After a shattering start to the week, U.S. stocks on Tuesday rebounded on reports of a government stimulus that would help cushion the country from the economic effects of the coronavirus outbreak.

The Dow Jones industrial average jumped 1,164 points, 4.9 percent, recovering more than half its losses from Monday — which was the blue chip index’s worst day since the 2008 financial crisis. The Standard & Poor’s 500 and tech-heavy Nasdaq composite also finished Tuesday near 5 percent gains for the day. Financials and technology were leading the way for all 11 stock market sectors that went positive.

After weeks of turbulence, U.S. markets plunged to new depths Monday, cratering more than 7 percent on the dual threat of the coronavirus’s spread in the United States and the escalating oil price war between Russia and Saudi Arabia.

The outbreak continues to spread at a rapid clip with more than 113,000 cases worldwide. The director of the World Health Organization called the threat of a coronavirus pandemic “very real.” More than 700 cases have been confirmed in the United States, with the virus present in more than 30 states and counting. The outbreak is responsible for thousands of deaths, including 26 in the United States.

March 10, 2020 at 2:32 PM EDT

Trump’s meeting with Senate Republicans ends with no resolution on coronavirus economic plan

President Trump’s meeting with Senate Republicans on Tuesday ended without any concrete plan for crafting an economic package that might address the turmoil caused by the coronavirus epidemic, sparking fears that policy makers are far apart on how to deal with growing concerns that the U.S. could enter a recession.

At the meeting, Trump discussed his proposal to extend a temporary payroll tax cut for a period of months. Some lawmakers also discussed the idea of targeted infrastructure spending. Both ideas could be used to try and flood the economy with more cash, but there was not a consensus over how to proceed. And House Democrats are busily assembling their own package.

“I don’t think any decision whatsoever has been made," said Sen. John Kennedy (R-La.).

At the meeting, Trump proposed having a temporary payroll tax cut that could last a period of months. The cut could amount to $40 billion per month, people briefed on the discussions said, which would make it quite substantial. Republicans have been cool to the idea of a payroll tax cut so far, arguing it would do little to help deal with the economic fear as the coronavirus continues to spread.

By Erica Werner, Robert Costa, Mike DeBonis and Seung Min Kim
March 10, 2020 at 2:00 PM EDT

White House likely to pursue federal aid for shale companies hit by oil shock, coronavirus downturn

The White House is strongly considering pushing federal assistance for oil and natural gas producers hit by plummeting oil prices, as industry officials close to the administration clamor for help, according to four people familiar with internal deliberations.

President Trump has touted the growth of oil and natural gas production under his administration, celebrating their rise in politically crucial swing states such as Pennsylvania. But many oil and gas firms were hammered Monday by the price war that broke out between Saudi Arabia and Russia, driving oil prices down in their steepest one-day drop in almost 30 years.

White House officials are alarmed at the prospect that numerous shale companies, many of them deep in debt, could be driven out of business if the downturn in oil prices turns into a prolonged crisis for the industry. The federal assistance is likely to take the form of low-interest government loans to the shale companies, whose lines of credit to major financial institutions have been choked off, three people said.

By Jeff Stein, Will Englund and Steven Mufson
March 10, 2020 at 1:10 PM EDT

Airlines slash routes, outlook and executive pay on coronavirus fallout

Several major airlines, feeling the coronavirus’s tightening economic squeeze, have moved to slash routes, redraw their financial outlooks and even slash executive pay.

Delta Air Lines said Tuesday that it is cutting international flights by as much as 25 percent and domestic routes by 10 to 15 percent. It’s also withdrawing its 2020 financial outlook, instituting a hiring freeze and suspending its stock repurchase program. American Airlines also cut back on its schedule, following comparable moves made last week by United and Jet Blue airlines.

Meanwhile, Southwest Airlines CEO Gary Kelly said he is taking a 10 percent pay cut as the discount carrier contends with a steep decline in bookings. United went even further, announcing that its CEO and president will forgo their base salaries through at least the end of June.

By Rachel Siegel
March 10, 2020 at 12:42 PM EDT

Saudi Arabia doubles down on oil production, escalating price war concerns

Saudi Aramco plans to increase its crude supply to 12.3 million barrels per day in April, Reuters reported overnight Tuesday, escalating the price war between the kingdom and Russia that helped send global stocks into a tailspin on Monday.

The move would flood oil markets further, further threatening U.S. shale producers and making it more difficult for the domestic economy to heal.

“While this game of chicken between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman is dangerous for both men to play, the biggest loser might be US shale oil producers,” said Ed Yardeni, president of Yardeni Research in his morning note. “That collateral damage must be appealing to both of them.”

Oil prices experienced one of their most dramatic drops in history Monday, dropping as much as 31 percent and wiping out of hundreds of billions of dollars in market value for the U.S. oil and gas industry. But the sector showed signs of recovery Tuesday despite Saudi Arabia’s supply increase plans: Brent crude was up nearly 8 percent to a little more than $37 a barrel.

Energy stocks which were pummeled amid Monday’s price war fears saw also bounced back in early trading. ExxonMobil was up more than 7 percent in premarket trading. Chevron was up 6 percent and Valero was up 2.75 percent.

Frank Verrastro, senior vice president at the Center for Strategic and International Studies, said the miscalculation between the Saudis and Russians has blunted not only the price of oil but global financial markets.

Some analysts have even speculated the oil prices could reach single digits, which would decimate not only the U.S. shale oil industry, but would have far-reaching effects on producing countries that cannot survive without healthy per barrel prices in the $50, $60 or higher range.

“Egos and miscalculations can lead to a much larger and adverse economic impact if it’s not corrected,” Verrastro said, adding that the turmoil in oil markets is broad and deep. “Markets don’t like uncertainty, and that’s what is going on today.

“Pretty soon, these oil companies are going to have to report first-quarter earnings,” Verrastro said. “That could jeopardize outstanding bank loans. Then there are unemployment impacts, truckers and tankers are not moving oil. Prices on airlines are down, but no one is flying. We are going to need some signal that Russia and Saudi Arabia can resolve this before things get better.”

By Thomas Heath
March 10, 2020 at 12:39 PM EDT

Trump administration, Congress at odds as they collide on coronavirus economic plans

Many Republicans are uneasy about President Trump’s proposed payroll tax cut, and Democrats are focused on other ideas, such as ensuring paid sick leave, according to multiple officials involved in the discussions.

The payroll tax cut could cost between $55 billion and $75 billion per year for each percentage point cut, according to the Committee for a Responsible Federal Budget. The other changes Trump discussed Monday could also have large price tags.

Trump’s looming challenge begins with Senate Majority Leader Mitch McConnell (R-Ky.), who has privately told several allies in recent days that he personally opposes the payroll tax cut idea Trump has endorsed, according to two veteran Republicans briefed on the discussions who were not authorized to speak publicly.

By Erica Werner, Robert Costa and Mike DeBonis
March 10, 2020 at 10:43 AM EDT

Securities and Exchange Commission asks D.C. employees to work from home after coronavirus scare

The Securities and Exchange Commission on Monday asked employees at its D.C. headquarters to stay away from the office because of a potential coronavirus case, becoming the first major federal employer to turn to telework to avoid the spreading virus.

The announcement from the agency, which is charged with monitoring the financial markets, came after a day of turmoil on Wall Street, with the Dow Jones industrial average falling more than 2,000 points. The agency‘s notice, which was emailed shortly after 8 p.m., required employees working on the ninth floor of its office to stay home and encouraged all others to do the same.

“Out of an abundance of caution, effective immediately the SEC is requiring all Headquarters personnel (employees and contractors) who work on the 9th floor to telework,” the email to employees read.

By Renae Merle
March 10, 2020 at 8:47 AM EDT

Fears of corporate debt bomb grow as coronavirus outbreak worsens

The coronavirus panic could threaten a $10 trillion mountain of corporate debt, unleashing a cycle of layoffs and business spending cuts that would hit the economy just as some analysts are warning of a recession.

Financial markets already are showing major signs of stress. Investors are demanding higher interest payments in return for lending to less creditworthy companies; some businesses are delaying their planned bond sales while they wait for Wall Street to settle down; and ratings agencies are moving toward downgrading some corporate borrowers.

The mammoth debt bulge includes a dramatic increase in borrowing by the lowest quality investment grade firms -- those rated just one level above “junk.” More than $1 trillion in “leveraged loans,” a type of risky bank lending to debt-laden companies, is a second potential flash point.

“It is a big concern,” said Ruchir Sharma, chief global strategist for Morgan Stanley. “We’re dealing with the unknown. But given the enormous increase in leverage, the system is fragile and vulnerable.”

By David Lynch
March 10, 2020 at 8:19 AM EDT

Trump struggles for calm after market meltdown

President Trump confronted one of the most perilous days of his presidency Monday by first erupting in a barrage of commentary that failed to calm the cratering financial markets, struggling to inspire confidence that his administration could stop the spread of the novel coronavirus.

But by the time the sun set in Washington, Trump sounded momentarily chastened by the turbulence and previewed a raft of emergency measures to shore up the economy.

“We have a very strong economy,” the president told reporters, “but this blindsided the world.”

The coronavirus and the market meltdown present Trump with a challenge unlike any he has faced as president, and one for which he has no ready solution. At a moment when anxious citizens are turning to the government for facts and assurance, Trump is playing down risks and immersing himself in feuds with Democrats, the media and other perceived enemies.

By Philip Rucker, Robert Costa, Ashley Parker and Josh Dawsey