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Headlines moving the stock market in real time.
Stocks have crashed due to the coronavirus outbreak. Is it time to go all into stocks now at cheaper prices?
Is it time to buy stocks amid the coronavirus scare? Perhaps.
Investors dumped stocks Friday morning as the rapidly spreading coronavirus outbreak raised fears of a possible global recession. The Dow shed more than 1000 points in early trading, down more than 4%. The S&P 500 plunged 4%. The three main stock indexes are set to post their sharpest weekly drop since the global financial crisis in 2008. Rattling investors: the rapid spread of the coronavirus outside of China, and that has countries around the world preparing for a possible pandemic. Friday's selling was broad-based. Tech and cyclical stocks led the list of decliners. Virus fears have wiped out nearly $3 trillion off the combined market value of companies listed on the S&P 500. Treasury yields also declined. That deepened the so-called yield curve inversion which has historically been an indicator of a looming recession. And traders are now pricing in with greater probability interest rate cuts by the Federal Reserve. Investors got discouraging economic data before the market opened. Consumer spending in the U.S. rose less than expected last month. That loss of momentum could have been exacerbated by the rapidly spreading coronavirus.
A potential Bernie Sanders presidency is a bigger concern for Wall Street than the coronavirus outbreak, several investors say.
(Bloomberg) -- Fear over the economic fallout from the spreading coronavirus continued to rattle global markets, sending U.S. equities to a seventh straight loss and sparking demand for safe assets from Treasuries to the yen.The S&P 500 plunged more than 2% Friday and is now down almost 15% from its record. The index is headed for for its worst week since 2008 and is mired in its longest slump in over three years. The Dow Jones Industrial Average sank to the lowest since June. The Cboe Volatility Index hit the highest in two years.Stocks briefly pared lossess in afternoon trading when Federal Reserve Chairman Jerome Powell said the central bank is monitoring the virus and will act as appropriate, adding that the “fundamentals” of the economy remain strong. Bank of America strategists now expect the Fed to cut rates by 50 basis points at its March meeting.Banks led the sell-off, with JPMorgan sinking 6%, as travel restrictions took hold and trading floors scrambled for contingency plans if offices are required to close. Airlines tumbled after Lufthansa curbed short-haul flights and United pared back travel in Asia. Only 37 stocks in the S&P 500 rose.Treasury yields bounced off of all-time lows, though the two-year remained below 1%. Crude hit $45 a barrel, while gold tumbled the most intraday since June 2013. European shares sank to the lowest since August.Terminal users can read more live analysis in Bloomberg’s markets blog.U.S. equity markets shuddered as the World Health Organization raised its global risk level for the virus and a White House official suggested some schools could close. More major companies warned that disruptions could upend sales and profit forecasts. Germany quarantined about 1,000 people and Switzerland banned large events, leading to the Geneva car show being canceled. Iran and South Korea revealed more infections while the first cases appeared in Mexico and Nigeria, Africa’s most populous country.“Investors are selling stocks first and asking questions later,” Keith Lerner, SunTrust’s chief market strategist, wrote in a note. “We are seeing signs of pure liquidation. ‘Get me out at any cost’ seems to be the prevailing mood. There is little doubt the coronavirus will continue to weigh on the global economy, and the U.S. will not be immune. There is much we do not know. However, it is also premature to suggest the base case for the U.S. economy is recession.”Downgrades to the global outlook keep rolling in and money markets now see three Federal Reserve interest-rate cuts this year. Bank of America predicted that the global economy will see its weakest year since the financial crisis as the virus damages demand in China and beyond.“Asset prices diverged significantly from growth in the past year, in part because of central bank policy, but also because passive investment’s main signal is price action,” reckons James McCormick, global head of desk strategy at NatWest Markets. “The COVID-19 escalation runs a real risk of virtuous cycle turning to a vicious one. Either way, given where growth estimates are heading for the next few months, I’d expect more downside.”These are the main moves in markets:StocksThe S&P 500 Index fell 3.2% as of 2:08 p.m. New York time.The Nasdaq 100 Index dropped 2.5%.The Dow slid 3.7%.The Stoxx Europe 600 Index decreased 3.5%.Germany’s DAX Index slid 3.9%.The MSCI Asia Pacific Index dropped 2.6%.CurrenciesThe Bloomberg Dollar Spot Index rose 0.2%.The euro fell less than 0.1% to $1.10.The British pound dipped 1% to $1.2760.The Japanese yen strengthened 1.28% to 108.20 per dollar.BondsThe yield on 10-year Treasuries declined nine basis points to 1.17%.The yield on two-year Treasuries decreased 13 basis points to 0.93%.Germany’s 10-year yield decreased five basis points to -0.60%.CommoditiesWest Texas Intermediate crude sank 5% to $44.73 a barrel.Gold futures decreased 3.4% to $1,586 an ounce.Bloomberg’s commodity index sank 2%.\--With assistance from Sam Potter, Cormac Mullen, Anchalee Worrachate, Gregor Stuart Hunter and Adam Haigh.To contact the reporters on this story: Jeremy Herron in New York at email@example.com;Vildana Hajric in New York at firstname.lastname@example.orgTo contact the editor responsible for this story: Jeremy Herron at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Short sellers on Wall Street are aware of a single risk that could spoil their party: A surprise rate cut or even liquidity injection from the Federal Reserve. That's according to IPO Edge Editor-in-Chief John Jannarone, who joined Cheddar TV live at the closing bell late Thursday as the S&P 500 and Dow Jones Industrial […]
(Bloomberg Opinion) -- Financial-market volatility is painful. From mom-and-pop investors suddenly seeing red in their 401(k) plans to large institutions scrambling to hedge their gigantic portfolios, this past week has been record-setting in any number of ways. The one example that’s bound to be repeated often: The S&P 500 Index plunged the most since 2008. Minds tend to wander in the same direction when hearing that particular year. So let me just say this right now: There’s virtually no evidence that the world is veering toward another financial crisis. The rapid decline in Treasury yields and the fastest correction ever in stocks is, at least as of now, purely a market-driven phenomenon. That’s bound to strain some mutual funds, no question. Maybe some hedge funds, too. But it’s hardly apocalyptic. Here are just a couple of examples of scary charts that truly don’t reflect anything about the health of the financial system; rather, they are just another way of measuring the quick sell-off in equity markets.First there’s the often-cited market “fear gauge,” the CBOE Volatility Index (VIX). It jumped to as high as 49.48 on Friday, the highest level since the so-called Volmageddon episode in early 2018. Then there’s the fact that the Bloomberg U.S. Financial Conditions Index has been absolutely crushed in recent days and reached its lowest level since early 2016. But the inputs to this index are largely market-based, like the levels of the S&P 500 and the VIX, as well as yield spreads between Treasuries and corporate bonds rated triple-B and below investment grade, which have both widened significantly.So what sorts of metrics are worth watching to determine whether a banking crisis is unfolding beneath the market chaos? Some traders look to the London interbank offered rate and other money-market benchmarks. There, the three-month Libor plunged 11.8 basis points on Friday to 1.46275%, the steepest one-day drop since December 2008. This isn’t what you would expect to see if financial institutions were facing any sort of turmoil, given that it’s the rate at which large global banks lend to one another. The drop merely reflects expectations of significant central-bank easing in the near future. A spread known as FRA/OIS, which measures market expectations for the gap between Libor and the Overnight Index Swap Rate, are rising a bit but still remain comfortably below levels seen in each of the past two years and certainly nowhere near the levels of the crisis.Then, of course, there’s the Federal Reserve. There’s a lot of frustration that policy makers haven’t yet indicated that interest-rate cuts are imminent. “I wouldn’t want to prejudge the March meeting,” St. Louis Fed President James Bullard said on Friday, mimicking comments earlier this week from other policy makers. “We are going to want to monitor events right up until the meeting.” This could be contributing to the market’s angst.Still, few can dispute that the central bank has made significant strides to insulate the banking system from market stress. The Fed’s balance sheet expanded rapidly in the final months of 2019, which, somewhat ironically, had been cited by some investors as the reason behind the surge in equity prices. Stocks may be tumbling, but reserves at the Fed sure aren’t: They reached $4.18 trillion earlier this month, up from $3.76 trillion at the end of August. Expanding out to include the European Central Bank, the Bank of Japan and the Bank of England, their balance sheets as a percentage of gross domestic product remains close to a record. It’s an open question whether that’s a good thing for the health of their respective economies, but it makes it easier for the banking sector to withstand a severe slowdown.That’s not to say financial system is impenetrable. September’s repo meltdown served as a stark reminder of what can happen when critical market plumbing stops working. The Fed was able to step in, though, and it’s mostly functioning normally now.There’s still room for improvement. That’s why it was such a big deal this week that JPMorgan Chase & Co. said it plans to borrow funds through the Fed’s emergency lending facility from time to time this year in an exercise designed to break the stigma attached to it. The discount window is intended to provide emergency liquidity to banks that otherwise have healthy balance sheets. Randal Quarles, the Fed’s vice chairman for banking supervision, has said better access to the window would reduce demand for excess reserves at the Fed which in turn would enhance liquidity in repo and other money markets.I have written before about how the financial crisis caused a fundamental shift in who shoulders market risk now. Instead of Wall Street banks holding troves of corporate bonds and other risky assets, and stepping in when the markets are chaotic, they’ve tended to reduce their inventories over the past decade. That means asset managers, which are far less essential to the underpinnings of the global economy, will be increasingly on their own when losses start to mount. That’s a healthy development.As Bloomberg News’s Sebastian Boyd put it, in 2008 “reasonable minds could wonder out loud whether we were watching the death throes of global capitalism.” You wouldn’t be rational saying that today. Investors are witnessing the outbreak of a virus that governments around the globe are struggling to contain, which in turn has caused pockets of the global economy to grind to a standstill. Germany is quarantining 1,000 people. Switzerland is banning large events, including the Geneva car show. Milan looked like a ghost town. In such an environment, is it any wonder that the share prices of global companies have repriced, or that sovereign debt markets are bracing for a severe hit to growth?The coronavirus has infected markets, the economy and the habits of people worldwide. But if it’s any consolation, the financial system is proving so far to be immune.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Marathon Petroleum (MPC) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
Oil prices sank for a sixth consecutive day early on Friday and were on track for their biggest weekly drop in more than four years as the coronavirus continues to spook the markets
(Bloomberg) -- The worst week for stocks since 2008 looks even scarier in the volatility market.This below chart shows the difference between the daily percent change in the S&P 500 and the net change in the VIX Index, a gauge of implied volatility often called Wall Street’s fear gauge. Readings above the red line indicate the VIX increase was larger than expected for a given retreat in stocks, or the fall is smaller than anticipated for an increase in equities.Only two episodes since 2018 are farther away from the regression line than Friday’s reading (denoted in red) during a session associated with a material decline in the S&P 500. One is Volmaggedon, the 20-point jump in the VIX in February 2018. The other reading is Thursday.The VIX rose as far as 49.48 on Friday, its highest level since the market turmoil that followed the August 2015 devaluation of the Chinese yuan.To contact the reporter on this story: Luke Kawa in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jeremy Herron at email@example.com, Brendan Walsh, Rita NazarethFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- When markets are up, President Donald Trump claims credit. Now that they’re falling, it’s someone else’s fault.This week’s stock market plunge sparked by fears the coronavirus will drag down the economy posed a unique dilemma for a president who has staked his 2020 re-election campaign squarely on U.S. economic growth.Trump has grappled with how to respond. Earlier this week, he appeared to downplay risks from the virus and suggested that investors buy the dip in shares. As the sharp descent continued, he shifted blame to the media and Democrats.“I think the press has been really out of line,” Trump told reporters Thursday evening at the White House when asked about the market dive. The benchmark S&P 500 index plunged as much as 4% on Friday before cutting that decline in half, opening a seventh straight day of losses. It was the longest slump for the index in more than three years and potentially the worst week since the financial crisis.The Dow Jones Industrial Average has shed more than 4,000 points this week. Crude slid toward $45 a barrel and gold lost 2%.While analysts say the sell-off is driven by concern about the spread of coronavirus and U.S. preparations to combat an outbreak, Trump has constructed an alternative narrative. He said that investors are selling in part out of fear he’ll lose re-election in 2020, citing the Tuesday night debate performance of the candidates vying for the Democratic nomination.“They see these characters up on stage, and anything can happen in an election,” Trump said. “And if any of these people ever did happen to assume the presidency, you would have a crash like we’ve never seen before. And I think the market’s also putting that into the equation.”While markets remain smartly higher under Trump, with the S&P 500 up 35% since Election Day in 2016, the declines of the last week have cut the return under his presidency by more than a third.Trump’s top economic adviser, Larry Kudlow, on Friday encouraged long-term investors to get back into the market or increase their positions.“Our threat assessment is low and the economy is fundamentally sound,” he said in an interview on Fox Business Network.Kudlow said he believes “the market has gone too far” and investors “should not over-react.”He added that the government is not currently planning “precipitous policies” such as lifting tariffs on Chinese goods. “We just think the economy is sound,” he said.Kudlow acknowledged that the government has the capability to increase production of critical supplies such as protective masks but said he didn’t want to specify what actions might be taken. Reuters reported on Thursday that officials were considering invoking the Defense Production Act to order manufacturers to make more masks and other gear.Bond traders are increasingly betting that Federal Reserve may be forced into an emergency interest rate cut for the first time since the global financial crisis. The wagers have driven down benchmark yields in U.S. Treasuries to record lows and spurred the biggest one-day drop in the London interbank offered rate for dollars since the 2008.Trump summoned reporters after markets closed on Thursday to an event to commemorate African American History Month. He ended the talk with repeated defenses of his administration’s approach to the global coronavirus outbreak.Democrats and Republicans “should not make this a political issue,” he said, before assailing Democratic Senate Minority Leader Chuck Schumer. Trump praised himself for being “very good” and “calming” during a news conference on the health crisis a day earlier, during which he belittled Schumer and House Speaker Nancy Pelosi.Trump, more than any president in living memory, has bound his political fate to the trajectory of markets. For most of his time in office, markets have rallied, and he has regularly and unabashedly taken credit for the ascent.“We have set 144 records on the stock market in three years. One-hundred-forty-four records. One-hundred-forty-four records, record stock markets. Do you know what that means? That is your 401(k)s are up,” Trump told supporters last week at a rally in Phoenix, Arizona.But this week isn’t the first time Trump has been quick to blame other forces when markets turn.Last fall, when gloomy economic data sent the equities down, Trump singled out two favorite targets: Federal Reserve Chairman Jerome Powell and Democrats who were then pursuing his impeachment in the U.S. House.(Updates with additional Kudlow comments beginning in 11th paragraph.)\--With assistance from Jordan Fabian.To contact the reporter on this story: Josh Wingrove in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Alex Wayne at email@example.com, Justin BlumFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Whatever happens in Friday trading, however this week and month closes out, two things are certain in global markets: The scale of February’s moves have few precedents, and everyone involved is going to have stories to tell.The S&P 500 Index is heading for a seventh day of declines, which would be the longest losing streak since 2016. Some $6 trillion has been wiped off global stocks in this sell-off, while already expensive government bonds have seen so much demand that record-low yields seem to be printed daily.“It’s more about survival than return on capital today,” said John Moore, the head of trading at Berkeley Capital Wealth Management. “It was a sleepless night last night, and we may get another one tonight, but it’s the weekend soon so fingers crossed things settle.”This sell-off comes with added edge: velocity. In a swoon that summed up the week, the Dow Jones Industrial Average at one point plunged 500 points in 45 minutes on Thursday. The correction in the S&P 500 Index was the fastest ever.On trading floors and research desks the world over, market players are still catching their breath -- and bracing for whatever comes next.Moore says they’re not trying to trade the market because where it’s going is anyone’s guess. He and his colleagues are busy updating clients, keeping accounts well-funded and generally “riding the storm,” he said.27 HoursUnsurprisingly, lack of sleep has been something of a common theme. At Futures First, research analyst Rishi Mishra said some work mates had spent up to 27 hours at their desks. For the younger cohort, it’s a once-in-a-career event.“Many of us who weren’t trading during the 2008 crisis see this as one of those days you could tell your grandchildren about,” Mishra said. “It’s been mental, and that’s probably an understatement.”In fact ominously, in the markets themselves, comparisons with 2008 and the global financial crisis are building. The S&P 500 was down 2.4% as of 9:46 a.m. in New York on Friday, comfortably on track for its worst week since early October 2008. That came amid the turmoil following the collapse of Lehman Brothers. European shares are on course to do the same.“If you think of the banking crisis, where credit was restrained, this is as bad in which demand just drops off a cliff,” said Mark Nash, head of fixed income at Merian Global Investors. “Pandemics are up there with banking and political crisis.”Expectations that the market turmoil or economic impact of the coronavirus will force the Federal Reserve to cut interest rates are surging -- in what could even be the first emergency cut since 2008.‘Big Toll’Of course, in many corners of the market traders have been lamenting a lack of volatility for years. For them, this may be the opportunity they’ve been dreaming about. But for everyone else the shift in sentiment -- less than three weeks ago global stocks were at the highest on record -- has been brutal.“This week is taking a big toll on all of us physically and mentally, it’s like living in a continued hangover,” said Ricardo Gil, head of asset allocation at Trea Asset Management in Madrid. “There’s lots of phone calls, lots of meetings and always with the feeling that you are behind the curve as, even if it was clear that markets were going to fall, the speed of the moves are so sharp. Everything is very overreacted and there’s too much fear.”Gil isn’t alone in thinking the current displays of market panic might be overdone. Bank of America Corp. strategists led by Michael Hartnett said in a note dated Thursday that their models show that U.S. and European equities are “extremely oversold” and that the S&P 500 between 2,800 and 3,040 is a good point to start buying again. The gauge was at 2,907.80 on Friday.As Gil and his colleagues look for opportunities on expectations of a March rebound, only time will tell if any such optimism is justified. Until then, traders, investors and analysts will remain caught in the maelstrom.“As you can imagine, it’s a bit tense,” said Zoeb Sachee, head of European government bond trading at Citigroup Inc.(Updates with Friday trading.)\--With assistance from Ksenia Galouchko, Anchalee Worrachate, Abhishek Vishnoi and John Ainger.To contact Bloomberg News staff for this story: Sam Potter in London at firstname.lastname@example.org;Macarena Munoz in Madrid at email@example.com;Kit Rees in London at firstname.lastname@example.org;Priscila Azevedo Rocha in London at email@example.com;William Shaw in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Sam Potter at email@example.com, Cecile Gutscher, Yakob PeterseilFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Another interest rate cut by the Fed and lower business investments are likely to put further pressure on banks' revenues and in turn hurt profitability.