Stocks close in the red despite Fed's rescue efforts: March 23, 2020
US stocks ended in the red on Monday, after the Senate failed for a second time to vote through the coronavirus economic relief package.
A slew of new stimulus measures from the Federal Reserve provided a boost to premarket trading, but it didn’t help stocks end the regular trading day higher.
The Dow finished 3%, or 583 points, lower.
The S&P 500 closed down 2.9%. The index has now erased all of the gains accumulated under the Trump administration.
The Nasdaq Composite finished 0.3% lower.
The US Federal Housing Finance Agency stepped up today to protect renters in multi-family properties.
Fannie Mae and Freddie Mac will grant owners of multi-family properties who are "negatively affected by the coronavirus national emergency" forbearance of mortgage payments -- as long as they don't evict renters who are unable to pay their rent because of the coronavirus impact.
“Renters should not have to worry about being evicted from their home, and property owners should not have to worry about losing their building, due to the coronavirus," said FHFA director Mark Calabria in a statement.
US stocks sank sharply again this afternoon after Senate Democrats blocked a coronavirus economic stimulus bill from advancing. It was the second time in two days Democrats blocked the measure as talks over the giant bill continue.
The global economy is on track for a short but sharp recession this year, according to a statement from the International Monetary Fund, as the impact from the coronavirus pandemic weighs on economies throughout the world.
The outlook for worldwide economic growth this year is negative, said Kristalina Georgieva, a managing director of IMF, in a statement Monday. The impending recession will be "at least as bad as during the global financial crisis or worse," she said.
The IMF expects that growth will rebound in 2021.
"The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be," Georgieva said.
Department store giant Macy's (M) was already struggling when the economy was in high gear. It just couldn't compete with the likes of Amazon (AMZN), Walmart (WMT), Target (TGT) and TJ Maxx and Marshalls owner TJX (TJX). Macy's also didn't have a successful digital strategy.
Now that retail sales are expected to plunge as consumers pull back as a result of the coronavirus, Macy's future looks even more bleak. Shares of Macy's plummeted 15% Monday to an all-time low of barely above $5 a share after CFRA analyst Camilla Yanushevsky cut the stock to a "sell." The stock is now down 70% this year.
Macy's announced late Friday that it was suspending its dividend and cutting capital expenditures to conserve cash, accessing a $1.5 billion credit facility and withdrawing its 2020 sales and earnings targets.
CFRA's Yanushevsky said in her report that Macy's faces "heightened financial vulnerabilities" and is likely to lag both the broader market and other retail stocks over the next 12 months due to the coronavirus pandemic.
In other words, it may take a miracle on 34th Street for Macy's to get back on track anytime soon.
At its low point today, the Dow erased all the gains it accumulated since the November 2016 election of President Donald Trump.
The index briefly fell below 18,333 points, the level at which it closed on Election Day in 2016.
Since that date, the Dow climbed more than 60% to its all-time high of 29,551 in February. The coronavirus crisis has made these gains vanish in a matter of weeks.
The Dow has bounced back since dropping below that key level today. Where it closes today remains an open question.
Royal Caribbean Cruises (RCL) has received a $2.2 billion revolving line credit to help the beleaguered company stay afloat, it announced Monday.
The move was made to "bolster its liquidity," bringing its total to $3.6 billion.
The cruise industry is in dire straits as the world shuts down because of coronavirus. Royal Caribbean's stock briefly halted trading. It fell 1% Monday and is down more than 80% for the year.
"This is a period of unprecedented disruption for the cruise industry," said Jason Liberty, the company's chief financial officer said in a release. "We continue to take decisive actions to protect the company's financial and liquidity positions as they enable us to keep focused on our guests, our crew and our long-term plans."
Stocks are deep in the red at midday. The Washington gridlock on fiscal stimulus measures has overshadowed hopes that the Federal Reserve's onslaught of new monetary moves would lift markets higher.
The novel coronavirus outbreak has forced many people to stay home and work -- and kids are "going" to school virtually as well. That's a big reason why video conferencing company Zoom Video Communications (ZM) has been one of the rare Wall Street winners while the broader market has plunged into bear status.
Shares of Zoom soared nearly 20% Monday to a new all-time high and are now up an astonishing 130% so far in 2020. CEO Eric Yuan said during an earnings conference call earlier this month that "overnight, almost every business really understands they needed a tool like this. This will dramatically change the landscape. I truly believe in the future, every business would turn to video for the remote workers for the collaboration."
Another web video company, virtual medicine firm Teladoc, is also surging on social distancing measures. Teladoc (TDOC) shares were up about 15% Monday to a new record highs and have nearly doubled this year.
Teladoc said in a release last week that it is "experiencing unprecedented daily visit volume in the United States as the novel coronavirus continues to spread globally." Patient visits were up 50% from the prior week to about 100,000 -- and a big chunk are reporting breathing problems due to the virus.
“We are seeing more patients and more of those patients are experiencing upper respiratory issues,” said Teladoc chief medical officer Lew Levy, MD, in the release.