The Dow’s plunge continues a week of rampant volatility with the broad index closing up more than 1,000 points Tuesday off news of a $1 trillion stimulus proposal from the White House. Oil prices sank to an 18-year-low in early trading as the commodity was walloped by cratering demand amid widespread travel restrictions and social distancing. Brent crude, the global oil benchmark, was down more than 5.7 percent to trade at $27 a barrel.
“If 2008 was the Great Financial Crisis, this is the Great Virus Crisis,” said Ed Yardeni, president of Yardeni Research. “It’s all at once a health crisis, financial crisis and economic crisis. We need to fix the health part of it before we have it solved, but we can take financial and fiscal steps to blunt its effects. We are starting to do that now.”
The declines come despite extreme government intervention aimed at cushioning the economy against a coronavirus-fueled recession. The Federal Reserve began the week by slashing interest rates to near zero and reviving a financial crisis-era “quantitative easing program,” and on Tuesday the central bank announced plans for a special fund to keep credit flowing during the coronavirus outbreak.
Treasury Secretary Steven Mnuchin also announced that the White House was looking at giving direct cash payments to Americans as part of an $850 billion stimulus package, which the administration hopes will stanch the economic free fall caused by the coronavirus. President Trump initially supported a payroll tax holiday but said Tuesday that it would take too long to deliver relief to Americans.
European markets also tanked Wednesday as governments introduced sweeping, blank-check stimulus moves to prop up their economies, with the benchmark Stoxx 600 index down more than 4.3 percent in midday trading. Germany, Spain and the United Kingdom have unleashed hundreds of billions in rescue package funding. French President Emmanuel Macron went so far as to promise that no French company will be allowed to fail because of the coronavirus impact, saying the government would provide assistance through loans, delayed tax payments or even nationalize industries to keep them afloat.
“People are panicked,” said Nancy Tengler of Tengler Wealth Management. “If there’s too much stimulus, then the market take is things must be really bad. And if there’s not enough, then there’s no leadership. People are worst-case-scenario-ing it.”
On Tuesday, all 50 states had confirmed cases of the virus, while the number of confirmed cases worldwide crept past 200,000.
Industries that have been hit hardest by the outbreak, such as airlines, casinos and hotels, are lobbying for government assistance. The United States is expected to lose 4.6 million travel-related jobs this year as the coronavirus outbreak levies an $809 billion blow to the economy, according to startling projections released Tuesday by the U.S. Travel Association. 4 million jobs have been eliminated already or are on the verge of being lost in the next few weeks, the American Hotel & Lodging Association said.
March 18, 2020 at 10:57 AM EDT
Honda temporarily shutters 12 production plants as demand slows
Japanese carmaker Honda plans to take 12 North American manufacturing plants offline from March 23 to the end of the month in anticipation of a slowdown in demand for cars and service parts, the company announced Wednesday.
More than 27,000 workers will be affected by the shutdown, though the company said they would continue to be paid during the stoppage, which will reduce production by close to 40,000 vehicles. Honda will use that time to “continue deep cleaning of its production facilities and common areas to further protect associates upon their return to the plants,” it said in a statement.
In the U.S., seven factories will be hit by the temporary closure, including four in Ohio and one each in Alabama, Georgia and Indiana. Three plants will close in Canada and two in Mexico.
“This production adjustment also will allow Honda associates to better prepare and adjust family plans in relation to regional directives to close schools to stop the spread of the [covid 19] virus,” Honda said in a statement. “This will enable working parents to determine how best to manage the needs of children staying home from school and other required lifestyle adjustments.”
Honda was the second automaker to announce a production slowdown on Wednesday. Volkswagen, the world’s largest car company, said it would close its European manufacturing plants on Thursday due to supply-chain disruptions and falling demand caused by the spread of the novel coronavirus. North American plants would remain open, the company told The Washington Post.
By Jacob Bogage
March 18, 2020 at 10:50 AM EDT
White House stimulus plan envisions $2,000 for many Americans, $300 billion for small businesses
White House officials are working with congressional Republicans on an emergency stimulus package that could send two $1,000 checks to many Americans and also devote $300 billion towards helping small businesses avoid mass layoffs, according to two senior administration officials.
No final decisions have been made and talks with Republican leaders remain fluid, but the growing scale of the $1 trillion rescue plan is coming into sharper focus.
The White House will still need backing from Democrats before any plan can be pushed into law, but many Democrats have said they would support sending cash payments to Americans who are struggling to pay bills because of the virus’s economic impact. Still, multiple levels of negotiations remain.
By Erica Werner and Jeff Stein
March 18, 2020 at 10:14 AM EDT
Ikea closes all U.S. stores: ‘Unprecedented times call for unprecedented measures’
Furniture giant Ikea announced plans to close all 50 of its U.S. stores on Wednesday in response to the global spread of the novel coronavirus.
The Swedish self-assembly home goods chain has sprawling warehouse-style locations in 22 states and a “planning studio” in New York. Those locations will remain open to fulfill online orders for customer pickup. Before Wednesday’s announcement, the company closed American stores on a case-by-case basis.
“Unprecedented times call for unprecedented measures. This is the most responsible way Ikea can continue to care for our co-workers and our customers in a manner that is healthy and safe,” Javier Quiñones, Ikea retail U.S. president, said in a statement. “We are taking our role in containing this epidemic seriously, and we recognize the positive impact our actions could have on making life better for the millions of people who have been impacted by this crisis.”
The retailer said it would support employees through its “comprehensive benefits package and paid leave policy,” which includes health insurance, a 401(k) retirement plan and tuition assistance for staffers working at least 20 hours a week. It’s also canceled all nonessential travel and large in-person meetings.
Ikea, which according to its statement, employs 18,000 American workers, made a splash in 2016 with substantial increases to its family leave policy. New parents, based on their tenure with the company, are eligible for up to four months paid or partially-paid time off.
Ikea has already temporarily shuttered stores in Austria, Belgium, Canada, Czech Republic, Denmark, Germany, Italy, France, the Netherlands, Poland, Slovakia, Spain and Switzerland. It is beginning to reopen stores in China as the covid 19 risk recedes there.
By Jacob Bogage
March 18, 2020 at 9:03 AM EDT
Trump’s coronavirus plan includes industry bailouts that Republicans once opposed
Less than two hours after President Trump finished speaking Tuesday at the White House about his plan to bail out industries reeling from the coronavirus pandemic, Democrats made it clear they had their own priorities.
While the president spoke of helping airlines and cruise operators — and even individual companies like Boeing — prominent Democrats insisted that any crisis aid must include plenty of conditions designed to benefit workers.
From progressives like Sen. Sherrod Brown of Ohio to business-friendly figures like Sen. Mark Warner of Virginia, Democrats insisted that any corporate rescue include restrictions on stock buybacks and executive compensation along with provisions for paid sick leave, including for informal “gig economy” workers.
The president, who once criticized President Obama’s bailout of the U.S. auto industry for “ruining American industry,” now confronts the toxic politics of crisis-fighting. As his two most recent predecessors discovered in 2008-09, battling an economic emergency involves balancing competing imperatives: time and justice.
Yet it’s not just Democrats who are uneasy with the rush to throw money at the problem. Prominent Republicans such as Sen. Rick Scott and Rep. Matt Gaetz, both of Florida, said they oppose corporate bailouts.
By David Lynch and Jeff Stein
March 18, 2020 at 8:56 AM EDT
Volkswagen Group, world’s largest carmaker, to suspend production in Europe over coronavirus
Volkswagen Group announced it will suspend European production Thursday in response to the rapid spread of the coronavirus, disruptions to the automaker’s supply chains and plunging demand.
Factories in Germany, Slovakia, Spain and Portugal will wind down, as will components plants throughout in Europe, the world’s largest carmaker said late Tuesday. Production is expected to stop for two weeks, and workers will be fully compensated, the company told The Post Wednesday.
Ralf Brandstätter, chief operations officer of the Volkswagen Passenger Cars brand, said the move also is in the “interests of our employees who are becoming increasingly concerned about the spread of corona.”
Volkswagen also owns the Audi, Bentley, Bugatti, Ducati, Lamborghini and Porsche brands, among others. Volkswagen has 124 production sites worldwide, Reuters reported. Seventy-two are in Europe, and 28 in Germany alone.
By Rachel Siegel