The raging coronavirus will close the New York Stock Exchange's floor operations on Monday, after employees tested positive for the coronavirus. (Photo by Luiz Roberto Lima-ANB/Pacific Press/LightRocket via Getty Images)
Stocks around the world rallied Tuesday amid expectations that Congress is nearing a deal to pump nearly $2 trillion of aid into the coronavirus-ravaged economy.
Top congressional and White House officials said they expect to reach an agreement Tuesday, though some issues remain. Investors have been frustrated waiting for the U.S. government to do what it can to help the economy, which is increasingly shutting down by the day after the Federal Reserve has done nearly all it can.
Signs of optimism radiated around the world. Beyond the better than 5 percent gain for the S&P 500 within the first few minutes of trading, South Korean stocks surged 8.6 percent and Germany's market returned 7 percent. Treasury yields rose in a sign that investors are feeling less fearful. Even crude oil, which has more than halved this year, rose.
The market has seen rebounds like this before, only for them to wash out immediately. Since the market began selling off on Feb. 20, the S&P 500 has had six days where it's risen, and all but one of them were big gains of more than 4 percent. After every one of them, stocks fell again the next day.
Ultimately, investors say they need to see the number of new infections peak before markets can find a bottom. The increasing spread is forcing companies to park airplanes, shut hotels, and close restaurants to dine-in customers. Altogether, estimates suggest at least 10 percent of the U.S. economy is shutting down, according to Rob Sharpe, head of investments and group chief investment officer at T. Rowe Price.
The S&P 500 was up 5.4 percent, as of 9:43 a.m. Eastern time. The Dow Jones Industrial Average rose 1,130 points, or 6.1 percent, to 19,722 and the Nasdaq was up 4.9 percent.
Economists are topping each other's dire forecasts for how much the economy will shrink this spring due to the closures of businesses, and a growing number say a recession seems inevitable.
To support the economy while health experts work to corral the virus, the Federal Reserve on Monday pledged to buy as many Treasurys and mortgage-backed securities as it takes to keep lending markets working smoothly. It's the latest in a string of extraordinary moves by the U.S. central bank.
Investors are waiting for Congress and the White House to also do what they can. They debated through the weekend and Monday on a plan to send cash to households and help support the hard-hit travel industry, among other things.
Governments and central banks in other countries around the world are also unveiling unprecedented levels of support for their economies in an attempt to limit the scale of the upcoming virus-related slump. Germany, a bastion of budgetary discipline, also approved a big fiscal boost.
Markets rose even as more dismal data came in about the global economy.
"Everyone was prepared for a set of shockers, and that is precisely what we got, but they are not a surprise," said Chris Beauchamp, chief market analyst at IG. "It is at times like this that the market's propensity to look forward is demonstrated most effectively."
A further boost to sentiment has come from the news that China is preparing to lift the lockdown in Wuhan, the epicenter of the outbreak, and from Italy reporting a reduction in the number of new cases and coronavirus-related deaths.
"It's still early days, of course — perhaps investors can start to envisage life beyond the coronavirus," said Craig Erlam, senior market analyst at OANDA Europe. "That could make stocks look a little more attractive, although anyone jumping back in now will need to have nerves of steel."
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. Those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems. Recovery could take six weeks in such cases.
Bobby Zagotta, CEO of Bitstamp USA, joins Cheddar News' Closing Bell, where he discusses what he expects to see from Bitcoin and other cryptocurrencies amid a volatile period in the market, and explains how his crypto exchange is helping investors.
Markets started the week on a rocky note: the major indexes at most points during the day were double digits off of their highs, on the path to their worst performances since March 2020 and for the Nasdaq, since October 2008. Investors were skittish about the Federal Reserve's meeting this week, where the central bank is expected to announce more details about its plans to hike interest rates and taper asset purchasing this year. Art Hogan, Chief Market Strategist at National Securities, joined Cheddar News' Closing Bell to discuss today's market meltdown, why investors were feeling pressure, what to expect from the Fed, and more.
AT&T announced it's offering two tiers of high-speed internet, 2 gigs, and 5 gigs, to its fiber customers in more than 70 metro regions. AT&T Consumer CEO Thaddeus Arroyo joined Cheddar to talk about the newly available speed upgrades for 5.2 million of its customers, and where the rollout goes from here. "Over the course of 2022, we'll rapidly continue to retrofit the rest of the base," he said. "And importantly now is, as we build-out, we've talked about building out to cover 30 million homes and businesses by the end of 2025, we're going to continue to ensure that every new location that we stand up has this multi gig capability."
Autonomous driving tech company Waymo is partnering with transportation and logistics business J.B. Hunt. The two firms are teaming up to bring autonomous shipping to the highways. Head of commercialization for trucking at Waymo, Charlie Jatt, joined Cheddar to discuss how the companies are combining their strengths. "We, of course at Waymo, are working on the technology side of affairs, and J. B Hunt brings critical operational and commercial expertise," Jatt said. "And together we're going to work to deploy the first fully autonomous Class 8 truck hauling goods for one of their customers in the coming years in Texas."
Amid a rough week for Peloton's stock, as well as its image — its bikes being the cause of death for two fictional TV characters now — an activist investor is calling for a change in upper management. Chief investment officer of Blackwell, Jason Aintabi, petitioned in a letter that Peloton’s CEO, John Foley, must be fired. Joining Cheddar to discuss the ultimatum, Hatem Dhiab, a portfolio manager and managing partner at Gerber Kawasaki Wealth and Investment Management noted the conditions leading to the demand for Foley's removal. "The stock is basically 85 percent below the high," he said. "I think there is some change that needs to happen, and that's just the reality."
Talent Resources Sports is partnering with ABG Entertainment to host Sports Illustrated The Party during the weekend of Super Bowl LVI, featuring musical performances by Kygo, Jack Harlow, and other guests. David Spencer and Mike Heller, co-CEOs and founders of Talent Resources Sports, joined Cheddar to discuss the details behind putting on the event. “We’re just really pumped that after all of the things that got canceled people will finally have a place to let some steam off in such an exciting moment, such a charged moment with the Super Bowl,” Mike Heller said about putting on the live event after previous COVID-related cancellations.
Mayors in cities like Miami and New York City are considering introducing cryptocurrencies as a way to reduce economic inequality. Miami Mayor Francis X. Suarez has even pushed for distributing Bitcoin dividends to the city's inhabitants.
As companies look toward the metaverse concept to further move their companies online, Shep Ogden, CEO and co-founder of Offbeat Media, spoke with Cheddar about questions investors should be posing to businesses like how customized the metaverse experience will be. "One of the best things that people can do, or companies can do, to be competitive is really find those influencers within the community that are very deep in the space," Ogden added.
