The Dow Jones industrial average sank 3.6 percent and the S&P 500 was off 3.4 percent, with both erasing their gains for the year. The tech-heavy Nasdaq, which had been surging, fared even worse, shedding 3.7 percent.
Trump sought to reassure investors following the market close, stressing U.S. public health officials are on top of the threat and suggesting stocks have bottomed out and investors should buy back in:
Larry Kudlow, Trump's top economic adviser, echoed the sentiment in an interview with my colleague Bob Costa:
It’s precarious ground to stake out. Attempting to call a market bottom is a dicey enough task for investment professionals. It’s more difficult amid an unpredictable global health crisis. And there’s arguably little to justify the risk for a president who will be called on to manage the response if the coronavirus defies his reassurances and arrives in the United States as a major problem.
That’s especially true considering the stock market is not the economy. As Deutsche Bank Securities chief economist Torsten Slok recently noted, the share of the population that has benefited from the S&P 500's rise has shrunk since the financial crisis more than a decade ago:
But the president has already firmly established that voters should look to the performance of the stock market as a proxy for his own economic stewardship. Just this month, he boasted about market highs twice on Twitter:
Trump’s kids have gotten in on the act, too:
The president’s preoccupation with the stock market has shaped his response to the coronavirus menace. “On Jan. 31, the same day several airlines suspended flights and the United States announced its escalated response, the Dow Jones industrial average dropped 600 points, or 2 percent. Trump grew concerned that any stronger action by his administration would hurt the economy, and he has told advisers that he does not want the administration to do or say anything that would further spook the markets,” my colleagues Yasmeen Abutaleb and Josh Dawsey reported last week. “He remains worried that any large-scale outbreak could hurt his reelection bid.”
Trump has sought to project calm since then, telling Fox News's Sean Hannity earlier this month, “We pretty much shut it down coming in from China.” But “behind the scenes, the Trump administration rushed to expand its response to the coronavirus and rebound from missteps that had drawn the president’s ire and raised questions about the government’s readiness to address the outbreak,” my colleagues Toluse Olorunnipa and Bob Costa report.
Trump’s team remains riven internally about the best path forward, as it eyes the political cost of a longer-term market downturn, per Toluse and Bob. “If he gets a real correction, a 10 to 15 percent down draft in the market, it’d take one of the legs off of a very big part of his reelection campaign,” financier and former Trump hand Anthony Scaramucci tells them.
What course the disease follows, and the fallout for growth abroad and at home, remains anybody’s guess. Treasury Secretary Steven Mnuchin acknowledged as much in a CNBC interview, saying officials need “another three or four weeks to see how the virus reacts until we really have good statistical data.”
But the market action on Monday bore all the hallmarks of a freakout over the virus's toll. Travel companies took some of the toughest pummeling, with American Airlines shares dropping 8.5 percent and Delta Air Lines dropping 6.3 percent. Bleach maker Clorox was a rare bright spot, climbing 1.55 percent, and while Kleenex maker Kimberly Clark, Campbells Soup Co., and Hormel Foods all dipped, they outperformed the broader market.
Investors fled to safe havens, “sending the price of gold soaring as government bond yields, which move opposite prices, plumbed new depths. Oil also fell into bear market territory amid expectations of prolonged global weakness,” The Post's David Lynch, Rachel Siegel and Thomas Heath write. And traders now see a greater than 80 percent chance the Federal Reserve cuts its benchmark interest rate at least once by the end of July, though it is hardly clear monetary policymakers have the tools necessary to mitigate the sort of supply-chain shock a worst-case scenario could bring.
“If all of a sudden cases appear in Silicon Valley, or Manhattan — closer to home and in areas that have greater implications for the market or earnings — we could see continued declines,” Wedbush Securities Managing Director Steve Massocca tells me. “But it's too early to tell.”
Scot Lance, managing director at San Mateo, Calif.-based Titus Wealth Management, takes a sunnier view. “I think this is likely presenting itself as a fairly good buying opportunity,” he tells me. “Our clients base I would say overall has been very slightly underinvested and has been looking for some type of pullback in order to get back into the market… I don’t think necessarily that this will cause a 20 percent pullback. I believe it will be relatively modest.”
— Markets stabilize somewhat. The Post's Adam Taylor: “Global markets mostly stabilized after Monday’s heavy losses, although fears over the economic impact of the coronavirus epidemic continued to haunt investors. Major European indexes were down about 0.8 percent, and oil futures were also lower. Asian stocks were a little lower overall, although the Nikkei, which was closed on Monday, fell more than 3 percent as it caught up with losses elsewhere.”
Fed remains in wait-and-see mode. WSJ's Nick Timiraos: “Federal Reserve officials said it was too soon to know how the fallout from the coronavirus, which weighed heavily on global markets Monday, would ripple through the U.S. economy and whether it would force a return to interest-rate cuts later this year… In a speech Monday, Cleveland Fed President Loretta Mester said she was comfortable with the central bank’s current interest-rate posture and was closely watching the impact of the coronavirus outbreak on global growth.”
U.S. companies are surviving China's slowdown, for now. The Post's Jeanne Whalen and Abha Bhattarai: "The next few weeks will be crunchtime for U.S. companies awaiting products from stalled Chinese factories. If their suppliers spring back to life soon, many companies say they should be able to manage without disastrous disruption. But the uncertainty is keeping managers up at night.
“The variables go beyond the number of employees allowed to return to work after weeks of quarantine. Factories will need enough raw materials to restore production, and enough protective masks to keep workers safely in place for the foreseeable future. They’ll also need Chinese truckers and functioning ports to ensure that goods can make it to market.”
More companies are issuing warnings. Bloomberg News's Angus Whitley: “Mastercard Inc. and United Airlines Holdings Inc. emerged as the latest companies to warn that sales and profit are getting hurt as the epidemic spreads meaningfully beyond its center in China’s Hubei province… The U.S. credit-card network cut its revenue-growth forecast as the spread of infections puts off travelers. Chicago-based United scrapped its 2020 profit forecast altogether, underscoring the unpredictable nature of the two-month-old health emergency.”
Putting Monday's market carnage in perspective. As usual, the number to stress is the percentage decline, not the point drop. Per LPL Financial's Ryan Detrick:
More from Detrick:
— Sanders unveils massive child-care plan: Sen. Bernie Sanders (I-Vt.) “proposed spending $1.5 trillion over 10 years to create a universal child care and early education system, to be funded by taxing the wealthiest Americans,” Reuters's Jason Lange reports.
“At least 10 hours of childcare a day would be available from infancy through age three, the age at which early-education programs would kick in, according to Sanders’ proposal. Sanders said the program would be paid for by taxing the wealth of the richest 0.1 percent of Americans.”
— Bloomberg once called Warren ‘scary’: “Former New York City Mayor Mike Bloomberg said at a private event in 2016 that his presidential campaign platform would have been to ‘defend the banks’ and also labeled the progressive movement and Massachusetts Sen. Elizabeth Warren, now a rival for the 2020 Democratic presidential nomination, as ‘scary,' ” CNN's Andrew Kaczynski and Em Steck report.
“When asked his views on the rise of the far right in Europe, Bloomberg warned about the rise of progressive politicians in the U.S., citing Warren. ‘The left is arising. The progressive movement is just as scary,’ he says. ‘Elizabeth Warren on one side. And whoever you want to pick on the Republicans on the right side?’ ” CNN confirmed that Bloomberg made the comments during a private event hosted by Goldman Sachs at Yankee Stadium in the summer of 2016.
- He also slammed Obama: “Bloomberg, who was elected mayor as a Republican and as an independent, also criticized President Barack Obama, saying that his 2012 endorsement of Obama was ‘backhanded’ and that he thought Republican Mitt Romney could have done a better job if he'd been elected.”
- Bloomberg's campaign said the bank comments were a joke: “The opening line was a joke,” Bloomberg campaign spokesman Stu Loeser told CNN He added: “In the more serious parts of the speech, Mike tells very wealthy Americans that they need to break their addiction to cheap money that's exacerbating income inequality in America."
Warren's campaign leapt on the report, snapping up “ScareMikeBloomberg.com" — a URL that redirects to a fundraising page for her:
— Facebook investigated suspicious pro-Sanders posts: “Facebook Inc. in recent weeks investigated suspicious content supporting [Sanders’s] presidential campaign, said people familiar with the matter. But the company was unable to substantiate claims that Trump supporters or Russian actors were involved in any inauthentic activity,” the WSJ's Emily Glazer and Dustin Volz report.
“Some in Facebook’s leadership were briefed recently on the investigation, some of the people said. It couldn’t be learned whether the probe is continuing. Facebook spokesman Andy Stone said the company investigated a claim by an outside researcher over suspicious pro-Sanders content, among regular reports it generally receives from the research community. While Facebook actively monitors its platform for political disinformation, not all internal inquiries are escalated to senior officials, as this one was, people familiar with the matter said.”
— U.S. considers expelling Chinese journalists: “The U.S. is weighing whether to expel Chinese journalists after China kicked out three Wall Street Journal reporters, part of a push by the Trump administration to show leaders in Beijing that it will resist restrictions on Americans working in China,” Bloomberg News's Nick Wadhams, Jennifer Jacobs and Saleha Mohsin report.
“The administration’s options were to be discussed in a meeting of senior administration leaders at the White House … led by Matt Pottinger, the deputy national security adviser who was once a Wall Street Journal reporter in Beijing, according to U.S. officials familiar with the deliberations. There’s an intense debate over how severely to respond to the expulsions last week. Some advocate ordering dozens — and perhaps hundreds — of Chinese reporters to leave, while others say that’s not legally possible or in keeping with American values on freedom of the press, according to several of the officials.”
- Top Cabinet officials urge restraint: “Secretary of State Michael Pompeo and Treasury Secretary Steven Mnuchin are among those arguing for a more moderate approach, especially as the U.S. needs to work with China in stemming the coronavirus outbreak, one person familiar with the discussions said.”
— Xi's coronavirus response foreshadows tighter grip: “For all the lessons for President Xi Jinping to take away from China’s worst virus outbreak in modern history, he seems to have settled on one above all others: Centralized control works and more is needed,” Bloomberg News reports.
“Xi shared the conclusion in an unprecedented conference call with 170,000 officials Sunday — the closest the leader of the world’s longest-lasting communist regime has come to a fireside chat. In it, according to excerpts released by state-run media, he defended the ruling party’s judgment as ‘accurate’ and argued that the outbreak ‘demonstrates the remarkable advantages of the leadership of the Communist Party of China and the socialist system with Chinese characteristics.’ While the statement echoes countless others by Xi since he came to power more than seven years ago, China’s response to the coronavirus outbreak has given the world a new understanding of what he means.”
— Moderna makes big move in coronavirus fight: “Drugmaker Moderna Inc. has shipped the first batch of its rapidly developed coronavirus vaccine to U.S. government researchers, who will launch the first human tests of whether the experimental shot could help suppress the epidemic originating in China,” the WSJ's Peter Loftus reports.
“[The company] sent vaccine vials from its Norwood, Mass., manufacturing plant to the National Institute of Allergy and Infectious Diseases in Bethesda, Md., the company said. The institute expects by the end of April to start a clinical trial of about 20 to 25 healthy volunteers, testing whether two doses of the shot are safe and induce an immune response likely to protect against infection, NIAID Director Anthony Fauci said in an interview. Initial results could become available in July or August."
Gilead drug also shows promise. Bloomberg News: "China will release results at the end of April from clinical trials of a Gilead Sciences Inc. drug that is emerging as a frontrunner in the race to find an effective treatment for the novel coronavirus. The outcome of trials of the experimental medication remdesivir on 761 patients in Wuhan, the city where the virus originated, will be made public on April 27, China’s National Intellectual Property Administration said Tuesday…
“Foster City, California-based Gilead, whose remdesivir is not licensed or approved for use anywhere in the world, seems poised to benefit as confidence grows in its drug’s efficacy in treating the coronavirus. If the trials prove remdesivir works, China could roll out the treatment more quickly than the usual deployment of new drugs due to the critical need among patients.”
- Other drugmakers are trying: “Drugmakers Johnson & Johnson, Sanofi SA and Inovio Pharmaceuticals Inc. have started to develop coronavirus vaccines, and human studies of them could start in anywhere from a few months to about a year from now,” Loftus also reports.
— JPMorgan unveiling climate plans: “JPMorgan Chase & Co executives plan to announce new climate-change initiatives [today], including restrictions on financing coal mining and Arctic drilling, as well as a $200 billion target to provide financing for sustainable projects,” Reuters's Elizabeth Dilts Marshall reports.
“The bank’s changing approach at its 13th annual investor day, which is invitation-only, comes as other big U.S. banks have announced similar initiatives.”
— Saudis look to challenge U.S. on natural gas: “Saudi Aramco is launching the biggest shale gas development outside of the United States to boost domestic gas supply and end the burning of oil at its power generation plants, Chief Executive Officer Amin Nasser told Reuters,” Rania El Gamal and Simon Webb report.
“The world’s top crude oil exporter has for years battled for market share with rapidly expanding shale oil producers in the United States, which in just a decade have developed capacity to pump millions of barrels per day of oil from rock formations that were previously too costly to tap … If Aramco hits its targets for development of the field, Saudi Arabia would become the world’s third largest gas producer by 2030. The world’s top two gas producers are the United States and Russia.”
— Boeing adds to board: Boeing “nominated Steve Mollenkopf and Akhil Johri to its board and said two of its directors will retire,” Reuters's Sanjana Shivdas reports.
“Edward Liddy and Mike Zafirovski will retire at the U.S. planemaker’s annual shareholder meeting and not stand for re-election, the company said. Mollenkopf is the chief executive officer of Qualcomm Inc and Johri was the chief financial officer of United Technologies Corp.”
- Home Depot, Macy’s, Lumber Liquidators, Virgin Galactic, Caesars Entertainment and Thomson Reuters are among the notable companies reporting their earnings
- The Washington Post holds an event on working families and the cost of the American dream.
- Lowe's, Wyndham Destinations, Office Depot, Wendy's, Hostess Brands, Square and Sea World Entertainment are among the notable companies reporting their earnings
- The Brookings Institution holds an event on the economy and the 2020 election, featuring remarks from former Fed Chair Janet L. Yellen
- The House Financial Services Committee holds the second part of a hearing on “Rent-a-Bank schemes."
- Dell, Best Buy, Anheuser-Busch InBev, Keurig Dr Pepper, AMC Entertainment and Crocs are among the notable companies reporting their earnings
- Foot Locker is among the notable companies reporting its earnings