U.S. stocks wobble in another turbulent day.
Policymakers have stepped in with promises to do whatever it takes to support their economies, and Senate Republicans are working on a $1 trillion economic stimulus bill. China is reporting that it has now contained the coronavirus’s spread, and the Japanese government is considering when to reopen schools — indications that the worst of the pandemic may be behind both of those countries.
That’s the good news. But the bad news is equally persistent: The number of confirmed infections in the United States continues to climb fast, California has imposed a “shelter in place” restriction on the state, New York’s governor told the state’s residents to stay indoors and ordered nonessential businesses to keep workers home, Britain is closing all of its bars, restaurants, and health clubs, and a wave of jobless claims is only just beginning to swell.
On Friday, traders seemed unable to decide which was more important, and the S&P 500 swung from gains to losses. The moves were relatively small, however — a welcome respite from a month that has seen markets take some head-spinning turns.
Investors in Europe fared better, with stocks in Paris and Frankfurt up more than 3 percent.
But the tone of trading in the United States grew increasingly dour as the day went on.
A month of selling has brought major benchmarks in the United States back to levels last seen in 2017, with the Dow Jones industrial average below where it stood on the day before President Trump was inaugurated, amid a relentless barrage of troubling economic developments.
Perhaps the most stark development this week was a spike in unemployment claims reported on Thursday. The Labor Department said the increase in claims last week was one of the largest spikes on record.
But Goldman Sachs analysts, in a research note, estimated that the claims for the week of March 15 to 21, which will be reported next Thursday, could hit more than two million.
E.U. tells countries to spend ‘as much as they need.’
The European Commission on Friday triggered the so-called “general escape clause,” a panic button that lifts stringent spending rules and allows countries to run big deficits to respond to a crisis, turning to an emergency economic measure that would have been unimaginable just weeks ago.
The clause means Europe is abandoning its expectations that countries keep their deficits and debt loads small, and it’s the first time in the European Union’s history that it has turned to this measure.
“Today — and this is new and never done before — we trigger the general escape clause,” Ursula von der Leyen, the president of the European Commission, said in a video posted on her Twitter account.
“That means national governments can pump into the economy as much as they need. … We are relaxing the budgetary rules to enable them to do that,” she added.
The 27 countries in the European Union and the institutions that run the world’s richest bloc of nations are scrambling to fight the coronavirus and mitigate its economic impact. Suspending rules that limit spending and cap how much state aid can be funneled to ailing businesses is a key part of the response.
Next in the European arsenal to combat the crisis will be a deeply political debate about the idea of issuing joint debt to fund the massive stimulus needed to cushion the economic catastrophe.
The Fed says it will backstop municipal money market funds.
The Federal Reserve will backstop municipal money market mutual funds, helping to ensure that investment vehicles holding local debt can meet redemptions as people and businesses cash out their holdings.
The Fed will accept short-term, highly rated municipal debt as loan collateral in one of its emergency programs, it announced on Friday. That will give banks an incentive to buy such debt from money market mutual funds, allowing them to offload the securities to come up with cash quickly.
The move could keep the funds, which are popular investments among ordinary people and companies, from crashing as investors cash out. It could also help to soothe some pain in local bond markets, which have seen interest rates surge as investors flee amid coronavirus economic fears.
That announcement expands a program the Fed announced earlier this week. The Fed said in a release late Wednesday night that it would establish a so-called Money Market Mutual Fund Liquidity Facility, backed by $10 billion from the Treasury Department.
Also on Friday, the Fed took another step to make sure dollars continue flowing around the world, teaming up with five partner central banks to make short-term currency swap operations more frequent.
Trump says he will ‘demand’ companies shun buybacks if they get aid.
President Trump said on Friday that he will demand that companies receiving government aid not be allowed to buy back their own shares.
His comments, at a news conference, come as lawmakers debate what types of conditions, if any, to place on businesses that receive government funds to help alleviate the economic strain of the coronavirus.
American companies have spent about $1.4 trillion repurchasing their own shares over the past three years. The spending, which was boosted by corporate tax cuts that had been championed by Mr. Trump, can boost a company’s stock price.
“I am fine with restricting buybacks,” Mr. Trump said. “I would demand that there would be no stock buybacks. I don’t want them to take hundreds of millions of dollars and buying back their stocks because that’s nothing.”
Mr. Trump also criticized companies that used their 2017 tax savings to buy back their own shares.
“It was some companies that used that money to buy back stocks,” he said “driving up the stocks artificially in many cases. I don’t like it.”
However, the 2019 Economic Report of the President — written by White House economists and signed by Mr. Trump himself — praised the surge in buybacks by multinational corporations in the United States following the passage of the 2017 tax cuts.
Tax day moves to July 15.
Treasury Secretary Steven Mnuchin said on Friday that tax day will be moved to July 15 from April 15, giving all taxpayers an additional three months to file their returns.
Mr. Mnuchin said that the decision was made at the direction of President Trump. Previously, the Treasury Department allowed individuals and companies to defer tax payments to July 15 but were still required to file their returns in April.
The Treasury secretary encouraged all taxpayers who were expecting a refund to file on time so that they could get their money. Mr. Mnuchin has said that the delay would inject $300 billion of temporary liquidity into the United States economy.
California’s lockdown casts a further pall over the U.S. economy.
With Gov. Gavin Newsom ordering California’s 40 million residents to stay in their houses as much as possible and most businesses to shut, there will be a profound impact not only on the state’s economy, but on the nation’s as well.
California’s $3 trillion economy is the world’s fifth largest, and it is highly integrated with global commerce through its large export industries, its huge farming sector and its role as a hub of international trade. Most U.S. imports from China move through the state’s ports and airports before heading to inland warehouses and then being shipped by trucks and trains to supply auto dealers, factory floors and retailers across the United States.
“We contribute an outsize share of federal income taxes, and are the port of entry to the nation,” said Stephen Levy, director of the Center for Continuing Study of the California Economy.
China lifts quarantines, aiming for a return to work.
China is removing barriers to the movement of people and goods in much of the country after announcing that new cases of local coronavirus transmissions had fallen to zero.
The government will take measures to speed up the return to work for millions of people, including getting rid of mandatory quarantines for workers in parts of the country now considered “low risk,” Li Keqiang, China’s No. 2 official, said in a statement.
China is eager to get the economic engines of the world’s second-largest economy up and running again after damaging government data pointed to the possibility that it would face its first economic contraction since 1976.
Earlier this week, the government said it reached a record number of imported cases of the virus, just as local cases in China dropped to zero.
Coronavirus shipping delays are stalling construction.
When it comes to obtaining building materials, real estate developers often buy globally, not locally. But as the coronavirus spreads across the world, bringing countries to a standstill, the lack of access to overseas supplies is sending jitters through the construction industry.
Delayed so far at large-scale residential and commercial projects have been goods like marble, tile, paving stones, furniture, lighting equipment and elevators — and even models of buildings themselves, workers say.
Warning signs are appearing on multiple fronts. And the setbacks threaten jobs in an industry that employs millions of people. In many cases, no materials means no work, analysts say.
Reporting and research were contributed by Alexandra Stevenson, Ben Dooley, Jason Karaian, Adam Satariano, Amie Tsang, Jeanna Smialek, Matina Stevis-Gridneff, Conor Dougherty, Emily Flitter, C.J. Hughes, Ben Casselman, Niraj Chokshi, Michael de la Merced, Daniel Victor and Kevin Granville.