Wall Street tries to recover from Monday’s plunge.
Shares on Wall Street rebounded on Tuesday as investors looked to Washington to bolster the economy as the coronavirus spreads, but stocks swung from gains to losses and back, moves that highlighted just how fragile the recovery was.
President Trump met with Senate Republicans on Tuesday to pitch them on measures, including a payroll tax cut, to help the economy amid signs of a worsening outbreak in the United States. He is also considering using the Federal Emergency Management Agency as a vehicle for delivering funds to stimulate the economy, a move that wouldn’t require approval from Congress.
But the White House hasn’t announced any specific plans. Increased testing for the coronavirus is expected to generate rising numbers of new infections in the coming weeks, which could be a new challenge for investors’ nerves.
“With the Federal Reserve running out of options to help, the onus on lawmakers to provide fiscal stimulus — deficit-financed temporary tax cuts and government spending increases — is intensifying,” Mark Zandi, the chief economist at Moody’s Analytics, wrote in a note to clients on Tuesday.
Still, Mr. Zandi said such measures — which could also include tax rebate checks or expanded unemployment insurance benefits — are far from guaranteed.
After rising more than 3 percent in early trading, the S&P 500 fell into negative territory before climbing again. Shares in Europe, which had also climbed earlier in the day, ended lower Tuesday.
In Monday’s global plunge, the S&P 500 fell nearly 8 percent, its sharpest daily decline since December 2008 and a tumble so swift that trading in the United States had to be halted for 15 minutes early in the day. In Asia and Europe, some of the biggest financial exchanges flirted with or crossed into bear market territory — a decline of more than 20 percent from their highs. Through Monday, the S&P 500 was down about 19 percent.
The price of oil, which had slumped by a quarter on Monday, rose about 8 percent on Tuesday, with Brent crude trading at about $37.30 a barrel. But oil prices remain down more than 40 percent this year.
Trump pitches Senate Republicans on a payroll tax cut.
President Trump briefed Senate Republicans on Tuesday on his ideas for an economic stimulus package to respond to the coronavirus, including a payroll tax cut.
But the idea of a payroll tax reduction is running into bipartisan opposition on Capitol Hill, where Democrats are openly hostile to the idea and some Republicans, including Senator Mitch McConnell, are skeptical.
Mr. Trump has suggested the tax cut as part of an array of measures to bolster the economy, which some experts fear is headed into a recession amid the global coronavirus outbreak. But Mr. McConnell has privately discouraged discussion of the idea, according to people familiar with his thinking.
Mr. Trump discussed the coronavirus response with Senate Republicans at their policy luncheon on Tuesday, along with Steven Mnuchin, his Treasury secretary, and Larry Kudlow, his top economic adviser.
“Stay calm. It will go away,” Mr. Trump, who has been accused of understating the seriousness of the epidemic, told reporters after the meeting. “It’s really working out, and a lot of good things are going to happen.”
Walmart updates its leave policy.
Walmart, the nation’s largest employer, said it was taking steps to ensure that its 1.4 million workers would continue to be paid if they contracted the virus or were subject to a quarantine.
The company said employees forced into a mandatory quarantine would receive up to two weeks of pay and their absence would not be counted against their attendance record. Additionally, any U.S. worker with the virus who was unable to return to work would be paid up to 26 weeks.
The new policy, announced in an email to employees on Tuesday, comes as concerns mount for low wage workers who risk lost wages if they miss work.
Walmart confirmed on Tuesday that an employee at a store in Cynthiana, Ky., had tested positive for the virus.
A toymaker explains how the outbreak will hurt.
As the coronavirus epidemic spreads around the world, companies are less worried about factory shutdowns among their Chinese suppliers and more about a lack of customers in the United States.
Some have already been forced to take action. Jay Foreman, the chief executive of toy company Basic Fun, said the coronavirus crisis had forced him to lay off 18 of the company’s 175 workers on Friday — 10 in the United States, six in Hong Kong and two in Europe.
“China is slowly starting to open up, so we’re getting shipments,” said Mr. Foreman, whose company makes Tonka Trucks, Lite-Brite and Tinkertoy. “But now what I‘m worried about is a demand scenario in the United States, where people decide the only thing they’re buying is hand sanitizer and Wet Wipes and Campbell’s Soup, and they’re not spending any money.”
Saudi Arabia fires a new shot in its oil-price war with Russia.
The root of Monday’s financial market meltdown was the start of an oil-price war between Saudi Arabia and Russia over the weekend, when the Saudis slashed their prices after Russia refused to join OPEC in production cuts.
On Tuesday, Saudi Aramco, the national oil company, said that it would produce 12.3 million barrels a day of crude oil in April, a significant jump from its average of 9.7 million barrels a day.
Although it is not clear how much of this oil would come from storage, the company will likely sharply increase production. Saudi officials have said that they need to sell more oil to compensate for lower prices, and Aramco is offering deep discounts on its oil to win over buyers.
The sudden upheaval in the oil markets may take months to assess, but the impact on the American economy is bound to be considerable, especially in Texas and other states where oil drives much of the job market.
Many smaller American oil companies could face bankruptcy if the price pressure goes on for more than a few weeks, while larger ones will be challenged to protect their dividend payments. Thousands of oil workers are about to receive pink slips.
On Tuesday, Occidental Petroleum said it would slash its quarterly dividend and capital spending plan in response to the drop in oil prices.
Airlines are suspending service to Italy and cutting back elsewhere.
Several airlines on Tuesday announced the temporary suspension of all flights to and from Italy, a day after the country announced a nationwide lockdown to combat the coronavirus outbreak.
Spanish authorities barred all airlines from Spain, including Iberia and Vueling, from operating either inbound or outbound Italian flights, while British Airways announced the immediate suspension of flights until April 4 and Ryanair said that it would suspend all of its domestic flights in Italy and international flights to Italy.
Alitalia, Italy’s flagship carrier, said it would continue services but gave the passengers the option to rebook or reroute their flight free of charge.
Airlines in the United States also said on Tuesday that they were further slashing service and costs in response to the dramatic decline in bookings caused by fear over the coronavirus.
Speaking at an investor conference on Tuesday, Ed Bastian, chief executive of Delta Air Lines, announced that the airline would cut domestic service by about 15 percent.
Here’s what else is happening.
President Trump plans to meet with senior executives from the country’s biggest banks — including Goldman Sachs, Bank of America, Wells Fargo, Citigroup and JPMorgan Chase — along with community bankers, at the White House on Wednesday.
The Food and Drug Administration said on Tuesday that it would stop routine inspections of food, drugs and medical devices overseas through April, citing the worldwide spread of the coronavirus.
The World Trade Organization on Tuesday suspended further meetings until March 20, following the confirmation that one of its staff members had contracted the virus.
The Securities and Exchange Commission, in response to a potential coronavirus case, on Monday required a part of its staff to stay away from the agency’s Washington headquarters and advised all other employees there to work from home as well, a person briefed on the matter said.
An employee at Point72, the hedge fund run by Steven A. Cohen, has tested positive for the novel coronavirus. Other workers based on the same floor of Point72’s Hudson Yards location on Manhattan’s west side have been asked to work at home for the next two weeks.
President Trump on Tuesday called the Federal Reserve “pathetic,” saying it failed to cut interest rates fast enough and renewing a regular gripe. “Our pathetic, slow moving Federal Reserve, headed by Jay Powell, who raised rates too fast and lowered too late, should get our Fed Rate down to the levels of our competitor nations,” he tweeted on Monday.
Reporting and research were contributed by Jeanne Smialek, Alexandra Stevenson, Sheryl Gay Stolberg, Alan Rappeport, Jack Ewing, Stanley Reed, Michael Corkery, Kevin Granville, Tiffany Hsu, Kate Kelly, Matthew Goldstein, Brooks Barnes, Iliana Magra and Niraj Chokshi.