Stocks swing wildly and close higher: March 10, 2020

By CNN Business

Updated 7:58 p.m. ET, March 10, 2020
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10:54 a.m. ET, March 10, 2020

Chevron warns of spending cuts after worst day since Black Monday

From CNN Business' Matt Egan

The oil crash is already forcing Big Oil to consider hunkering down.

Chevron, America's No. 2 oil company, said Tuesday it is considering spending cuts that would lower its short-term oil production.

The oil giant said in a statement it's "already sharpening our focus" on reducing costs by targeting $2 billion in savings. Chevron (CVX) did not say whether that would include layoffs.

Monday's collapse in oil prices -- crude's worst day since 1991 -- will undoubtedly cause companies to abandon some shale oil projects that have suddenly become unprofitable. Chevron has spent heavily in recent years to build a powerful presence in the Permian Basin shale oilfield of West Texas.

"The impact of lower prices is clearly felt across the US energy industry," Chevron said. "It is difficult to predict how this will play out in the weeks and months ahead. Chevron has seen similar downturns before and is well positioned for a low price environment."

Wall Street seemed less certain of that Monday.

Chevron plummeted 15%, its worst day since the Black Monday crash of October 1987 as part of a sharp decline throughout the energy industry. Chevron climbed 5% Tuesday as oil prices jumped 8%.

10:35 a.m. ET, March 10, 2020

Oil rebound continues

From CNN Business' Anneken Tappe

Oil prices keep crawling back from yesterday's steep losses.

US oil was up 8.5% at $33.79 per barrel, following a whopping 26% drop Monday.

The global oil benchmark Brent Crude was up about 7.9% at $37.08 a barrel. Brent had plunged 24% yesterday.

US oil prices have collapsed more than 40% since the start of the year. Although it's not the first time commodities have been hit this hard, the low prices are here to stay, according to Samuel Burman, assistant commodities economist at Capital Economics.

This week's oil collapse is different than the 2008 or 2015-16 selloffs, which were driven by worries about a drop in demand associated with a decline in economic activity.

Key differences include that "until there are signs that the virus is being brought under control, and that containment measures are being lifted, policy stimulus is unlikely to boost global economic activity and thus oil demand," said Burman.

The collapse of OPEC talks last week mean that oil supply will also increase, making matters worse.

10:10 a.m. ET, March 10, 2020

Jeff Bezos and Bill Gates lost more than $10 billion yesterday

From CNN Business' Jordan Valinsky

Monday's market rout was bad for everyone, but the losses were especially eye-popping for the world's two richest men.

Amazon (AMZN) founder and CEO Jeff Bezos lost $5.5 billion, while Microsoft (MSFT) founder saw $5.1 billion disappear from his fortune. The pair have lost a combined $10 billion this year as of yesterday's close, according to Bloomberg's Billionaire Index.

But things are looking up for the billionaires. With stocks rebounding, Forbes' real-time index forecasts them recouping some of those losses.

9:59 a.m. ET, March 10, 2020

Stocks rebound from worst day since 2008

From CNN Business' Anneken Tappe

US stocks rallied at Tuesday’s opening bell. The market is set to rebound from its worst day since 2008, which included the worst point-drop on record for the Dow.

Stocks bounced back after the White House indicated it will propose a payroll tax cut to ease the burden from the coronavirus fallout.

Watch:

9:05 a.m. ET, March 10, 2020

After epic crash, Buffett and Icahn-backed Occidental Petroleum is spiking

From CNN Business' Matt Egan

Shale oil giant Occidental Petroleum is getting whipped around by the historic volatility in the energy market.

Occidental, the debt-laden driller backed by both Warren Buffett and Carl Icahn, crashed 53% on Monday after oil prices suffered their worst day since 1991.

However, the entire oil industry is making a comeback Tuesday in response to beaten-down prices and a sharp rebound in crude. Occidental is no exception: The stock is surging nearly 30% premarket.

The oil crash underscores why Icahn has slammed Occidental's risky takeover of rival driller Anadarko Petroleum last year. Icahn warned the company would face enormous financial trouble if crude stumbled.

But the controversial Anadarko deal was blessed by Buffett's Berkshire Hathaway, which provided equity financing. Berkshire is also one of Occidental's leading shareholders.

8:43 a.m. ET, March 10, 2020

Today's market rebound is a 'dead cat bounce,' says Nouriel Roubini

From CNN Business' Anneken Tappe

Stock futures point to a strong rebound rally today after Monday's dramatic losses. But can these gains be sustained?

Many market participants are skeptical. After all, the fundamentals -- a global pandemic and an oil price war -- have not changed in the past hours.

A potential fiscal stimulus from the US government could help ease the pain, but it's not that simple, said Nouriel Roubini, economist and CEO of Roubini Macro Associates.

A "dead cat bounce" is a brief post-selloff recovery that cannot be sustained.

9:23 a.m. ET, March 10, 2020

The US economy will contract next quarter, BMO predicts

From CNN Business' Anneken Tappe

America's economy is expected to grow by far less this year than most economists expected just a month or two ago. The global coronavirus outbreak is responsible for the damage.

BMO has cut its second-quarter GDP growth estimate to -2% to account for a hit to the US oil industry and the likelihood that parts of the economy could be shut down to control the outbreak. For the full-year, GDP growth is expected at 1%.

This would be by far, the weakest year for the economy since the great recession," BMO chief economist Michael Gregory said in a note Tuesday.

Before the outbreak, the bank expected the US economy would grow by 1.8% this year.

America's employment rate, which is sitting at a historically low level of 3.5%, is also expected to rise. BMO forecasts 3.9% in the second quarter.

With a downturn in the oil industry because of a price war amid oil-producing countries, and a hit to demand, US inflation will likely also remain sluggish. This will give the Federal Reserve the room to cut rates further, Gregory said.

8:27 a.m. ET, March 10, 2020

Why this market shock is not like 2008

From CNN Business' Julia Horowitz

Markets are moving back up on Tuesday as some investors dip their toes back in.

But investors still want to know: Is this a repeat of the 2008 financial crisis?

The BlackRock Investment Institute acknowledged Monday that the scale of market moves have been "reminiscent" of 2008. But the asset manager sees fundamental differences.

BlackRock said in a note to clients:

"The economy is on more solid footing and, importantly, the financial system is much more robust than it was going into the crisis of 2008."

Wall Street has been quick to note that banks are better capitalized this time around due to new regulations, and that debt levels, while high, are concentrated in less risky areas.

Corporate debt, particularly in the energy sector, could pose a problem, but doesn't look "large enough (yet) to trigger a global crisis," Neil Shearing, group chief economist at Capital Economics, said Monday.

This should allow for a faster economic rebound after the coronavirus is brought under control. "Fear can take [the market] lower, but expect [a] quick recovery when health threat recedes," former Goldman Sachs CEO Lloyd Blankfein tweeted Monday. "Unlike '08, will avoid systemic damage."

One issue, however, is that governments and central banks were able to throw massive amounts of money at the problem in 2008. That may not be as effective this time around.

President Donald Trump said Monday he would press for a payroll tax cut, but if people are staying at home, they're unlikely to pump that money back into the economy.

Central banks, meanwhile, have far less ammunition at their disposal, with interest rates already at or near historic lows. And there are concerns that monetary policy remedies take time to flow through the system.

8:41 a.m. ET, March 10, 2020

Netflix and chill due to coronavirus? Not so fast

From CNN Business' Paul R. La Monica

There is a belief among some investors that Netflix (NFLX) actually could benefit from the coronavirus outbreak. The stock is still up 7% this year despite Monday's massive sell-off.

Why? The rationale is that more nervous consumers will stay home and binge watch shows. But Netflix may not be positioned for a coronavirus boost after all, according to Needham analyst Laura Martin.

Martin gave three reasons why (13 might have been more fitting) Netflix won't get a COVID-19 bump in a research report Tuesday morning.

  1. Netflix charges a fixed monthly rate. It doesn't matter if people watch more.
  2. International subscribers might cut back on luxury items and would be more likely to cancel subscriptions if the coronavirus spreads
  3. Netflix's bonds are rated junk, which might make it more difficult for the company to raise capital it needs to fund its massive content budget.

Martin currently has an "underperform" rating on Netflix, which is essentially a sell.