Stocks Plummet as Grim Economic Outlook Grips Markets: Live Updates

Financial markets cratered on Monday, as investors were confronted with evidence that a steep decline in the world’s largest economies may have already begun.

The sell-off began after the Federal Reserve took extraordinary steps on Sunday afternoon to bolster the American economy, signaling that it saw an economic crisis unfolding as businesses shut down and borders are closed to contain the coronavirus. The financial downdraft was global, with major benchmarks in Asia, Europe and the United States all falling on Monday.

Then came news that factory activity in China — one of the world’s largest economies — fell 13.5 percent last month compared with February of last year. Investment in China fell by roughly 25 percent. And one of the first bits of data for American economic activity in March, a gauge of manufacturing activity in New York State, showed a record one-month plunge in the measure, which fell to its lowest level since 2009.

“Unfortunately, this is the new reality. This report is a harbinger of what is to come,” wrote economic analysts with investment bank Jefferies in New York.

The Trump administration released new public guidelines on Monday to slow the spread of the coronavirus, including closing schools and avoiding groups of more than 10 people, discretionary travel, bars, restaurants and food courts.

The S&P 500 fell 12 percent, its biggest drop since the coronavirus outbreak began to roil markets in the United States last month — and its worst daily decline since October 1987, when stocks plunged about 20 percent in what came to be known as Black Monday. For the technology heavy Nasdaq, the drop was its worst on record.

Energy prices also slid sharply as investors factored in significant slowdowns in economic activity.

Global oil prices plunged to below $30 a barrel, the lowest level in more than four years. Oil has fallen by half since the start of the year, and some analysts predict that oil prices could drop below $20 a barrel in the coming weeks.

The Fed’s emergency interest rate cut on Sunday underscored its deepening worry that the spread of the pandemic is substantially depressing revenue for industries around the world while consumers hunker down, raising the risk of a worldwide recession. The central bank cut interest rates to near zero and said it would buy hundreds of billions of dollars in government debt, moves that are reminiscent of its actions during the financial crisis in 2008.

Those moves were engineered to ensure that credit flows freely, spurring businesses and households to borrow and spend to keep the economy growing. But markets appeared to absorb the action as the latest indication that the world had arrived at a dangerous place — a clear sign that they should dump risky assets like stocks and seek refuge in government bonds.

But the nature of this crisis — a viral outbreak that can only be contained by enormous economic disruptions — is beyond the Fed’s ability to stop, analysts said.

“They can only make sure the fallout and economic impact are softened,” Yousef Abbasi, global market strategist at INTL FCStone, a financial services and brokerage firm, said in an email.

A major concern for stock investors now is that efforts to contain the virus in the United States will hit consumer spending, the biggest driver of economic growth. Broadway is dark. College basketball tournaments are canceled and professional sports are on indefinite hold. Conferences, concerts and St. Patrick’s Day parades have been called off or postponed.

“If the public stops spending then the economy will go into a recession, and frankly, the market’s steep losses are saying that day isn’t just coming, it is now,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in an email on Monday.

The lobbying group for the biggest airlines in the United States on Monday called on the government to provide the industry more than $50 billion in emergency support in the form of grants, loan guarantees and tax relief. The group, Airlines for America, warned that the situation is not sustainable for the industry and that there is no end in sight to the crisis.

“This is a today problem, not a tomorrow problem,” said Nicholas E. Calio, chief executive of Airlines for America. “It requires urgent action.”

The industry group said that flight cancellations were outpacing new bookings and that the decline in demand was getting worse by the day. The request included $25 billion in grants for passenger carriers, $4 billion in grants for cargo, $25 billion in loan guarantees.

Larry Kudlow, the director of the National Economic Council, said on Monday that “we’re in touch” with the airlines “about their balance sheets and their cash flow.”

“We don’t see the airlines failing, but if they get into a cash crunch we’re going to try to help them,” he said.

Goldman Sachs and Apple are granting one-month, interest-free payment waivers to people who hold the Apple credit card that the companies issue.

All cardholders can enroll in the customer assistance program. Once they do so, they can skip their March payment and will not incur interest charges, the companies told cardholders on Sunday. The companies will not add the interest to the balance later on, and customers’ credit scores will not suffer if they participate.

Other banks may make similar offers. The Federal Reserve and a group of financial regulators encouraged banks last week to “meet the financial needs of customers” and “work constructively” with those in “affected communities.”

JPMorgan Chase has also allowed some customers to skip a payment without incurring interest, a spokeswoman said.

Goldman Sachs will be extending the same offer to customers with personal loans through its online bank, Marcus, in which it does not partner with Apple, Mr. Williams said.

In some places, public officials and private business owners moved with stunning speed. In others, paralyzing hesitancy, defiant bravado or blithe disregard dominated. But by Monday, everywhere there were signs that most of the American economy was scraping to an unparalleled halt.

Across the country, bars and bookstores, gyms and nail salons, kindergarten classrooms and universities shut their doors. Major retailers from Apple to Lululemon to Patagonia have closed stores for two weeks, as have casino hotels in Las Vegas.

Some companies are shutting stores to help prevent the spread of the virus. Others are cutting back because their customers are staying away.

Many companies have vowed to continue to pay workers who are not coming in, and Congress is working on legislation to help businesses cover costs. But it’s only a matter of time before layoffs start registering on the wider economy.

Challenger Gray & Christmas, an outplacement firm that tracks layoffs, said it had seen only a relative handful of coronavirus-related layoffs so far.

“We anticipate more to come,” said Andrew Challenger, the firm’s vice president. Many probably won’t be announced and will be hard to track, at least in real-time, he said. “But they will definitely start happening fairly quickly.”

Some businesses are improvising. Starbucks is eliminating seating at all of its company-owned stores in the United States for at least the next two weeks to encourage social distancing. Stop & Shop stores will open earlier, 6 a.m. to 7:30 a.m. daily, to serve only customers who are age 60 and over.

And others are planning to keep their doors open, including a few retailers. Home Depot, which employs about 400,000 people at roughly 2,200 stores in the United States, was also open for business on Monday. Lowe’s, another big home improvement chain, said all of its more than 1,700 stores were open for business.

UPS, which employs some 413,000 people in the United States, was still processing packages and sending trucks for deliveries. Merck, the pharmaceutical company, was continuing to produce and distribute drugs from facilities spread out across nine states.

Amazon said it would hire 100,000 new workers and raise pay by $2 an hour for many employees in response to a surge in delivery orders from people staying at home to combat the spread of the coronavirus.

Amazon said the 100,000 new jobs would include both full and part-time positions across the United States to staff its warehouses and make deliveries. The company encouraged people who lost work as a result of coronavirus-related shutdowns and cancellations to apply.

“We also know many people have been economically impacted as jobs in areas like hospitality, restaurants, and travel are lost or furloughed as part of this crisis,” the company said in a news release. “We want those people to know we welcome them on our teams until things return to normal and their past employer is able to bring them back.”

Amazon said it would also spend $350 million to raise pay by $2 or more an hour for workers staffing its enormous logistics operation in the United States, Britain and parts of Europe. The raises would last at least through April. In the United States, such workers start at $15 an hour.

The decline of the stock market, which hit a record high less than a month ago, has wiped out many of the gains that President Trump has crowed about throughout his presidency.

Mr. Trump’s victory in 2016, along with the Republican Party’s control of Congress, set off a surge in share prices as investors looked forward to the prospect of steep cuts to corporate tax rates and an administration stocked with industry-friendly faces.

In December 2017, Mr. Trump delivered a sweeping tax overhaul. By the following month, the S&P 500 was up more than 30 percent, and the gains kept coming for much of the year. For Mr. Trump, this was a surefire barometer of his success as president.

There was one other nasty dip along the way: In late 2018, investors grew increasingly worried about Mr. Trump’s trade war with China and the prospect that the Federal Reserve would raise interest rates.

Stocks climbed 28.9 percent last year, thanks largely to the Fed’s decision to reverse course. But that rally has unraveled in the past month.

Though stocks have now given up most of their gains since the president was elected, the S&P 500 would have to fall another 12 percent for the entire Trump bump to be erased.

  • Europe’s auto industry is coming to a standstill. PSA, the maker of Peugeot and Citroën cars, said it would suspend production at all of its factories in Europe. Renault is closing its French factories, idling 18,000 workers, and Fiat Chrysler is also shutting factories.

  • NBC confirmed on Monday that “Saturday Night Live” would remain dark until further notice. There were six scheduled episodes remaining this season, which normally ends in May.

  • Shares of the largest banks in the United States were hit particularly hard on Monday, with JPMorgan Chase, Bank of America and Morgan Stanley all down around 13 percent. On Sunday, the eight largest U.S. banks announced that they would suspend buybacks of their stock — a move that would help them keep cash on hand in case conditions in the financial markets grew unstable.

  • The falling price of crude is being reflected at the gasoline pump. The U.S. average price for regular gasoline fell 13 cents a gallon over the last week, according to the AAA motor club, to $2.25 a gallon. Eleven states now average below $2 a gallon.

Reporting was contributed by Ron Lieber, Peter S. Goodman, Amie Tsang, Jeanna Smialek, Niraj Chokshi, Ben Dooley, Isabella Kwai, Daniel Victor, Carlos Tejada, Clifford Krauss, Jim Tankersley, Peter Baker, Sapna Maheshwari, Natalie Kitroeff, Keith Bradsher, Ben Casselman, Vanessa Friedman, Jack Ewing, Stanley Reed, Jack Nicas, Liz Alderman, Brooks Barnes, Nicole Sperling, David Yaffe-Bellany and Matt Phillips.