US FINANCIAL MARKET
STOCKS OPEN SHARPLY LOWER AFTER FED SLASHES RATES
- The S&P 500 sank, wiping out all of Friday’s final-hour rally.
- The Dow Jones Industrial Average plunged 9.7% before being halted.
- All stock trading was halted for 15 minutes within seconds of the opening bell, prompted by a drop of more than 7% the S&P 500.
- If the S&P 500 were to fall 13% once trading resumes, another 15-minute halt would begin.
- Brent crude tumbled below $30 a barrel for the first time since 2016.
- The yield on the benchmark 10-year U.S. Treasury note dropped to 0.743%, from 0.946% at Friday’s close.
- The Fed took several steps last week to calm the Treasury market slashing its benchmark interest rate to near zero.
- In addition to slashing borrowing costs, the Fed said it would buy $700 billion in Treasurys and mortgage-backed securities, cut the rate charged to banks for short-term emergency loans from its discount window and activate swap lines with five other central banks.
- Chinese data showing the scale of the country’s virus-induced slowdown also fed a regional selloff. Economic statistics for January and February showed Chinese retail sales, investment in fixed assets and industrial output all fell sharply. Industrial output was 13.5% lower year-over-year.
- Coronavirus deaths outside China surpassed those inside for the first time, as the center of the pandemic shifted to Europe and the U.S. and forced more countries to limit travel and gatherings to contain the spread.
- Nearly 3,300 people from countries including Italy, Iran and Spain had died from the new coronavirus as of early Monday, compared with around 3,200 in China.
- Similarly, the 81,000 total cases of infection in China have been surpassed by the 88,000 outside the country.
- The first cases of coronavirus infection were reported in the central Chinese province of Hubei in December.
Fed Takes Emergency Steps as Virus Pushes Economy Toward Recession
- The Federal Reserve cut its benchmark interest rate to near zero and unleashed an aggressive set of additional moves aimed at stabilizing markets as the new coronavirus pushed the U.S. economy toward a recession.
- The Fed said it would cut the federal-funds rate to a range between 0% and 0.25%, down 1 percentage point.
- The central bank will also buy at least $500 billion in Treasury securities and $200 billion in mortgage-backed securities over the coming months to help unclog markets that grew dysfunctional last week, the central bank said.
- The Fed said it was activating with five other central banks, including the European Central Bank and the Bank of England, swap lines to smooth out disruptions in overseas dollar-funding markets, effectively encouraging foreign central banks to use existing facilities to supply dollars to their own financial systems.
Sanofi and Regeneron Begin Initial Covid-19 Treatment Trials
- Sanofi and Regeneron will soon begin evaluating an experimental treatment in patients hospitalized with severe Covid-19, the drugmakers said Monday.
- The companies initiated a later-stage clinical trial in up to 400 patients for Kevzara, a fully-human monoclonal antibody that inhibits the so-called interleukin-6 (IL-6) pathway.
- Kevzara is already approved to treat adults with rheumatoid arthritis.
- Regeneron, which will be leading U.S.-based trials, will immediately begin enrolling patients across 16 sites, beginning with medical centers in New York.
- Sanofi will lead upcoming trials in coming weeks outside of the U.S., including in countries hardest hit by the outbreak, such as Italy.
Coronavirus Deaths Outside China Exceed Those Inside
- The outbreak has now infected more than 169,000 people in 148 countries and territories.
- Germany said Sunday it would partially shut its borders.
- Spain and Italy, the continent’s biggest outbreaks, have both imposed nationwide lockdowns, while France has closed down restaurants, bars and all nonessential shops.
- The U.S. imposed travel bans on foreigners coming from much of Europe, the U.K. and Ireland.
- New York City and Los Angeles said Sunday they would close entertainment venues and limit restaurants, bars and eateries to takeout and delivery to corral the infectious pneumonia.
- As of Monday morning, public and private schools will be closed for nearly 30 million children across the U.S.—more than half of the nation’s school enrollment.
Airlines Slash Flights Across Globe as Demand Evaporates
- Airlines worldwide will shrink operations to only a trickle of flights, severing global links and putting hundreds of thousands of jobs at risk as they fight to preserve cash and survive the coronavirus pandemic.
- British Airways owner IAG will slash capacity for April and May by at least 75% amid the collapse in demand and government restrictions aimed at slowing the disease.
- Partner American Airlines will cut international long-haul flights by the same degree in the biggest reductions by a U.S. carrier.
- Ryanair Holdings and Air France-KLM announced even deeper cuts at 80% and 90% respectively, and the Irish firm said its entire fleet may be grounded.
- Job cuts mounted as Norwegian Air Shuttle, already mired in debt and losses, cut 7,300 posts, and Virgin Atlantic Airways offered staff 12 months of leave.
Lockheed Martin Names New CEO
- Lockheed Martin Chief Executive Marillyn Hewson will step down from the role in June to be succeeded by aerospace industry veteran James Taiclet, the world’s largest defense company by sales said Monday.
- Mr. Taiclet joins from telecom infrastructure specialist American Tower Corp. but has been on the defense giant’s board since 2018, having worked for a variety of other big aerospace companies.
- Ms. Hewson will stay on as executive chairman from June, and her shift after more than six years as CEO continues a series of successions at the largest U.S. defense companies, with Northrop Grumman, BAE Systems and, later this year, Raytheon all changing their top leaders.
F-35’s $17 Billion Diagnostic System Rife with Flaws, GAO Says
- A $17 billion Lockheed Martin system used since 2009 to monitor F-35 fighter jets for repairs, parts replacement and general maintenance is rife with flaws, sometimes forcing personnel to spend hours entering data by hand, according to congressional auditors.
- Maintenance crews at one of five U.S. Air Force, Navy and Marine Corps bases that were reviewed “estimated they spend an average of 5,000 to 10,000 hours per year manually tracking information that should be automatically and accurately captured” by Lockheed’s system.
- In addition, “inaccurate or missing data” in the Autonomic Logistics Information System, or ALIS, sometimes result in alerts that “an aircraft should not be flown even though it is ready for flight,” the GAO said.
Domestic Box Office Suffers Worst Weekend in Nearly 20 Years
- With the box office experiencing its first weekend fully in the throes of the virus outbreak, grosses in the U.S. and Canada totaled just $55.3 million, according to media-measurement company Comscore Inc.
- Ranking as the worst weekend in recent memory is Sept. 15, 2000, when the box office generated just $54.5 million in ticket sales.
- It was the worst March weekend since at least 1998, the first year for which Comscore has data.
Hospitals Push Off Surgeries to Make Room for Coronavirus Patients
- A growing number of hospitals, including Boston’s Brigham and Women’s Hospital, NewYork-Presbyterian, the main facility of the University of California, San Francisco and some major systems in the hard-hit Seattle area, are starting to put off surgeries that aren’t urgent or emergencies.
- In addition to freeing up capacity, doctors say they don’t want to expose patients and workers to potential infection risk.
US ECONOMY & POLITICS
Joe Biden Vows to Pick a Woman to Be His Vice President
- Joe Biden committed to choosing a woman to be his vice president if he becomes the Democratic presidential nominee, though his rival Bernie Sanders didn’t make as firm a promise to do so during a debate Sunday.
- The debate, moderated by CNN and Univision, is the first to be held without a live audience and the first this cycle with only two candidates.
Coronavirus Closes School for Nearly 30 Million Children in U.S.
- A cascade of announcements by governors across the country to close schools statewide in the last few days means that, as of Monday morning, public and private schools will be closed for nearly 30 million children across the U.S.—more than half of the nation’s school enrollment.
- The historic closings will take place across 26 states and the District of Columbia, as well as in most of the nation’s largest school districts including Los Angeles, Chicago and Boston, according to Education Week, which is keeping a running tally.
EUROPE & WORLD
Bank of Japan Rolls Out Measures to Blunt Coronavirus Impact
- The Bank of Japan said it would double stock purchases and help companies get loans in response to the coronavirus pandemic, but the move failed to impress investors, who drove stocks down 2.5%.
- The BOJ has been purchasing exchange-traded stock funds at an annual pace of ¥6 trillion, or about $56 billion, and it said Monday it would double that target to ¥12 trillion for now.
Saudi Aramco Cuts Spending, Hikes Dividend Amid Price War
- State oil giant Saudi Aramco will cut its spending this year due to the coronavirus pandemic, while it increases its dividend, the company said Sunday, as its share price continued to decline amid the Saudi regime’s price war with Russia.
- The company’s net profit for 2019 fell 21% to 330.69 billion riyals ($88.11 billion), down from 416.52 billion riyals ($111 billion) a year earlier.
- Aramco said it expects capital spending for 2020 to be between $25 billion and $30 billion, down from $32.8 billion a year earlier, due to market conditions and recent price volatility.
- Aramco—the world’s most valuable oil company—said it intends to declare cash dividends of at least $75 billion in 2020, up from $73.2 billion in 2019.
China’s JD.com Moves to Follow Alibaba With Hong Kong Listing
- Securing this deal despite market turmoil would be a victory for the Hong Kong stock exchange, which is eager to become a major venue for Chinese technology stocks.
- In November, Alibaba completed a secondary listing in the city, which eventually raised about $13 billion including a so-called overallotment option.
TODAY in HISTORY
- Ferdinand Magellan reached the Philippines. 1521
- The first liquid-fuel rocket was successfully launched by Prof. Robert Goddard at Auburn, Massachusetts. The rocket traveled 184 feet in 2.5 seconds. 1926
- Adolf Hitler cancelled the military clauses of the Treaty of Versailles. 1935
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