US FINANCIAL MARKET
Stocks Rise Despite Jobless Claims Soaring to Record
- U.S. stocks rallied as investors speculated the $2 trillion rescue package poised to pass Congress will lessen the pandemic’s toll on the economy.
- The S&P 500 extended its advance to as high as 4% in mid-morning, headed for its first three-day rally since February.
- Jobless claims surged to a record 3.28 million Americans last week as businesses shut down to help prevent the spread of the virus.
- Federal Reserve Chairman Jerome Powell also sought to assure traders that the central bank wouldn’t run out of crisis-fighting ammunition.
- The rescue measures across major economies are unprecedented, yet traders remain cognizant of the virus’s escalating toll.
- The world’s cases now top 491,000 with more than 22,000 deaths.
- The U.S. death toll topped 1,000.
Micron Gives Strong Outlook Lifted By Data-Center Demand
- Micron Technology predicted stronger-than-expected revenue helped by a surge in orders from data center operators who are building more capacity to deal with the expansion of people working from home.
- Revenue declined 18% to $4.8 billion.
- Net income in the period fell to $405 million, from $1.62 billion a year earlier.
- Revenue will be $4.6 billion to $5.2 billion in the fiscal third quarter.
- Analysts had projected $4.88 billion, according to data compiled by Bloomberg.
- Adjusted earnings will be 55 cents a share, plus or minus 15 cents. Analysts, on average, estimated 52 cents a share.
CVS says membership, payment collection hit by coronavirus
- U.S. drugstore operator CVS said on Thursday its medical membership and payment collection have been hit due to the coronavirus pandemic, although it cannot reasonably estimate the impact on its businesses, cash flows or operating results.
- The company also said deterioration of U.S. and global economies has hurt its net investment income.
- Earlier this week, CVS said it was hiring 50,000 employees across the United States to assist patients and customers with the outbreak.
Caterpillar halts operations at some facilities, withdraws 2020 outlook
- Construction and mining equipment maker Caterpillar said on Thursday it was suspending operations at some facilities and withdrawing its 2020 outlook as it struggled with the impact of government-ordered shutdowns on its plants and supply chains.
- The company said it may suspend operations at more facilities, adding that it continues to run the majority of its U.S. domestic operations and plans to continue operations in other parts of the world.
- Caterpillar in January said it expected adjusted profit in 2020 in the range of $8.50 to $10 per share on the back of a further decline in equipment sales. The forecast is lower than $11.06 per share last year.
Harley-Davidson withdraws outlook due to coronavirus disruption
- Harley-Davidson on Thursday withdrew its financial forecasts as the coronavirus outbreak hurts its supply chain, and warned further disruptions could dent its ability to supply and sell motorcycles.
- Harley said last week it would shut majority of the production at its facilities in Pennsylvania and Wisconsin, starting March 18 through March 29, after an employee tested positive for the virus at its Wisconsin facility.
Ford to restart U.S. truck plants in April to combat virus cash squeeze
- Ford Motor announced plans on Thursday to shore up its finances amid the coronavirus pandemic, aiming to generate more cash by resuming production next month of its most profitable vehicles while saving money through more cost cuts.
- To get more cash coming in, Ford said Thursday it would restart key plants, while introducing additional safety measures to protect returning workers from the coronavirus.
- Ford also took additional moves to conserve cash, announcing its top 300 executives would defer 20% to 50% of salaries for at least five months starting May 1, with the executive chairman deferring his entire salary.
U.S. auto sales in states with coronavirus lockdown orders to drop 80%: analysts
- Vehicle sales in U.S. states that implemented lockdown orders to curb the spread of the coronavirus will drop 80% or more, analysts said on Wednesday.
- Auto retail sales through the week of March 22 declined 22% nationwide on a yearly basis and as much as 40% in some cities on the U.S. West Coast, according to an analysis by J.D. Power, based on data from dealership stores around the country.
- Separately on Wednesday, dealership company Group 1 Automotive told investors its overall U.S. vehicle sales volumes were down 50-70% from regular expected March sales.
ViacomCBS’s Freefall Forces Parent to Give Up Borrowing Power
- ViacomCBS’s parent company is losing some of its ability to borrow money at a time when its key revenue drivers—movies, movie theaters and live-sports TV broadcasts—have ground to a halt because of the novel coronavirus.
- National Amusements, the movie-theater chain that in recent decades has become predominantly a holding company for its controlling stake of ViacomCBS, has reached a deal with Wells Fargo to restructure its credit facilities.
- The restructuring became necessary after the value of the ViacomCBS shares pledged as collateral for credit fell below Well Fargo’s minimum threshold, people familiar with the matter said.
- Shares started dropping pretty much since the merger of sister companies CBS and Viacom was finalized last year, and are down nearly 65% so far this year.
US ECONOMY & POLITICS
Senate Approves Roughly $2 Trillion in Coronavirus Relief
- The Senate approved the largest economic stimulus package in recent memory, moving the estimated $2 trillion bill to the House as Congress seeks to give American families and businesses a financial shield against the ravages of the pandemic.
- The legislation will provide one-time checks of $1,200 to Americans with adjusted gross income up to $75,000 for individuals and $150,000 for married couples.
- The stimulus package included $350 billion in loans to small businesses in an effort to keep Americans on payrolls as economic activity across the country comes to a standstill.
- A major challenge in the negotiations was $500 billion in corporate aid, much of which will go toward backstopping Federal Reserve loans.
- The corporate aid portion includes $17 billion for assistance to companies deemed to be crucial to national security, which could include firms such as Boeing and General Electric.
Record 3.28 Million File for U.S. Jobless Benefits
- A record 3.28 million workers applied for unemployment benefits last week as the new coronavirus hit the U.S. economy, marking the end of a decadelong job expansion.
- It was nearly five times the previous record high.
- Economists had forecast claims would rise to 1 million, though estimates were as high as 4 million.
- Workers seeking jobless benefits, a proxy for layoffs, increased by 3 million for the week ended March 21, from the prior week.
- Until March, U.S. employers added jobs for a record 113 straight months, causing payrolls to grow by 22 million.
- Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid increased 101,000 to 1.80 million, the highest since April 2018.
U.S. core capital goods orders point to worsening business investment downturn
- New orders for key U.S.-made capital goods fell sharply in February as demand for machinery and other products slumped, suggesting a deepening contraction in business investment that analysts said signaled the economy was already in recession.
- Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.8% in February after rising by a slightly downwardly revised 1.0% in January.
- These so-called core capital goods orders were previously reported to have increased 1.1% in January.
- Shipments of core capital goods fell 0.7% last month.
EUROPE & WORLD
Infineon withdraws 2020 outlook due to coronavirus
- German chipmaker Infineon Technologies on Thursday withdrew its forecast for revenue to grow by 5% in the fiscal year to Sept. 30, saying the coronavirus pandemic could lead to a noticeable decline in revenue.
- Infineon said that all of its production sites were operational, some at reduced levels, including in Malaysia and the U.S. state of California that have imposed lockdowns, while raw material supplies were currently sufficient.
- For the current quarter, revenue is seen towards the lower end of the guided range of 5%, plus or minus 2 percentage points.
Coronavirus Is Advancing on Poor Nations, and the Prognosis Is Troubling
- The new coronavirus is now taking off in the world’s poorest countries, which join the battle with even fewer weapons than developed nations, some of which have fumbled the pandemic’s early stages.
- From Venezuela to Pakistan to the Democratic Republic of Congo—and nearly every developing country between—confirmed cases have started to spike in recent days, a sign the contagion is advancing exponentially, disease-control experts say.
- Cases have suddenly spiked in Pakistan, with 210 million people and a per capita daily income of $3.50, spurred partly by its proximity to Iran, a middle-income nation slammed by the virus.
- By Wednesday morning, cases there had doubled from four days earlier to 991, official figures showed, a growth rate health experts say indicates rampant spread of the disease.
- According to an internal Pakistani government assessment, if steps aren’t taken to stem the spread of the virus, cases could reach 20 million in the country.
ECB Begins New Bond Purchases, Throwing Weight Behind Virus-Hit Nations
- The European Central Bank sent a powerful signal to investors that it will aggressively support Italy and other indebted eurozone countries that are battling the coronavirus, starting purchases under a new €750 billion ($812 billion) bond-buying program and stating that it won’t be bound by earlier limits on its bond buys.
- Under a legal act adopted overnight Thursday, the ECB said it would have broad flexibility to focus its new €750 billion bond-buying program, announced last week, to force down the borrowing costs of any eurozone country it chooses.
- That represents a major shift from the bank’s earlier bond-buying program, under which the ECB restricted itself to buying no more than a third of the debt of any individual government.
Huawei Workers Return After Coronavirus, But CEO Sees Financial Hit
- Most employees at Huawei Technologies are back at work following the coronavirus outbreak, though the pandemic is likely to hit the Chinese telecom giant’s financial results this year, the company’s chief executive said.
- Ren Zhengfei, who is also Huawei’s founder, also told The Wall Street Journal in an interview Wednesday that the company plans to boost its research and development budget this year by $5.8 billion to more than $20 billion.
- More than 90% of its approximate 150,000 China-based workforce is now back to work, though workers have cut overseas travel and increased their reliance on remote conferencing to carry on business.
Airbus says reducing wing production for three weeks
- Airbus is reducing the production of aircraft wings for three weeks as it slows operations to put in place extra health and safety measures due to the coronavirus pandemic, the planemaker said on Thursday.
- The move affects wing plants in Broughton, U.K., and Bremen, Germany.
- Airbus, whose main industrial operations are shared between four European countries, resumed partial production in France and Spain on Monday at a slower rate than normal.
TODAY in HISTORY
- The battle of Iwo Jima ended; about 22,000 Japanese troops were killed or captured in the fighting and more than 4,500 S. troops were killed. (1945)
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