US FINANCIAL MARKET
Dow, S&P 500 Rise More Than 6% As Volatility in Stocks Continues
- U.S. stocks rallied Tuesday on signs that lawmakers and the Trump administration were nearing a deal on a giant stimulus package aimed at limiting the economic fallout of the coronavirus pandemic.
- The global death toll from the novel coronavirus surpassed 17,000, with more than 395,000 confirmed cases.
- Cases in the U.S. alone grew 10-fold to cross 46,000 from a week earlier, as more state governors ordered residents to stay home.
- In Washington, Treasury Secretary Steven Mnuchin and Senate Minority Leader Chuck Schumer (D., N.Y.), who have led the negotiations for Republicans and Democrats, emerged from late-night negotiations Monday saying they were within striking distance of a deal. Mr. Schumer said it could be worth $2 trillion.
- A string of emergency measures by the Federal Reserve to support credit markets and ensure funding for American businesses and homeowners has also helped alleviate some of the most pressing concerns among investors.
- On Tuesday, March figures for the manufacturing and services sector in Germany and the eurozone pointed to a contraction.
- A steep fall in the U.K. data, which hit a record low, signaled that the British economy is headed for a recession, analysts said.
New Coronavirus Cases in the U.S. Rise Sharply; Wuhan to Get Lockdown Relief
- China said it would let healthy people leave Wuhan beginning April 8, easing the lockdown around the initial center of the coronavirus pandemic, as the number of newly reported cases in the U.S. shot higher.
- Over the past week, China has reported several days without new domestic infections.
- More than 387,000 people have been infected world-wide and 16,767 have died of Covid-19, the pneumonialike disease caused by the virus, according to data from Johns Hopkins University.
- The U.S. reported more than 13,000 new infections Monday alone.
Coronavirus Could Trigger Global Recession, Says IMF
- Business activity in the U.S. contracted at its sharpest rate in over a decade in March as measures to limit the coronavirus pandemic hit businesses.
- Data company IHS Markit said Tuesday that its composite purchasing managers index (PMI) for the U.S., a measure of activity in businesses, dropped to 40.5 in March, down from 49.6 in February, and the steepest decline since October 2009.
- In separate surveys released Tuesday, Europe saw a record fall in business activity during March as government measures and behavioral changes designed to contain the novel coronavirus intensified, while Japan saw sharp falls that similarly hit service providers hardest.
- Data firm IHS Markit said its composite Purchasing Managers Index (PMI) for the eurozone—an aggregate measure of activity in the manufacturing and services sectors—fell to 31.4 from 51.6 in February, its lowest level since the surveys began in July 1998.
- The sharp decline in activity recorded by the surveys suggest the global economy is likely to contract in the first six months of this year.
General Motors to draw down $16 billion in credit, suspends 2020 outlook
- General Motors said on Tuesday it will draw about $16 billion from its credit lines in a bid to beef up liquidity amid rising business impact from the fast-spreading coronavirus outbreak.
- The No.1 U.S. automaker, which also suspended its 2020 outlook, said it was evaluating its quarterly dividend, but has not yet decided to suspend it.
- Last week, rival Ford abandoned its 2020 forecast and said it drew down $15.4 billion from two credit facilities to bolster its balance sheet.
Intel suspends share buybacks, warns of likely coronavirus hit
- Chipmaker Intel said on Tuesday it would suspend its share buybacks and warned that the coronavirus pandemic could have a material impact on its business, even as its factories remain operational.
- The suspension of buybacks would not impact dividend payments, Intel said in a filing.
- Intel in October 2019 said it would repurchase $20 billion worth of shares over the next 15 to 18 months.
Comcast shuts theme parks, delays film distribution due to COVID-19
- Comcast on Tuesday warned of a hit to its results from the coronavirus outbreak as it shut all its theme parks and delayed distribution of films in theaters worldwide.
- The media and communications company said it also expects economic distress due to the virus to impact its customer base in cable business, which is already under pressure from the widespread shift to streaming services.
- The creation and availability of film and television programming has been disrupted, hurt by cancellation or postponement of sports events and entertainment production, including possibly the Olympics, the company said.
Twitter ad sales hit by coronavirus but active users soar
- Twitter pulled its first-quarter revenue outlook and forecast an operating loss on Monday as the coronavirus outbreak crimped ad sales, but said the pandemic boosted the number of active users on the microblogging platform.
- Twitter on Monday said it would post an operating loss in the first quarter and that sales would decline “slightly” compared with the year-ago quarter, when it posted about $787 million in revenue.
- The company previously said sales for the quarter should rise and operating income could reach $30 million.
- The company said it has, on average, around 164 million users daily that it can reach with advertisements, up 23% from with last year and 8% higher than in the previous quarter.
Chevron Plans Cuts to Capital Budget
- Chevron is cutting $4 billion from its capital budget as it confronts plummeting petroleum demand and an oil-price rout, the latest major energy company to axe its spending to shore up its balance sheet.
- The oil giant said Tuesday it would reduce its 2020 spending by 20% to about $16 billion, with the biggest cut to come in the largest U.S. oil field, the Permian Basin in West Texas and New Mexico.
- Chevron will also suspend stock buybacks but promised to protect its dividend and said oil production would be flat.
Refiner Phillips 66 cuts spending forecast by 18%, commits to dividend
- Refiner Phillips 66 cut its 2020 spending forecast by about 18% and assured investors their dividend was secure even as the coronavirus outbreak and a price war between Saudi Arabia and Russia threaten the oil market with massive oversupply.
- Phillips 66 said it now expects consolidated spending for the year to be about $3.1 billion, a $700 million reduction from its earlier forecast.
Boeing chief still sees mid-year return to service for 737 MAX
- Boeing Chief Executive Dave Calhoun said Tuesday the company still expects a “mid-year” return to service for the grounded 737 MAX and said the company needs to know credit markets remain open to the aerospace manufacturing sector.
- “We’re very close to the finish line,” Calhoun told CNBC of the plane that has been grounded since two fatal crashes in five months.
Boeing CEO: No Government Equity Stake for Taxpayer Aid
- Boeing Chief Executive David Calhoun suggested he would decline taxpayer aid if lawmakers require the government to take an equity stake in the beleaguered aerospace giant.
- Mr. Calhoun’s comments came as Congress was negotiating details of an aid package of more than $1.6 trillion aimed at blunting the economic fallout from the worsening novel coronavirus outbreak.
- Instead of the government taking an equity stake in Boeing, Mr. Calhoun expressed support for taking out taxpayer-funded loans and repaying them with interest.
Netflix to cut traffic in India by 25% to ease data gridlock
- Netflix said on Tuesday it would reduce traffic over telecom networks in India by 25% over the next 30 days to ease data congestion as millions stay indoors because of the coronavirus pandemic.
- The decision comes after the streaming giant also reduced traffic on networks in Europe to help internet service providers (ISPs) experiencing a surge in usage.
- Mobile networks could come under increased pressure as lockdowns to slow the pandemic become stricter and broader.
Nordstrom joins Macy’s in suspending dividend amid coronavirus
- Nordstrom said on Monday it would suspend its quarterly cash dividend and share repurchases as it looks to weather the impact from the coronavirus pandemic.
- The upscale department store chain also said it drew down $800 million on its revolving line of credit.
- Last week, Macy’s also suspended its quarterly dividend and said it would borrow $1.5 billion from a revolving credit facility.
Mondelez raises hourly wage, hands out weekly bonus as virus worries fuel demand
- Mondelez International on Monday said it would increase hourly wage by $2 and pay a $125 weekly bonus for its sales representatives as it rushes to meet a surge in demand for its packaged food due to the coronavirus outbreak.
- Retail giants Amazon.com and Walmart have also temporarily raised pay for their hourly U.S. workers, while Jif peanut butter maker J.M. Smucker said on Monday it would give a $1,500 one-time bonus to each of its 5,700 employees on duty.
- Mondelez said the hourly wage hike is effective immediately, through May 2.
U.S. trade regulators approve tariff exemption for Apple Watches
- U.S. trade regulators have approved Apple’s request to waive tariffs on China-made Apple Watches, the Office of the United States Trade Representative said in a letter dated Friday.
- The iPhone maker had requested for an exclusion in October, seeking relief from U.S. tariffs of 15% that took effect on Sept. 1.
Digital Payments Soar Amid Coronavirus Restrictions
- Digital-payment services are facing a surge in demand as efforts to stem the novel coronavirus pandemic result in housebound shoppers stocking up on groceries, prescription drugs, audiobooks and movies online.
- Many e-payment providers are falling back on contingency plans put in place to handle seasonal bursts in online shopping, such as Black Friday, in part by tapping additional on-demand capacity in the cloud, industry analysts said.
- In Italy, one of the first countries to order residents to stay home in a bid to prevent the virus from spreading, e-commerce transactions have soared 81% since the end of February, according to estimates by McKinsey & Co.
US ECONOMY & POLITICS
U.S. new home sales fall; January revised sharply up
- Sales of new U.S. single-family homes fell in February after surging in the prior month, and could decline further because of the coronavirus pandemic, which is boosting unemployment and severely disrupting economic activity.
- The Commerce Department said on Tuesday new home sales dropped 4.4% to a seasonally adjusted annual rate of 765,000 units last month.
- January’s sales pace was revised sharply higher to 800,000 units from the previously reported 764,000 units.
- Economists had forecast new home sales declining at a 2.0% to a pace of 750,000 units in February.
U.S. Domestic Passenger Flights Could Virtually Shut Down, Voluntarily or by Government Order
- Major U.S. airlines are drafting plans for a potential voluntary shutdown of virtually all passenger flights across the U.S., according to industry and federal officials, as government agencies also consider ordering such a move and the nation’s air-traffic control system continues to be ravaged by the coronavirus contagion.
- No final decisions have been made by the carriers or the White House, these officials said. As airlines struggle to keep aircraft flying with minimal passengers, various options are under consideration, these people said.
- U.S. airlines have already eliminated the vast majority of international flying and have announced plans to cut back domestic flying by as much as 40%.
Negotiators Aim to Wrap Up Talks Tuesday on U.S. Stimulus Package
- Top lawmakers and the Trump administration aim to complete a colossal stimulus package worth at least $1.6 trillion on Tuesday in an effort to shield the U.S. economy from the most drastic consequences of the coronavirus pandemic.
- Treasury Secretary Steven Mnuchin and Senate Minority Leader Chuck Schumer, who have led the negotiations for Republicans and Democrats, emerged from another set of late-night negotiations Monday saying they were within striking distance to a deal.
- “We expect to have an agreement tomorrow morning,“ Mr. Schumer said on Monday, adding that the deal could be worth $2 trillion. “There’s still a few little differences, neither of us think they’re in any way going to get in the way of a final agreement.”
- The two sides were approaching an agreement on one of the primary remaining sticking points: oversight on $500 billion that Republicans had proposed to allocate to aid distressed businesses.
Administration to Use Defense Production Act for First Time in Coronavirus Pandemic
- The Trump administration is set to use the Defense Production Act on Tuesday for the first time in the coronavirus pandemic to procure about 60,000 coronavirus test kits, as health care workers around the country face severe shortages in kits, masks, ventilators and other crucial equipment.
- Peter Gaynor, the Federal Emergency Management Agency administrator, said Tuesday on CNN that the administration had decided to use the Defense Production Act because “there are some test kits we need to get our hands on.”
- He said the federal government was also inserting “DPA language” into its mass contract for 500 million masks.
EUROPE & WORLD
AB InBev scraps 2020 outlook as coronavirus crisis expands
- Anheuser-Busch InBev, the world’s largest brewer, said on Tuesday it was scrapping its 2020 outlook as the scale of the coronavirus increased.
- The Belgium-based maker of Budweiser, Stella Artois and Corona had forecast at the end of February that core profit (EBITDA) would decline by 10% in the first quarter and by between 2 and 5% for the full year.
- The company said it was pressing ahead with a $11 billion sale to Asahi Group Holdings of its Australian operations and hoped to get regulatory approvals to allow the deal to close as soon as possible in the second quarter of 2020.
Global airlines face emergency, need rescue package now: IATA
- Global airlines are in an emergency situation and government rescue packages are needed as quickly as possible to avoid multiple airline collapses, the head of the International Air Transport Association warned on Tuesday.
- “We need a full speed massive rescue package now,” IATA chief Alexandre de Juniac told reporters on a call.
- IATA’s chief economist said that European airlines were under the most pressure.
Japan, IOC Agree to Postpone 2020 Tokyo Olympics by About One Year
- Japanese Prime Minister Shinzo Abe said he agreed with the International Olympic Committee’s president that the Summer Olympics previously scheduled to start in Tokyo on July 24, 2020, would be delayed by around one year.
- Citing the spreading coronavirus pandemic, the Japanese leader said it was difficult to hold the Olympics this year and a delay was needed to ensure the safety of athletes and spectators.
- He said he proposed a delay of “about one year” and received “100% agreement” from Mr. Bach.
- Broadcasters like Comcast’s NBCUniversal and Discovery, who together paid more than $1 billion to show the 2020 Games to audiences in the U.S. and abroad, will have their schedules thrown into chaos.
TODAY in HISTORY
- Robert Koch announced the discovery of the tuberculosis bacillus. (1882)
- In one of worst oil spills in recent history, the tanker, Exxon Valdez, ran aground and released 240,000 barrels of oil into Prince William Sound. (1989)
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