way now: It is hard to discourage work in sectors that the government has ordered to shut down.
Joseph S. Vavra, an economist at the University of Chicago Booth School of Business, said that policymakers typically try to stimulate consumer demand during a recession and start a recovery as quickly as possible. Right now, the goal is almost the opposite.
“I don’t think what we’re trying to do is to get people to go out and shop,” he said. “What we’re trying to do is provide some assistance to households so they can sit at home and don’t have to go out and shop.”
Catch up: Here’s what else is happening.
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Drive-through testing sites were opened Sunday in Walmart parking lots in the Chicago area, part of the retailer’s collaboration with federal health officials, for health care workers and emergency personnel.
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In a letter to congressional leadership on Saturday, the chief executives of the major airlines, UPS and FedEx said that they would postpone mass layoffs and stock buybacks and dividends if a bailout large enough is passed.
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The coronavirus outbreak has created a spike in demand for a once-unfashionable product: beans. Goya Foods has delivered 24 million cans of black beans, pinto beans and other items to retailers in the past week.
Reporting was contributed by David Yaffe-Bellany, Nelson Schwartz, Rachel Abrams, Jessica Silver-Greenberg, Natasha Singer, Choe Sang-Hun, Daisuke Wakabayashi, Steve Lohr, Jack Nicas, Mike Isaac, Niraj Chokshi and Jim Tankersley.
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March 23, 2020 at 08:27AM
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