‘THE CORONAVIRUS IS SHUTTING THE ECONOMY DOWN’
Dow drops more than 900 points, ending worst week since 2008
Wall Street ended the week the same way it began: in full retreat from the coronavirus.
Stocks fell sharply and the price of oil sank Friday as federal and state governments moved to shut down bigger and bigger swaths of the nation’s economy in the hope of limiting the spread of the outbreak.
The Dow Jones Industrial Average slid more than 900 points, ending the week with a 17.3% loss. The index has declined in four of the last five weeks.
The latest sell-off wiped out the gains from a day earlier and capped the market’s worst week since the financial crisis of 2008.
Investors are worried that the coronavirus will plunge the U.S. and other major economies into deep recessions. Steps to contain the spread of the outbreak are causing massive disruptions and layoffs. Optimism that emergency actions by central banks and governments to ease the economic damage has waned as investors wait for the Trump administration to deliver on legislation that will pump billions of dollars into hurting households and industries.
“The coronavirus is shutting the economy down,” said Lindsey Bell, chief investment strategist at Ally Invest. At the same time, oil prices are being pulled lower by increased supplies at a time when demand is declining.
“This is kind of a double-whammy for the economy,” she said.
Friday’s selling accelerated after New York Gov. Andrew Cuomo ordered that most workers stay home. The declaration came a day after California announced similar measures.
Investors say they need to see the number of new infections stop accelerating for the market’s volatile skid to ease.
“We just don’t know what the next two weeks will bring,” said Paul Christopher, global market strategist at the Wells Fargo Investment Institute. “Are we going to follow the same infection curve as other countries and the number infections will drastically accelerate? That’s when the storm is going to come.”
Income tax filing deadline now July 15
The income tax filing date has been pushed back from April 15 to July 15, Treasury Secretary Steven Mnuchin said. At a White House briefing, President Donald Trump said that if people are expecting refunds, they should go ahead and file now so that they can get their refunds from the IRS more quickly.
Fed ramps up lending
The Federal Reserve moved with unprecedented force and speed Friday to pump huge amounts of cash into the financial system to ease disruptions that have escalated since the viral outbreak.
The New York Federal Reserve Bank said it will offer $1 trillion of overnight loans a day through the end of this month to large banks. That is in addition to $1 trillion in 14day loans it is offering every week. Banks, so far, have not borrowed nearly as much as the New York Fed is offering, and the loans are quickly repaid. None of the funding is from taxpayer dollars. Wall Street analysts say the huge number is intended to calm markets by demonstrating that the Fed’s ability to lend short-term is nearly unlimited.
The Fed is also buying Treasury bonds at a furious pace, and will soon run through the $500 billion in purchases it announced on Sunday. It is also accelerating its purchases of mortgage-backed securities. Most analysts expect they will buy more.
Paper money shunned by some
In a world suffering a pandemic, cash is no longer king.
A growing number of businesses and individuals worldwide have stopped using banknotes in fear that physical currency, handled by tens of thousands of people over their useful life, could be a vector for the spreading coronavirus.
Public officials and health experts have said that the risk of transferring the virus person-to-person through the use of banknotes is small. But that has not stopped businesses from refusing to accept currency and some countries from urging their citizens to stop using banknotes altogether.