This briefing is no longer updating. Read the latest developments in the coronavirus outbreak here. The Federal Reserve unveiled a vast expansion of its efforts to shore up businesses and keep markets functioning. But the brief boost for Wall Street was soon wiped away as Washington lawmakers failed again to come together on a nearly $2 trillion rescue package.
Across the landscape of American business, grim news abounded Monday as the coronavirus pandemic paralyzed the country. Boeing said it was temporarily idling 70,000 factory workers in Washington State after about 30 employees tested positive for Covid-19. Twitter said its revenue would take a hit as advertising has declined. Nordstrom, its cash diminished, drew down $800 million in credit.
And General Electric said it would cut 10 percent of workers in its aviation unit. The biggest factor again driving markets was Congress, which hit another wall in its attempt to push through a fiscal stimulus package. Senate Democrats blocked the progress of the nearly $2 trillion government rescue package for a second time as they continued to negotiate for stronger protections for workers and restrictions for bailed-out businesses. The S&P 500 fell about 3 percent Monday, adding to a 15 percent plunge last week as traders remained cautious about the Fed’s ability to shift the trajectory of an economy that appears to be in free-fall because of the coronavirus crisis.
“It is hard for the Fed to stimulate underlying demand. For that, fiscal stimulus is needed,” Randy Watts, chief investment strategist at William O’Neil, an equity research and advisory firm, wrote in an email. “The deal in the Senate of the fiscal stimulus bill is obviously disappointing. ” There was more reason to worry on Monday as well.
The International Monetary Fund’s managing director, Kristalina Georgieva, said she expected “a recession at least as bad as during the global financial crisis or worse” this year, with a rebound in 2021. “The faster the virus stops, the quicker and stronger the recovery will be,” she added. And forecasters at Morgan Stanley offered one of the grimmest assessments for how much damage the coronavirus could inflict on the American economy in the months to come. The economists said in a research note that they expected the economy to contract at an annualized rate of 2.
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4 percent in the first quarter of the year and a 30 percent rate in the second quarter — which would be the worst single-quarter drop recorded in modern American economic statistics. In that scenario, the unemployment rate would approach 13 percent, which would also be a record. “Economic activity has come to a near standstill in March,” they wrote. Still, investors signaled a possible reprieve from market slumps.
Asian markets opened broadly higher on Tuesday, led by a nearly 6 percent rise in Japanese stocks. Futures markets predicted Wall Street would open higher as well. In the first 10 days of March, some of the commentators on Fox News and Fox Business played down the threat of what would soon be recognized as a pandemic. Many of the networks’ elderly, pro-Trump viewers responded to the coverage and the president’s public statements by taking the virus less seriously than others.
But one elderly Fox News viewer, a crucial supporter of President Trump, took the threat seriously: The channel’s chairman, Rupert Murdoch, who was to celebrate his 89th birthday on March 11. On March 8, as the virus was spreading, the Murdoch family called off a planned party out of concern for the patriarch’s health, according to a person familiar with the cancellation. There were about 20 people on the guest list. The canceled party is perhaps the most glaring instance of the gap between the elite, globally minded family owners of Fox — who took the crisis seriously as reports emerged in January in their native Australia — and many of their nominal stars, who treated the virus as a political assault on Mr.
Trump, before zigzagging, along with the president, toward a focus on the enormity of the public health risk. In South Korea, police investigators and financial authorities are harnessing surveillance-camera footage and location data from smartphones and car navigators. In Lombardy, Italy, authorities are analyzing location data transmitted by citizens’ mobile phones.
“In Israel, the country’s internal security agency is poised to start using a cache of mobile phone location data originally intended for counterterrorism operations.”
As countries race to contain the coronavirus pandemic, many are deploying digital surveillance tools to trace the movement of virus patients and pinpoint people who may have been exposed. Yet ratcheting up surveillance to combat the pandemic now could permanently open the doors to more invasive forms of snooping later. It is a lesson Americans learned after the terrorist attacks of Sept. 11, 2001, civil liberties experts say.
“We could so easily end up in a situation where we empower local, state or federal government to take measures in response to this pandemic that fundamentally change the scope of American civil rights,” said Albert Fox Cahn, the executive director of the Surveillance Technology Oversight Project, a nonprofit organization in Manhattan. Boeing plans to announce on Monday that it will temporarily shut down its operations in Washington State, where the company has two major factories and several smaller sites, in an effort to slow the spread of the coronavirus among its tens of thousands of employees in the region, according to three people familiar with the matter. The factories will close for two weeks and all of the 70,000 employees will continue to receive paychecks during that time, according to two of the people, who spoke on condition of anonymity to discuss internal decisions. Boeing is in contact with the Pentagon to determine how to handle its work on the KC-46 tanker and P-8 military aircraft, which are made in the Washington factories.
For now, the company’s other major production facilities, in Missouri, South Carolina, Arizona and Pennsylvania, will remain open. The Federal Reserve said it would buy as much government-backed debt as it needed to keep financial markets functioning, and unrolled a series of programs meant to shore up both large and small businesses, in a staggering, whatever-it-takes-effort to cushion the economic blow of coronavirus. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate,” the central bank said in a Monday morning statement, adding that “the Federal Reserve is using its full range of authorities to provide powerful support for the flow of credit to American families and businesses. ” The Fed resurrected an enormous bond-buying program — last used in response to the financial crisis — earlier this month, saying it would spend $700 billion on Treasury securities and $200 billion in mortgage-backed debt.
But on Monday, the central bank said it would not limit its purchases, instead buying “in the amounts needed to support smooth market functioning. ” While the rest of the economy is tanking from the crippling impact of the coronavirus, business at the biggest technology companies is holding steady — even thriving. Amazon said it was hiring 100,000 warehouse workers to meet surging demand. Mark Zuckerberg, Facebook’s chief executive, said traffic for video calling and messaging had exploded.
Microsoft said the number of people using its software for online collaboration had climbed nearly 40 percent in a week. With people told to work from home and stay away from others in an attempt to slow the virus’s spread, the pandemic has deepened reliance on services from the technology industry’s biggest companies while accelerating trends that were already benefiting them. “The largest tech companies could emerge on the other side of this much stronger,” said Daniel Ives, managing director of equity research at Wedbush Securities. But beyond the biggest companies, it is more of a struggle.
Communication tools like the videoconferencing service Zoom are now essential, but ride-hailing firms like Uber and Lyft and property-rental sites like Airbnb are seeing customers vanish. More people are using Twitter, with daily visitors up 8 percent from the final quarter of 2019 and 23 percent from a year ago. But that increase hasn’t translated into advertising — the lifeblood of the company. Twitter had estimated that its revenue this quarter would be between $825 million and $885 million.
Now the company expects revenue to decline from the same quarter a year ago, when it made $787 million. Over the past five days, executives from the largest American clothing brands and department stores have been engaged in urgent late-night phone calls and marathon video conferences in which they game out scenarios for their future in a world with a coronavirus pandemic. In the end, they have decided to request a stimulus package from the United States government that would defray the worst of the effects for both big and small businesses alike, framing it as a “bridge,” not a “bailout. ” The discussion of coming economic carnage as municipal and federal shutdowns have changed lives and businesses has primarily focused on the airlines and the cruise ships, on restaurants and hotels.
On Monday, Nordstrom announced several precautionary measures, including suspending its quarterly cash dividend, suspending share repurchases and drawing down $800 million on its revolving line of credit. General Electric said that it would lay off 10 percent of the U. S. staff, about 2,500 people, from its aviation unit, which makes engines for military and commercial aircraft.
The company has already frozen hiring and merit raises and reduced nonessential spending. Dollar General said it would hire up to 50,000 employees by the end of April, nearly doubling its hiring rate, as it tries to meet increased demand from shoppers. Reporting was contributed by Natasha Singer, Choe Sang-Hun, Ben Smith, Kate Conger, Jim Kerstetter, Natalie Kitroeff, Jeanna Smialek, David Gelles, Stacey Cowley, Tiffany Hsu, Davey Alba, Niraj Chokshi, Daisuke Wakabayashi, Jack Nicas, Steve Lohr, Mike Isaac, Jim Tankersley, Matthew Goldstein, Alan Rappeport, Keith Bradsher, Ana Swanson, Sapna Maheshwari, Vanessa Friedman, Carlos Tejada, Ben Dooley, Vindu Goel, Melissa Eddy, Kevin Granville and Daniel Victor.
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