{"id":65365,"date":"2020-03-24T12:44:10","date_gmt":"2020-03-24T12:44:10","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=65365"},"modified":"2020-03-24T12:44:15","modified_gmt":"2020-03-24T12:44:15","slug":"stocks-rebound-from-mondays-collapse","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/stocks-rebound-from-mondays-collapse.html","title":{"rendered":"Stocks Rebound From Monday\u2019s Collapse"},"content":{"rendered":"\n
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\nAfter suffering their worst day in decades, stocks bounced back on Tuesday as Washington policymakers talked up plans to try to cushion an economy careening toward a deep recession driven by the coronavirus outbreak.<\/span><\/span><\/div>\n
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\nThe S&P 500 rose 6 percent, rebounding from a 12 percent collapse on Monday, which was its steepest drop since 1987.<\/span><\/span><\/div>\n
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\nEarly trading was unsteady, and stocks briefly fell into negative territory. They then surged after the Federal Reserve said it would use its emergency lending powers to try to keep credit flowing to households and businesses in the United States by buying up commercial paper. Shares in Europe also recovered from early losses to end higher.<\/span><\/span><\/div>\n
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\nThe market for commercial paper is part of the normally invisible plumbing of the American financial system, but it had become frozen in recent days. Companies and financial entities borrow billions by issuing commercial paper to fund their operations and manage their daily cash flows.<\/span><\/span><\/div>\n
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\nOn Tuesday evening, the Fed announced yet another program intended to spur lending. The new Primary Dealers Credit Facility is similar to one the central bank unveiled in 2008 to help banks \u2014 known as primary dealers \u2014 that are conduits between the Fed, Treasury Department and broader financial system.<\/span><\/span><\/div>\n
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\nStill, even if the financial system functions well, a daunting economic challenge continues to face the American economy, as the spread of the coronavirus forces federal, state and local officials to take simultaneous actions that will cut consumer spending. Such spending accounts for roughly 70 percent of American gross domestic product.<\/span><\/span><\/div>\n
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\nOn Tuesday, economists from S&P Global Ratings wrote that they expected the United States\u2019 economy to shrink by 1 percent in the first quarter, and 6 percent in the second quarter, putting the country in recession. That 6 percent drop would be the sharpest falloff in economic activity since 2008.<\/span><\/span><\/div>\n
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\nEven as stocks gained, the trading on Tuesday reflected some of these concerns. The best performing parts of the market were traditionally defensive areas, such as the utilities and consumer staples, where investors typically hide out during trying economic times. Oil prices also fell.<\/span><\/span><\/div>\n
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\n\u201cThis is the type of news the market wants,\u201d Ilya Feygin, managing director at the institutional brokerage firm WallachBeth, said in an email. \u201cAid to households and businesses and attacking the virus directly, not monetary gimmicks.\u201d<\/span><\/span><\/div>\n
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\nLatest Updates: Markets and Business<\/span><\/span><\/div>\n
\nThe Fed\u2019s rescue plan is undermined by a drum beat of bad news.<\/span><\/span><\/div>\n
\nAs Fox News played down the coronavirus, its chief protected himself.<\/span><\/span><\/div>\n
\nAs virus surveillance escalates, personal privacy plummets.<\/span><\/span><\/div>\n
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\nAirlines and lawmakers discuss terms of a bailout.<\/span><\/span><\/div>\n
\nCongressional leaders and airlines on Tuesday started to negotiate a bailout for the industry, which has been hobbled by the coronavirus outbreak, a day after an airline association proposed more than $50 billion in federal grants and loans.<\/span><\/span><\/div>\n
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\nThe Trump administration has said that it wants to help airlines, and intends to include aid for them in a broader $850 billion package of economic stimulus measures it is proposing as a response to the outbreak. Separately, Democratic leaders in the House spoke with airline chief executives by phone Tuesday afternoon after hearing from Treasury Secretary Steven Mnuchin, who has been a central point of contact within the administration.<\/span><\/span><\/div>\n
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\nIn Tuesday\u2019s call, the airline executives and members of Congress specifically discussed limiting executive bonuses and shares buybacks and protecting employees from layoffs or furloughs. They also discussed protecting collective bargaining and reversing any union concessions when the industry recovers. The airlines indicated that furloughs would be a last resort, according to a person familiar with the call, but unauthorized to discuss it publicly.<\/span><\/span><\/div>\n
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\nAirlines for America, an industry association, asked the federal government on Monday for a $58 billion bailout, equally split between grants and loans and loan guarantees, for passenger and cargo airlines. It is also seeking help in the form of a temporary tax break.<\/span><\/span><\/div>\n
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\n\u201cCarriers are burning through cash as cancellations far outpace new bookings,\u201d Katherine Estep, a spokeswoman for Airlines for America, said in a statement.<\/span><\/span><\/div>\n
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\nIn a sign of the stress on the industry, Moody\u2019s on Tuesday downgraded the debt of Southwest Airlines, which borrowed $1 billion last week, and put it on watch for further downgrades. Moody\u2019s said the carrier, the most consistently profitable U.S. airline, \u201cremains vulnerable to the outbreak continuing to spread\u201d and that the outbreak could depress travel demand through \u201cat least June.\u201d<\/span><\/span><\/div>\n
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\nMnuchin warns that unemployment could approach 20 percent without government help.<\/span><\/span><\/div>\n
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\nThe comments came while Mr. Mnuchin was making the White House\u2019s pitch to lawmakers to back a $1 trillion fiscal stimulus package that would include $250 billion of checks being sent to Americans suffering from the fallout of the coronavirus epidemic.<\/span><\/span><\/div>\n
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\nMr. Mnuchin said that the jobless rate could go up by 5, 10 or 15 percentage points if there is no intervention, according to two people familiar with his comments. The jobless rate currently sits at 3.5 percent.<\/span><\/span><\/div>\n
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\nMonica Crowley, a spokeswoman for Mr. Mnuchin, said that the Treasury secretary\u2019s comments were not a projection and that because Congress was taking additional action, he did not believe the unemployment rate would reach 20 percent.<\/span><\/span><\/div>\n
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\n\u201cDuring the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case,\u201d Ms. Crowley said in a statement.<\/span><\/span><\/div>\n
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\nSince World War II, the United States has never seen unemployment rise above 11 percent, the level it nearly reached in the recession of the early 1980s. It reached 10 percent, briefly, during the 2008 financial crisis.<\/span><\/span><\/div>\n
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\nThe White House is seeking ways to use smartphone location data in its virus response.<\/span><\/span><\/div>\n
\nThe Trump administration has spoken with large technology companies about how their access to geolocation data from smartphones can aid in the response to the coronavirus pandemic.<\/span><\/span><\/div>\n
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\nAt a recent meeting, a group of tech companies discussed the use of anonymous, aggregated geolocation data to respond to the spread of the virus with the White House and other administration officials, according to two people with knowledge of the matter. They also discussed how that would intersect with user privacy, the people said.<\/span><\/span><\/div>\n
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\nThe Centers for Disease Control asked during the meeting about the prospect of using the data to track demand for hospitals around the country, which are expected to be deluged by patients, one of the people said. The conversations were first reported by The Washington Post.<\/span><\/span><\/div>\n
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\nFacebook has also discussed with the U.S. government the maps it produces to track disasters using satellite and census data, said a company spokesman, Andy Stone. It is also working to provide nonprofit groups \u2014 which can work with local, state and federal authorities \u2014 with a second set of mapping tools that use smartphone location data that Facebook users can choose to share.<\/span><\/span><\/div>\n
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\nThe possible use of geolocation data raises questions about user privacy, especially as policymakers are increasingly asking about the power of major tech companies like Amazon, Facebook and Google.<\/span><\/span><\/div>\n
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\nBut analysis of aggregated data would be different from aggressive measures to track individual patients using their phones. In Israel, for example, the government has moved to use cellphone data to retrace the steps of virus patients.<\/span><\/span><\/div>\n
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\nAutoworkers demand that the Big 3 shut down, while European factories are idled.<\/span><\/span><\/div>\n
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\nPressure mounted Tuesday for General Motors, Ford Motor and Fiat Chrysler to close their factories, while Europe\u2019s auto manufacturing was brought virtually at a standstill after Daimler, Ford Motor and Nissan joined Volkswagen and most other major carmakers in shutting down.<\/span><\/span><\/div>\n
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\nThe United Automobile Workers union has called on the three Detroit carmakers to shut down manufacturing plants across the United States for two weeks to prevent the spread of the coronavirus, a request the companies have so far denied.<\/span><\/span><\/div>\n
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\nIn an email sent to U.A.W. members on Tuesday, the union\u2019s president, Rory Gamble, said he had requested the shutdown in a meeting on Sunday with the chief executives of General Motors, Ford Motor, and Fiat Chrysler, based on the guidelines from the Centers for Disease Control and Prevention and the World Health Organization.<\/span><\/span><\/div>\n
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\n\u201cYour U.A.W. leadership feels very strongly, and argued very strongly, that this is the most responsible course of action,\u201d Mr. Gamble said in the email.<\/span><\/span><\/div>\n
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\nThe automakers have responded by taking actions to protect workers, such as extending down time between shifts to allow for sanitizing of equipment and common areas in the plants.<\/span><\/span><\/div>\n
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\nJim Cain, a G.M. spokesman, said the company was trying to keep factory workers safe while being mindful of the potential economic impact of a broad shutdown and of the hardship employees could face if they were no longer earning paychecks.<\/span><\/span><\/div>\n
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\nIn Europe, Ford said the suspension would take effect Thursday and last \u201cfor a number of weeks\u201d depending on the spread of the pandemic, as well as disruptions to supply chains, government restrictions on travel, and declines in sales.<\/span><\/span><\/div>\n
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\nFacebook announced a $100 million grant program for small businesses around the world that are affected by the coronavirus outbreak. The company said in a blog post that it would begin accepting applications in the coming weeks.<\/span><\/span><\/div>\n
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\nMacy\u2019s said on Tuesday that it would close all its stores, including Bloomingdale\u2019s, through March 31. The company added that it would provide benefits and compensation to its work force.<\/span><\/span>
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