Market Brief: March 24, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Tuesday, March 24, 2020
Dow’s Best Day Since 1933. Stocks soared on Tuesday after the U.S. Senate appeared to be closing in on an agreement over a multitrillion-dollar economic rescue bill. “If last night we were on the five-yard line, I’d say now we’re on the two-yard line,” said Senate Minority Leader Chuck Schumer on Tuesday. The Dow Jones Industrial Average closed Tuesday up 2,093 points, or 11.3%, to trade well above 20,000 points again and notch its greatest one-day gain since 1933. The S&P 500 rose 9.3%, and the Nasdaq Composite gained 8.1%.
CHANGE
DJIA 20,424.33 1,832.40
S&P 500 2,447.33 209.93
NASDAQ 7,417.86 557.18
US 10-Year Note 0.84 0.05
Dollar Index 101.98 -0.50
Crude Oil 24.11 0.75
Gold 1,663.00 95.40
Global Dow 2,327.25 188.28
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
GM Says It Will Borrow Billions and ‘Aggressively’ Preserve Cash
General Motors said Tuesday it was pushing hard to conserve cash and drawing down $16 billion from previously existing credit lines as it confronts the financial toll of the coronavirus outbreak.

The company is “aggressively pursuing austerity measures” to preserve cash, CEO Mary Barra said in written comments. GM also said it would suspend its 2020 guidance. GM said that the combination of tapping its credit lines and its cash on hand would leave it with between $31 billion and $32 billion in cash at the end of the month.

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Chevron Will Stop Buying Back Stock
Chevron will suspend its stock buybacks and reduce capital spending by $4 billion this year to account for the recent plunge in oil prices, the company announced on Tuesday. But Chevron will hold on to its dividend, a key selling point for investors. The stock now yields 9.5%.

Chevron had expected to spend $5 billion on share repurchases this year, and will end the first quarter having spent $1.75 billion, the company said. But the buybacks will end there.

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Tokyo Olympics Postponed Over Coronavirus Pandemic
Olympic chiefs on Tuesday postponed the 2020 Tokyo Games until next year, a historic move to push back the world’s biggest sporting event due to the coronavirus pandemic that is upending global society.

The dramatic step is the first time the Olympics has been postponed in peacetime and comes as a devastating blow to the city of Tokyo and the Olympic movement.

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Boeing CEO Says Company Won’t Give Up Equity for a Bailout
Shares of commercial aerospace giant Boeing were surging for a second day on Tuesday after CEO Dave Calhoun said he wasn’t willing to give the U.S. government stock in return for a bailout.

That means shareholders don’t have to worry about dilution, and shares were up about 20% shortly before the close on Tuesday. During the financial crisis, car companies, banks and insurance firms gave the government equity in exchange for bailout funds.

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Ford to Make Ventilators, Respirators, Face Masks for Covid-19 Response
Ford Motor is getting into the medical-supply business, at least for now.

In a statement on Tuesday morning, the auto maker announced plans to manufacture a number of devices and tools used by health-care workers treating Covid-19 patients, including plastic face shields, powered air-purifying respirators, and a simplified respirator.

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Intel Suspends Its Stock Buyback Program
Intel has suspended its stock repurchase plan to conserve its resources for other needs as it copes with the impact of the coronavirus pandemic.

In a filing with the SEC, the chip maker said that, to date, “Intel has kept its factories operational while safeguarding the health and safety of employees and continues to have a strong balance sheet.” But the company said the suspension of the buyback plan “is prudent given uncertainty regarding the length and severity of the pandemic.” Intel said it isn’t changing its dividend rate—the stock yields about 2.9%—and still has capacity to reinstate purchasers “as circumstances warrant.”

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S&P 500 Dividends Could Drop for First Time Since the Financial Crisis
The last time the S&P 500’s total dividends declined from the previous year was in the aftermath of the financial crisis. Expect that to happen this year.

Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, says an overall decline in dividend payments in 2020 “is very feasible” due to the coronavirus pandemic. That warning marks a drastic turnabout from the start of the year, when Silverblatt was expecting dividend increases of about 9% for S&P 500 companies.

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The Fed Has Never Bought ETFs Before. Here’s Why That’s Changing.
The array of stimulus measures the Federal Reserve announced on Monday had an unusual feature: The central bank will buy bond exchange-traded funds.

Under a program it introduced on Monday, called the Secondary Market Corporate Credit Facility, the Fed can buy up to 20% of the assets of any exchange-traded fund that provides broad exposure to the investment-grade bond market.

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Fed’s Playbook Echoes 2008, but With a Mammoth Twist
The measures announced by the Federal Reserve in recent weeks to combat the coronavirus crisis are unprecedented in size and scope because the crisis itself is unlike any other the world has faced. While they build on the central bank’s response to the 2008-’09 financial crisis, they vastly exceed steps taken more than a decade ago to shore up the faltering U.S. economy.

This time around, moreover, there is no debate about the need for government intervention. In 2008—and well beyond—dissenters questioned the wisdom and fairness of bailing out the corporate sector, and especially the nation’s banks.

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Companies Plan to Boost Production of Controversial Malaria Drug as Demand Jumps
Demand for hydroxychloroquine, the malaria drug that President Trump has touted as a treatment for Covid-19 despite limited evidence, has already begun to increase, according to a note from SVB Leerink analyst Ami Fadia.

Fadia wrote that 10.2 million hydroxychloroquine pills were sold in the week ending March 13, according to data-science company Iqvia, well above the average weekly volume of 8.5 million pills.

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Copyright ©
2020 Dow Jones & Company, Inc. All Rights Reserved. Not for redistribution.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market or economic conditions.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Market Brief: March 23rd, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Monday, March 23, 2020
Stimulus Disappointment. U.S. stocks ended Monday’s session with significant losses as investors looked past an aggressive Fed action to back private and municipal debt markets, focusing instead on the steady rise in new coronavirus cases and Congress’ inability to come to an agreement on a fiscal stimulus package. The Dow Jones Industrial Average fell about 582 points, or 3%, to close at 18,591, the S&P 500 shed 68 points, or 2.9%, to end the session at around 2,237 and the Nasdaq Composite index lost 19 points, or 0.3% to close at around 6,860. Sentiment suffered from more worrying news on the coronavirus outbreak, with New York State announcing 5,700 new cases Monday to bring the state’s total to more than 20,000, the most in the nation. Meanwhile Congress and the Trump Administration failed to come to an agreement on a nearly $2 trillion fiscal stimulus
plan aimed at supporting individuals and businesses as the economy suffers from the fallout of the pandemic.
CHANGE
DJIA 18,591.93 -582.05
S&P 500 2,237.40 -67.52
NASDAQ 6,860.67 -18.84
US 10-Year Note 0.77 -0.09
Dollar Index 102.47 -0.35
Crude Oil 23.53 0.90
Gold 1,561.50 76.90
Global Dow 2,138.19 -98.94
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
Federal Reserve Rolls Out New Measures to Support Financial Markets
The Federal Reserve is introducing a slate of new measures, including a facility for corporate-bond purchases and open-ended Treasury and mortgage-backed purchases, intended to support the U.S. economy as officials scramble to deal with the growing economic fallout from the coronavirus.

“The coronavirus pandemic is causing tremendous hardship across the United States and around the world. Our nation’s first priority is to care for those afflicted and to limit the further spread of the virus. While great uncertainty remains, it has become clear that our economy will face severe disruptions,” the Fed said in a statement. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.”

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Corporate Bond Markets Cheer Fed’s Intervention
Investors in high-quality corporate bonds—and bond exchange-traded funds—cheered the Federal Reserve’s decision to create vehicles to buy companies’ debt. The question now is how much debt the central bank will be able to buy, and whether its array of interventions will be enough to stabilize other markets as well.

The investment-grade corporate-bond market gained, even though strategists such as Daniel Sorid, high-grade bond strategist at Citigroup, characterized the size of the new corporate debt programs as modest.

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Boeing Halts Seattle-Area Production
Commercial aerospace giant Boeing will temporarily halt production at its Puget Sound operations because of the Covid-19 coronavirus outbreak. The halt is intended to last two weeks beginning March 25.

“This necessary step protects our employees and the communities where they work and live,” said CEO Dave Calhoun in the company’s news release. “We will keep our employees, customers and supply chain top of mind as we continue to assess the evolving situation.”

Boeing added in an email to Barron’s that employees who cannot work remotely will receive paid leave for 10 working days, double the company policy.

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GE Is the Latest to Cut Workforce, Laying Off 10% of Its Aviation Employees
General Electric is the latest company to announce layoffs as the economic impact of the coronavirus outbreak continues to mount.

The company said Monday that plummeting air travel has reduced demand from airlines and that its aviation subsidiary, GE Aviation, would lay off about 10% of its workers and furlough approximately 50% of its maintenance, repair, and overhaul employees for three months.

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PG&E to Plead Guilty to Involuntary Manslaughter Charges in Deadly Wildfire
PG&E Corp. has agreed to plead guilty to felony involuntary manslaughter charges for its role in starting the deadliest wildfire in California history.

The indictment in Butte County, where 85 people died during the 2018 Camp Fire, charges the company with 84 counts of manslaughter and one count of unlawfully causing a fire.

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Twitter Withdraws First-Quarter Revenue Guidance Due to Coronavirus
Twitter on Monday said it is withdrawing revenue and operating income guidance for the first quarter of 2020, as well as its outlook for expenses, stock-based compensation, headcount, and capital expenditures for the full year because of economic fallout from the coronavirus pandemic.

The San Francisco-based company expects a slight decline in first-quarter revenue from the same quarter a year ago, and anticipates an operating loss. Twitter shares are down 24% in the last year.

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These Are the Stocks Investors See Benefiting in the Shift to Work From Home
While the broad market continues to struggle, investors are embracing shares of companies that are perceived to benefit from the growing number of people in the U.S. and around the world who are working from home.

The poster-child for the trend is Zoom Video Communications, an application spreading like wildfire. A case study is taking place in my own house. My college-freshman daughter is taking her spring semester classes over Zoom. My wife is preparing to teach a law school class by Zoom. A few days ago, I “attended” a class via Zoom. The tool is popping up everywhere, and the stock is taking off in response.

Shares of Teladoc Health, a telemedicine company, and Slack Technologies, the collaborative-communications software company, also soared on Monday.

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SoftBank Reveals Plan to Sell Assets, Buy Back Shares, and Reduce Debt
Under pressure from a falling stock price, activist investors and credit-market concerns about its balance sheet, SoftBank Group responded Monday with a plan to sell up to $41 billion in assets and use the proceeds to buy back up to $18 billion in stock and reduce debt.

The buyback plan is in addition to the $4.8 billion repurchase program announced on March 13. Combined, the repurchase programs would retire 45% of the company’s stock, SoftBank said. The company previously announced a $5.5 billion repurchase program in February 2019. SoftBank said it has about $245 billion of assets and $15 billion of cash on its balance sheet.

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Bailouts Might Bring Bans on Stock Buybacks. Here’s What It Means.
Stock buybacks are expected to decline this year as American companies hit hard by the coronavirus outbreak seek to conserve cash. Government bailouts could limit the total further.

Already, the nation’s eight major banks have said they will suspend their stock-repurchase programs through the second quarter in an effort to support “customers, clients, and the nation’’ amid the pandemic. The move could be followed by other industries, especially those with deeply disrupted businesses such as energy and travel companies.

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Royal Caribbean Secures $2.2B Credit Line
Royal Caribbean Cruises stock soared Monday afternoon, bucking the broadly lower market, as the cruise operator entered into a $2.2 billion secured credit facility to bolster its liquidity.

Royal Caribbean, which is the second largest U.S. cruise operator, said it now has more than $3.6 billion of liquidity. That includes cash deposits and existing undrawn revolving credit lines. Royal Caribbean added that it has financing committed for the ships that are on order.

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Dow Jones Contact Us
| Privacy Policy
| Cookie Policy
4300 Route 1 North, South Brunswick, NJ 08852
Copyright ©
2020 Dow Jones & Company, Inc. All Rights Reserved. Not for redistribution.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market or economic conditions.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Market Brief: March 20, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Friday, March 20, 2020
Rough Week. U.S. stock indexes dropped in response to a renewed fall in the price of oil and after New York Gov. Andrew Cuomo ordered all nonessential businesses in the state to close. Friday’s losses capped off the worst week for the Dow Jones Industrial Average and S&P 500 since the 2008 financial crisis. On Friday, the Dow Jones Industrial Average fell 913 points, or 4.4%, to 19,173. The S&P 500 was down 4.3%, and the Nasdaq Composite, which has outperformed the other major indexes in recent days, was off 3.8%. For the week, the Dow dropped more than 17%, while the S&P 500 fell 15% and the Nasdaq dropped more than 12%.
CHANGE
DJIA 19,173.98 -913.21
S&P 500 2,304.92 -104.47
NASDAQ 6,879.52 -271.06
US 10-Year Note 0.88 -0.28
Dollar Index 102.75 -0.00
Crude Oil 19.84 -5.38
Gold 1,489.00 9.70
Global Dow 2,204.75 -19.26
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
U.S. Oil Prices Post Weekly Loss of 29%, Biggest Since 1991
Oil settled sharply lower on Friday, with U.S. prices down 29% for the week—the largest weekly loss since 1991—as economic stimulus plans from government and central banks fail to offset expectations for steep fall in demand due to coronavirus pandemic, and as Saudi Arabia and Russia oversupply the market.

Prices for U.S. benchmark West Texas Intermediate crude just a day earlier had posted their largest one-day percentage rise on record, partly due to comments from the Trump administration, which indicated that it was considering intervention in the oil-price war between Saudi Arabia and Russia.

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The Fed Is Now Buying Munis, More or Less
The Federal Reserve is expanding its program to bolster money-market funds by extending its support to municipal debt, as well.

The Fed’s original money-market lending program, introduced late Wednesday, was created to finance banks’ purchases of short-term corporate securities known as commercial paper (specifically from money-market funds). After this latest expansion, the Fed will also finance similar bank purchases of municipal debt maturing in less than one year.

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Higher Treasury Yields Send a Hopeful Signal to Markets
Treasury yields rose this past week while stocks slid. That’s the opposite of the usual pattern when risky assets, such as equities, come under pressure. Normally, investors flock to the haven of government securities, pushing their prices higher and their yields lower. But this time, that relationship unraveled, with longer-term Treasuries failing to appreciate and to provide a cushion against falling stocks.

Jim Paulsen, the Leuthold Group’s chief investment officer, sees the upturn in longer-term Treasury yields as a glass-half-full story. The history of market crashes since 1987 shows that the 10-year note’s yield turns upward as a bear market is close to running its course, he writes in a client note.

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WHO Says There Are 7,000 U.S. Coronavirus Cases. Johns Hopkins Says It’s Twice That.
New Covid-19 cases diagnosed outside of China continue to rise. More than 16,000 were diagnosed Thursday, according to the World Health Organization daily situation report. It’s the first time the number breached the 16,000 level. The escalating outbreak prompted U.S. officials to recommend no international travel for U.S. citizens.

The number of cases in the U.S. more than doubled to 7,087 on Thursday, jumping by 3,551. It’s a huge jump, but the roughly 7,000 cases recorded by the WHO are only about half the number tallied by the Johns Hopkins Center for Science and Engineering database.

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What the U.S. Can Learn From China’s Response to the Coronavirus Pandemic
As the U.S rushes to slow the spread of the deadly novel coronavirus, it has unleashed a kitchen-sink array of measures to stave off severe economic damage from the pandemic. Investors grasping for a road map—and perhaps a bit of optimism—as to what comes next have settled on China, whose economy is restarting while the rest of the world is shutting down. But economists and fund managers warn the U.S. could be in for an even longer and bumpier path to recovery.

First, the good news: The number of new confirmed cases of the coronavirus in China has slowed considerably, and that suggests the risk from the virus isn’t indefinite. “It’s the uncertainty for what the virus is engendering that’s creating market chaos, but the important thing is that it’s a fading virus,” Alan Greenspan, former Federal Reserve Chairman and advisory board member at RockCreek, a $14 billion investment firm, said in a video to the company’s clients. “The book will close on this, but not right away.”

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Honeywell, 3M, and GE Ramp Up Effort to Produce Hospital Supplies
Ahead of potential shortages for supplies and equipment needed for hospitals to treat Covid-19 patients, a group of public companies are looking at ways to help.

Manufacturers Honeywell International and 3M are stepping up production of N95 industrial face masks—which Vice President Mike Pence says can now be sold directly to hospitals in need. General Electric said its GE Healthcare subsidiary is committing more production lines to ventilators and adding shifts so lines can be active 24 hours a day.

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GE’s $20 Billion Division Sale Approved by Regulators
U.S. antitrust regulators cleared General Electric’s biopharma division sale to Danaher Thursday evening. The deal, which will bring $20 billion into GE’s coffers, is now slated to close March 31, in line with management’s expectation.

“Today’s update represents a critical milestone on our journey to transform GE,” said General Electric CEO Larry Culp in a news release. “The value from this transaction will fortify our considerable sources to de-risk our balance sheet and continue to solidify our financial position.”

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AT&T Suspends Stock Buyback Plan
AT&T shares are trading lower after the communications and entertainment giant announced that it has canceled a previously disclosed $4 billion accelerated share-repurchase agreement, as well as “any other repurchases.”

Even before the current coronavirus pandemic added new stresses to the financial markets, AT&T faced a pair of competing financial challenges: reducing its $163 billion debt position, while also maintaining its dividend, which currently provides investors with a 6.7% yield.

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Carnival’s First-Quarter Earnings Were Halved. It’s an Early Glimpse of Coronavirus Impact.
Carnival’s adjusted fiscal first-quarter earnings were cut in half because of the coronavirus hit, giving the first glimpse of how cruise operators fared as the pandemic intensified in recent weeks.

In a securities filing after the market closed Thursday, Carnival preannounced adjusted earnings of 22 cents a share, compared with 49 cents a share a year earlier. It added that the cornonavirus outbreak cost 23 cents a share, including canceled voyages, but the results exclude ship impairment and goodwill charges.

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Don’t Worry, You’ll Still Get Your Social Security, Even With the Coronavirus Crisis
The Social Security Administration’s commissioner wants you to know you’ll still get paid, but the agency is changing a few other policies in the midst of the coronavirus crisis—and wants recipients to be aware of potential threats to their financial security too.

“The first thing you should know is that we continue to pay benefits,” said Andrew Saul, commissioner of the Social Security Administration, in a statement on Thursday.

This is true whether Americans are receiving their Social Security benefits or Supplemental Security Income payments via direct deposit or mail, though they should check in with the U.S. Postal Service for any updates as well. Right now, the USPS is “closely monitoring” the coronavirus, also known as Covid-19. The Surgeon General, World Health Organization and Centers for Disease Control and Prevention have all said there’s currently no evidence the disease can spread through mail.

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Dow Jones Contact Us
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4300 Route 1 North, South Brunswick, NJ 08852
Copyright ©
2020 Dow Jones & Company, Inc. All Rights Reserved. Not for redistribution.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market or economic conditions.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.