Stocks surged Tuesday, with the Dow Jones industrial average climbing 11 percent to record its biggest single-day gain since 1933 on hopes that lawmakers were nearing a breakthrough on a $2 trillion package aimed at stanching the economic damage from the coronavirus.
But the major indexes remain down at least 24 percent from peaks they reached roughly than a month ago, making this the fastest collapse in history. Many investors are skeptical it has finally reached bottom, as the disease itself gains momentum in the United States. Stock futures turned negative overnight, despite news of a deal from Capitol Hill.
Still, amid the wreckage over the last month, a number of companies have managed to hold their own or even gain ground. Taken together, those names paint a picture of a country enduring a deep, shared trauma — and, potentially, transforming in ways that become permanent features of the post-coronavirus economy.
Some publicly held companies are benefiting from a surge in panic-driven demand, as Americans riding out the disease indoors stockpile household cleaners and pantry staples with long shelf lives.
Campbell’s Soup Co., for example, reports in a new SEC filing that sales of its soup over the past month are up 59.3 percent over a year ago, its Prego pasta sauce is up 52.9 percent and Goldfish crackers are up nearly 22.7 percent.
Clorox, which has seen a rush on its disinfectant products, is up 2 percent since the S&P 500 peaked on Feb. 19. That has earned it a place on Bespoke Investment Group’s list of “COVID Economy stocks,” which it first published on March 11:
Both Campbell's and Clorox have given back substantial gains over the past week — a potentially bullish sign for the broader market to some investment pros. Quincy Krosby, chief market strategist at Prudential Financial, told me earlier this week she is watching shares of Clorox, and those of “anything associated with cleaning,” for evidence of sustained weakening, reasoning it will indicate investors are “more optimistic about coming out of the lockdown of the economy. That won’t happen until we have ample evidence that the virus has started to slow and stop forcing people into hospitals.”
Other names geared toward staying home — Blue Apron, Netflix, and Dominos, for example — have defied the selloffs to post solid gains this year. So, too, have pharmaceutical companies that have reported progress developing tests, anti-viral treatments or potential coronavirus vaccines, including Moderna, Regeneron, Gilead Sciences, and Qiagen. It’s not clear those stocks will sustain their gains once the threat from the disease subsides.
Some market watchers are more bullish on the companies making teleworking tools. Office workers have relied on them as they are forced to work from home — a practice that could outlast the virus if companies find not much is lost in remote work, and it offers cost-savings from lower overhead. Among those companies, all of which have gained this year: Zoom, Dropbox, Citrix Systems, and Zscaler.
“That tech has been around, but until now i don’t believe it was so widely adapted,” Todd Sohn of Strategas writes in an email. “Thus, this has been a good litmus test for those names, and so far, so good. Perhaps this will lead to more widely adapted use and further increases in their stock prices.”
Major retailers have also consolidated their marketshare, and their stocks have weathered the last month better than most. “The virus also could exacerbate an already widening gap between the country’s most successful retailers — giants such as Amazon, Walmart, Target and Costco — and the rest of the industry,” my colleagues Craig Timberg, Drew Harwell, Laura Reiley and Abha Bhattarai report. “Companies selling groceries and staples are thriving, while the rest are barely hanging on, a dynamic analysts say is likely to become even more pronounced as economic conditions worsen.” Amazon, whose CEO Jeff Bezos owns the Post, has seen its stock eke out a gain this year, while shares of Walmart and Costco are down but only slightly.
One corner of the economy some investors expected to outperform for the most morbid of reasons has in fact done worse than the broader market. Funeral industry stocks have plummeted, with Services Corp. shedding 26 percent of its value since the market high and Carriage Services dropping 40 percent, despite the gathering specter of mass deaths from the coronavirus.
The likely explanation is grim: The contagiousness of the virus renders funerals potentially dangerous. “Mourners and funeral directors are making difficult decisions, weighing whether to postpone services, hold them with strictly limited access, broadcast them online or record them to replay later,” my colleagues Arelis R. Hernández and Mark Berman report.
Compounding the slowdown for the companies that sell funeral services, older people who might otherwise buy their own packages aren’t venturing out to meet with funeral directors — both because they are sheltering at home and because the stock market’s collapse is likely crimping their spending, Oppenheimer analyst Scott Schneeberger tells me.
"I’m getting a lot of calls from investors asking why this isn’t performing better in this environment,” he says. “It’s not a situation where you can elect to have a big funeral… And people around that age aren’t buying them at this time because they’re more worried about their retirement.”
MONEY ON THE HILL
— Senate, White House reach deal on stimulus package: “Senate leaders and the Trump administration reached agreement early today on a $2 trillion stimulus package to rescue the economy from the coronavirus assault, setting the stage for swift passage of the massive legislation through both chambers of Congress,” my colleagues Erica Werner, Mike DeBonis, Paul Kane and Jeff Stein report.
“Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Charles E. Schumer (D-N.Y.) announced the breakthrough on the Senate floor around 1:30 a.m., after a long day of talks with Treasury Secretary Steven Mnuchin and other administration officials.”
- What's next: “McConnell said the Senate would pass the legislation later Wednesday. With the House out of session, action there could take longer, depending on whether lawmakers can agree to pass the bill by ‘unanimous consent,’ which would require agreement from all members of the chamber… Mnuchin said President Trump would ‘absolutely, absolutely, absolutely’ sign the bill.”
From Bloomberg News's Steve Dennis:
Schumer and McConnell huddled after deal reached. I think I detect smiles? pic.twitter.com/ylywSjVNb2— Steven Dennis (@StevenTDennis) March 25, 2020
The White House made a major concession on the $500 billion Treasury-run loan program: An independent inspector general and an oversight board will be able to scrutinize lending decisions, my colleagues report.
- A reminder on how that breaks down: “$425 billion is supposed to go to businesses, cities and states. An additional $50 billion would go to passenger airlines, as well as $8 billion for cargo airlines, and $17 billion for firms that are deemed important to national security.”
What else is in it:
- Direct payments to Americans ($250 billion): “Under the plan as it was being negotiated, individuals who earn $75,000 in adjusted gross income or less would get direct payments of $1,200 each, with married couples earning up to $150,000 receiving $2,400 -- and an additional $500 per each child. The payment would scale down by income, phasing out entirely at $99,000 for singles and $198,000 for couples without children.”
- Small business loans ($367 billion): “Sen. Marco Rubio (R-Fla.), who negotiated the small business portion, said it had grown to $367 billion, with inclusion of six months of loan forbearance for all small businesses adding $17 billion to the original $350 billion price tag,” per my colleagues.
- A provision barring the Trump organization from receiving any money: “[Trump] and his family, as well as other top government officials and members of Congress [would be blocked] from getting loans or investments from Treasury programs in the stimulus, according to Minority Leader Chuck Schumer's office," per CNN.
In the United States:
- Trump wants economy reopened by Easter. The aspiration was “largely panned by public health experts and many elected leaders, including Republicans,” my colleagues John Wagner and Brady Dennis report.
- U.S. cases top 50,000. There are now 54,893 confirmed cases in the U.S., and 783 reported deaths. With the improved availability of testing, many states are now seeing rapid growth in confirmed cases.
- The situation in New York City is getting more dire. Hospitals in the area “are so inundated by Covid-19 cases that they are no longer able to test medical workers who fear their exposure to sickened patients may have made them ill,” Bloomberg News reports. And the White House task force is asking anyone who has left the area recently to self-quarantine for 14 days.
- Pentagon estimates the coronavirus will persist for months: "You’re looking at eight to 10 to 12 weeks, call it three months, based on what we know from other countries like China, Hong Kong, South Korea, etc., that may or may not apply to the United States,” U.S. Army Gen. Mark Milley, chairman of the Joint Chiefs of Staff, said, CNBC's Amanda Macias reports.
- Oil industry miffed at Trump: “[The president's] dream of a golden, dominant energy industry is almost gone and, industry executives said, so is his full-throated support,” Politico's Ben Lefebvre reports of the collapse of oil prices and the industry's frustration with the White House's response.
- FEMA chief says Defense Production Act will be used for testing: “Peter Gaynor, administrator of the Federal Emergency Management Agency, told CNN that the administration had decided to use the Defense Production Act to acquire some 60,000 kits,” CNBC's Thomas Franck reports. “The FEMA chief added that the White House will add “DPA language” into its mass contract for 500 million masks.”
- Bezos and other execs sold shares just in time: “Top executives at U.S.-traded companies sold a total of roughly $9.2 billion in shares of their own companies between the start of February and the end of last week, a Wall Street Journal analysis shows,” the WSJ's Susan Pulliam, Coulter Jones and Andrea Fuller report. The selling saved executives potential losses totaling $1.9 billion. Some of the CEOs the Journal look at included Amazon's Jeff Bezos, BlackRock's Laurence Fink and outgoing MGM CEO James Murren.
- Ford, 3M, GE team up on ventilators, respirators. The companies will work together to produce the equipment, “repurposing existing parts and hundreds of workers," my colleague Jacob Bogage reports, but their output could be months away.
- Trump, Pence hold call with top Wall Street players. The conversation was “focused on how America’s top money managers are viewing markets and the U.S. economy,” CNBC's Kayla Tausche and Thomas Franck report. Among those on the call: “Citadel’s Ken Griffin, Third Point’s Dan Loeb, Blackstone’s Stephen Schwarzman, Vista Equity’s Robert Smith, Intercontinental Exchange’s Jeffrey Sprecher and Paul Tudor Jones, hedge fund manager and co-founder of Just Capital.”
- Fed taps BlackRock to buy bonds. “BlackRock will purchase agency commercial mortgage-backed securities secured by multifamily-home mortgages on behalf of the New York Federal Reserve,” the WSJ's Dawn Lin reports. “The Fed will determine which securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are suitable for purchase. BlackRock will execute the trades.”
- India is now in a three-week national shutdown: “For the next 21 days, there will be restrictions on commerce and movement across the length and breadth of India. Even at the height of its battle against the virus, China did not impose a nationwide lockdown,” my colleagues Joanna Slater and Niha Masih report.
- The Summer Olympics are now officially postponed: “The Olympics are the biggest event to date scuttled because of the virus,” my colleagues Adam Kilgore, Rick Maese and Simon Denyer report. “Organizers say they now hope to stage the Games by the summer of 2021.”
— USDA, USTR cite progress on China buying U.S. agriculture products: “In a joint statement, they listed a number of steps taken that should help boost U.S. exports of beef, poultry and other farm products to China, and said U.S. food and agricultural products exports were benefiting from Chinese tariff relief,” Reuters's Andrea Shalal, David Lawder and Karl Plume report.
“As part of the deal signed on Jan. 15, Beijing agreed to nearly double its U.S. farm product purchases and lower several agricultural trade barriers that Washington said limited access to the lucrative Chinese market.”
From my colleague Andrew Van Dam: “The virus has progressed so rapidly that traditional data sources can’t keep up. To fill the void, economists and policymakers have turned to real-time alternatives such as the restaurant-reservation app Open Table, which publishes a daily comparison of how far sit-down restaurant traffic has fallen relative to last year. As of Friday, it was down 99 percent in the United States. One of the most common jobs in the country, waiter or waitress, has effectively ceased to exist.”
- The Labor Department releases its weekly jobless-claims report
- Lululemon Athletica, GameStop, KB Home and Movado Group are among the notable companies reporting their earnings
- U.S. consumer spending data for February is released
- The University of Michigan’s releases its consumer sentiment survey for March
From The Post's Tom Toles: