Stocks Climb as Investors Look to Washington: Live Updates

Shares on Wall Street surged on Tuesday, rebounding from their sharpest drop in more than a decade, as investors seemed to take comfort from efforts in Washington to protect the economy from damage caused by the coronavirus outbreak.

President Trump met with Senate Republicans on Tuesday to pitch them on measures, including a payroll tax cut, to help the economy amid signs of a worsening outbreak in the United States. He is also considering using the Federal Emergency Management Agency as a vehicle for delivering funds to stimulate the economy, a move that would not require approval from Congress.

Though the rebound was at times wobbly, and shares dipped back into negative territory earlier in the day Tuesday, the S&P 500 ended nearly 5 percent higher — recouping more than half of the previous day’s losses — in its biggest one-day gain since December 2018.

“Markets are always enamored with tax cuts, or even the hope thereof. Yesterday’s sell-off was so extreme that it’s not at all surprising to see a bounce,” Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn., said in an email.

But analysts stressed that any recovery in the markets will likely be tenuous. The White House has not announced any specific measures yet, and increased testing for the coronavirus is expected to generate rising numbers of new infections in the coming weeks, which could be a new challenge for investors’ nerves.

Plus, measures like tax cuts, rebates or expanded insurance benefits and other spending increases, are far from guaranteed.

“Given the nation’s charged politics, especially in the lead-up to the presidential election, these steps could prove difficult if not impossible for lawmakers,” Mark Zandi, the chief economist at Moody’s Analytics, wrote in a note to clients on Tuesday.

In Monday’s global plunge, the S&P 500 fell nearly 8 percent, its sharpest daily decline since December 2008 and a tumble so swift that trading in the United States had to be halted for 15 minutes early in the day. In Asia and Europe, some of the biggest financial exchanges flirted with or crossed into bear market territory — a decline of more than 20 percent from their highs. Through Tuesday, the S&P 500 was down about 15 percent.

The price of oil, which had slumped by a quarter on Monday, rose about 8 percent on Tuesday. But oil prices remain down more than 40 percent this year.

President Trump took his pitch for a coronavirus-related economic stimulus package to Capitol Hill on Tuesday, joining Senate Republicans over lunch to discuss cutting payroll taxes, offering targeted relief to tourism and hospitality industries, and other possible steps to lift economic growth.

After the meeting, a Senate aide said Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi of California would take the lead on negotiating a bipartisan package.

Mr. Trump emerged from his lunch with no new details to share on the package, which remained in flux throughout the day on Tuesday, amid internal struggles at the White House and a cool reception among congressional Republicans to the temporary payroll tax cuts that the president has floated. Mr. Trump said the payroll tax cut and other ideas were discussed, adding that “there’s great unity within the Republican Party.”

He acknowledged there was not yet a consensus on how to proceed but expressed confidence that the economy would endure.

“Be calm,” he said from Capitol Hill, after speaking with lawmakers. “The consumer has never been in a better position than they are now.”

Mr. Trump and his advisers are also considering using the Federal Emergency Management Agency as a vehicle to deliver funds to stimulate the economy, a move that could allow the administration to begin bolstering growth without waiting for Congress.

Walmart, the nation’s largest employer, said it was taking steps to ensure that its 1.4 million workers would continue to be paid if they contracted the virus or were subject to a quarantine.

The company said employees forced into a mandatory quarantine would receive up to two weeks of pay and their absence would not be counted against their attendance record. Additionally, any U.S. worker with the virus who was unable to return to work would be paid up to 26 weeks.

The new policy, announced in an email to employees on Tuesday, comes as concerns mount for low wage workers who risk lost wages if they miss work.

Walmart confirmed on Tuesday that an employee at a store in Cynthiana, Ky., had tested positive for the virus.

As the coronavirus epidemic spreads around the world, companies are less worried about factory shutdowns among their Chinese suppliers and more about a lack of customers in the United States.

Some have already been forced to take action. Jay Foreman, the chief executive of toy company Basic Fun, said the coronavirus crisis had forced him to lay off 18 of the company’s 175 workers on Friday — 10 in the United States, six in Hong Kong and two in Europe.

“China is slowly starting to open up, so we’re getting shipments,” said Mr. Foreman, whose company makes Tonka Trucks, Lite-Brite and Tinkertoy. “But now what I‘m worried about is a demand scenario in the United States, where people decide the only thing they’re buying is hand sanitizer and Wet Wipes and Campbell’s Soup, and they’re not spending any money.”

The root of Monday’s financial market meltdown was the start of an oil-price war between Saudi Arabia and Russia over the weekend, when the Saudis slashed their prices after Russia refused to join the Organization of the Petroleum Exporting Countries in production cuts.

On Tuesday, Saudi Aramco, the national oil company, said that it would produce 12.3 million barrels a day of crude oil in April, a significant jump from its average of 9.7 million barrels a day.

Although it is not clear how much of this oil would come from storage, the company is likely to sharply increase production. Saudi officials have said that they need to sell more oil to compensate for lower prices, and Aramco is offering deep discounts on its oil to win over buyers.

The sudden upheaval in the oil markets may take months to assess, but the impact on the U.S. economy is bound to be considerable, especially in Texas and other states where oil drives much of the job market.

Many smaller American oil companies could face bankruptcy if the price pressure goes on for more than a few weeks, while larger ones will be challenged to protect their dividend payments. Thousands of oil workers are about to receive pink slips.

On Tuesday, Occidental Petroleum said it would slash its quarterly dividend and capital spending plan in response to the drop in oil prices.

Several airlines on Tuesday announced the temporary suspension of all flights to and from Italy, a day after the country announced a nationwide lockdown to combat the coronavirus outbreak.

Spanish authorities barred all airlines from Spain, including Iberia and Vueling, from operating either inbound or outbound Italian flights, while British Airways announced the immediate suspension of flights until April 4 and Ryanair said that it would suspend all of its domestic flights in Italy and international flights to Italy.

Alitalia, Italy’s flagship carrier, said it would continue services but gave the passengers the option to rebook or reroute their flight free of charge.

Airlines in the United States also said on Tuesday that they were further slashing service and costs in response to the substantial decline in bookings caused by fear over the coronavirus.

Speaking at an investor conference on Tuesday, Ed Bastian, chief executive of Delta Air Lines, announced that the airline would cut domestic service by about 15 percent.

  • President Trump plans to meet with senior executives from the country’s biggest banks  — including Goldman Sachs, Bank of America, Wells Fargo, Citigroup and JPMorgan Chase — along with community bankers, at the White House on Wednesday.

  • An employee of BlackRock, the giant asset manager, has been infected by the coronavirus, and informed the company on Monday night. The employee, who works in BlackRock’s midtown Manhattan offices, has been in self-quarantine and working from home since March 4, the company said. BlackRock said it conducted a deep clean of the area where the employee worked, and that it has asked any colleagues who may have been in close contact with the individual to work from home for two weeks.

  • The World Trade Organization on Tuesday suspended further meetings until March 20, following the confirmation that one of its staff members had contracted the virus.

  • The Washington Post’s publisher, Fred Ryan, said in a staff-wide memo Tuesday that the newspaper would be “encouraging (but not mandating)” working from home for the rest of the month. The Post has already canceled nonessential business travel through March.

  • Los Angeles Times executive editor Norman Pearlstine said in a staff-wide memo Tuesday that all work-related flying was suspended except “in cases where it is absolutely required for the job.” Staffers who do fly will be subject to 14-day work-from-home quarantines, he said. For other staffers, working from home remains optional.

Reporting and research were contributed by Jeanne Smialek, Alexandra Stevenson, Sheryl Gay Stolberg, Alan Rappeport, Jack Ewing, Stanley Reed, Michael Corkery, Kevin Granville, Tiffany Hsu, Kate Kelly, Matthew Goldstein, Brooks Barnes, Iliana Magra and Niraj Chokshi.