Cruise operators and airlines showed some of the strongest gains in the S&P 500 on Friday. Those stocks, and the broader market, got a boost from furious buying in the last half-hour of trading after President Donald Trump announced actions designed to help the government counter the potential economic impact of the outbreak. Carnival Corp. and Norwegian Cruise Lines posted double-digit gains. Still, Carnival shares lost more than half their value and Norwegian shares a third of theirs for the week. Their losses for the year to date are even steeper.
Airlines have been cutting back on flying as some nations restrict travel and consumers decide not to fly for fear of contracting the virus. Delta Air Lines is slashing its flying by 40% to handle the unprecedented nosedive in air travel demand. Its shares jumped nearly 14% but still ended the week down about 16%. The NYSE Arca airline index, made up of both domestic and international carriers, rose 8.5% Friday.
European stocks gave up most of the gains made during the day, closing only slightly higher on Friday after suffering a huge drop the day before. The Stoxx Europe 600 index, which measures major shares across the continent, ended the day 1.4% higher. On Thursday it dropped 11.5%, its worst percentage drop on record. Britain's FTSE 100 closed 1.7% higher, Germany's DAX 0.8% and France's CAC 40 1.8%. Italy's FTSE MIB gained 7.1%, not even half of what it lost the previous day. Investor sentiment was helped somewhat by financial aid measures by the EU and states including Germany and France.
U.S. stocks surged, meanwhile, recouping much of a historic plunge, after President Donald Trump announced new measures to fight the coronavirus. The Dow Jones Industrial Average jumped 1,985 points, or 9.4%, its best gain since October 2008.
The Federal Reserve is accelerating its purchases of Treasury securities to address ongoing disruptions in the Treasury bond market, the largest and one of the most important financial markets in the world. The Fed said that it will purchase about $37 billion of Treasurys on Friday, out of the $80 billion it plans to buy over the next month. The Fed will purchase a range of maturities, from short-term bills to 7-year notes to 30-year bonds.
Typically, when stock prices plummet, as they have this week, Treasury yields fall as investors pile into Treasury bonds, which are considered the safest assets in the world. That raises their price but lowers their yields. But this week Treasury yields have risen, an unusual move that suggests many investors that want to sell large volumes of bonds are having difficulty doing so.
Warren Buffett's annual shareholder meeting for Berkshire Hathaway draws professional-sporting-event sized crowds every year to Omaha, Nebraska. But like the NBA, NHL and Major League Baseball, there will be no one in the stands for the big event this year because of the risks from the coronavirus pandemic.
Buffett said Friday that the May 2 event will stream live on Yahoo and there may be a select number of journalists on hand to ask questions. Buffett appeared crestfallen about shutting down the public portion of the two-decade-old event, which is usually a staid, but still carnival-like event. Last year in the traditional auction for the opportunity to have lunch with Buffett, the winning bid was more than $4.5 million.
German ship operator Aida Cruises says it is suspending all of its cruises due to “massive restrictions” being implemented in response to the COVID-19 pandemic. The Rostock-based company told The Associated Press on Friday that it would be suspending all cruises until April 5, and that all cruises currently underway will call at ports and allow guests to debark and return home.
The European Commission says it will set up a 37 billion-euro ($41 billion) investment fund and allow “maximum flexibility” on state aid and fiscal rules to help member states weather the economic hit by the coronavirus outbreak. European Commission president Ursula von der Leyen said the EU budget will guarantee 8 billion euros in liquidity for small and medium-sized companies affected by the crisis.
France’s government is promising to compensate virus-related salary losses for “99%” of workers, as travel bans, school closures and other measures take a heavy toll on the economy. It’s part of tens of billions of euros the government says it will stump up to support the economy, as French financial markets plunge and companies curb activity to try to stem the spread of the virus. France has more than 2,800 confirmed cases, including 61 deaths.
The Germany government is pledging at least 460 billion euros ($513 billion) in guarantees to cope with the economic impact of the coronavirus outbreak. Germany's economy minister, Peter Altmaier, said there was no limit to the amount the government was willing to use to support everyone from individuals, such as taxi drivers, to large companies, to prevent the corona pandemic from causing permanent harm to the economy. Finance Minister Olaf Scholz said the 2008 financial crisis following the collapse of Lehman Brothers offered lessons for the current situation.
China’s government on Friday freed up additional money for lending by reducing the amount of their deposits commercial banks are required to leave on reserve at the central bank. The required reserve ratio will be cut by between 0.5 and 1 percentage points for banks that meet regulatory targets for lending to small and private businesses, effective March 16, the central bank announced. It said that should release an additional 550 billion yuan ($80 billion) for lending.
Sweden’s central bank says it will lend up to 500 billion kronor ($52 billion) to companies via the banks to keep them from “being knocked out as a result of the spread of the coronavirus.” The central bank of non-European Union member Norway said Friday it had decided to reduce the policy rate by 0.50 percentage points to 1%.
This story has been corrected to read that the Fed said that it will purchase about $37 billion of Treasurys on Friday, not $33 billion.