FINANCE: The biggest banks in the U.S. moved in unison to conserve cash through the first half of the year. The Financial Services Forum, which represents Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, State Street, and Wells Fargo, said members would suspend stock buybacks for first quarter and the second quarter due to the virus outbreak. In a prepared statement, the group said the decision “is consistent with our collective objective to use our significant capital and liquidity to provide maximum support to individuals, small businesses, and the broader economy through lending and other important services." The financial sector is among the hardest hit Monday. Shares of Citigroup, Bank of America and JPMorgan plunged as billions in bank valuation evaporated. Citigroup, down 18%, led the way.
The Fed on Sunday made an emergency cut to its key interest rate, slashing it by a full percentage point to a range between zero and 0.25%. The central bank said it would stay there until it feels confident the economy can survive a near-shutdown of activity in the United States.
British Prime Minister Boris Johnson said there is “widespread agreement” among the Group of Seven industrial nations about what to do to help businesses deal with the COVID-19 outbreak that’s seen countries all around the world impose draconian restrictions on economic activity. In a press conference in London, Johnson said the G-7 acknowledged that “we are going to need to make sure everybody has access to liquidity." G-7 leaders, including U.S. President Donald Trump, discussed the coronavirus outbreak earlier Monday in a video conference.
MARKETS: Global stock markets are plunging as airlines cut service and public facing companies shut their doors. U.S. stocks are down about 10% after trading resumed on Wall Street following a temporary halt Monday morning. A precipitous decline at the open bell triggered circuit breakers meant to halt panic selling. Markets appear to have stabilized, though the are down by similar percentages around the world.
Emergency actions taken by the Federal Reserve late Sunday to prop up the economy and get financial markets running smoothly again may have raised fears even further, some investors said. European markets were also down about 10%. The price of crude oil also dropped about 10% . Bond prices soared as investors sought safety.
ENERGY DRAIN: The price for a barrel of U.S. crude plunged below $30 per barrel Monday. Airlines are slashing capacity, factories are shutting down and people are canceling vacations. That all translates into cratering energy demand. Brent crude lost $3.80, or 11%, to $30.05 per barrel in London on Monday. Benchmark U.S. crude tumbled $2.73, or 8.5%, to $29.00 per barrel in electronic trading on the New York Mercantile Exchange.
MANUFACTURING: PSA Group, whose brands include Peugeot and Citroen, is closing its factories in Europe until March 27 because of the virus. SUPPLY-DEMAND SHOCKWAVE: A surge of new orders is putting Amazon.com operations under significant pressure. The company told members who are used to two-day shipping to expect that delivery window to grow as millions of people line pantry and storage room shelves with food and supplies. Amazon is struggling to keep items like toilet paper and cleaning solutions in stock. It now says to expect delivery times to at least double. The same supply and demand shockwaves are hitting tech and toy companies, manufacturers and retailers alike.
AIRLINES: Airlines for America, the trade group representing the carriers, said Monday that U.S. airlines are asking the federal government for grants, loans and tax relief that could easily top $50 billion to help them recover from a sharp downturn in travel due to the new coronavirus.
Meanwhile, Global airlines are leapfrogging each other in a seeming race to reduce flights and even lay off thousands of workers in a bid to survive the sharp downturn caused by the new coronavirus. European budget carrier Norwegian Air said Monday that it would cut 90% of its workers – 7,300 people -- as it withdraws to mostly fly only in Norway and to Nordic capitals. The parent of British Airways and Spain’s Iberia announced plans to cut capacity at least 75% in April or May compared with the same months last year. U.K.-based EasyJet warned of "further significant cancellations," and Irish discount carrier Ryanair said it expects to ground most of its fleet over the next seven to 10 days.
United Airlines has announced that it will slash 50% of its flying capacity in April and May and warned that the cuts could extend into the peak summer travel season. Even with thousands fewer flights every week, the airline expects its planes to be only 20% to 30% full at best, and March revenue will be down by $1.5 billion.
American Airlines on Monday suspended about 75% of its long-haul international flights through at least May 6 and began grounding about 135 planes. It will cut passenger-carrying capacity in the U.S. by 20% in April and 30% in May. Airlines are talking to unions about taking cuts in pay or hours, and some are cutting executive and management salaries.
The international trade group for airlines is imploring governments to provide assistance to carriers. United and Delta have joined that request, but so far no major help has been announced from Washington. Instead, rumors spread over the weekend that the Trump administration was considering grounding all airline flights for up to 30 days to limit further spread of the virus.
SORRY, WE'RE CLOSED: Shopping binges are out, social distancing is in. Nike, Under Armour, Warby Parker, Patagonia, REI, Urban Outfitters and American Girl have closed the doors on their retail locations. Columbia Sportswear joined the list Monday, shuttering its North American stores until at least March 27. The company is offering "catastrophic paid leave" to employees most affected by COVID-19. The Gap cut store hours in the U.S. and Canada and following government guidance for further action.
TABLE FOR NONE: On Monday, the governors of New York, Connecticut and New Jersey essentially placed a curfew on bars and restaurants. The three Northeastern states ordered bars, restaurants and movie theaters closed to the public by 8 p.m. Essential businesses like supermarkets and gas stations will be able to stay open after 8 p.m. Take-out and delivery orders from restaurants are not banned.
A number of states, California, Ohio, Massachusetts, Washington and Illinois among them, previously ordered restaurants, cafes and bars, to close. The economic damage to restaurants has already been immense. BTIG analyst Peter Saleh said restaurant sales plunged between 50% and 90% in San Francisco and Seattle. Fast food sales fell 20% to 30% in New York City over the last week. Casual dine-in chains like Applebee’s or Olive Garden could be hardest hit, Saleh believes. Shares of the company that owns Olive Garden fell 11% Monday.
HOLLYWOOD: Box office ticket sales plunged to their lowest levels in at least 20 years in North America, leading to one of Hollywood's worst weekends on record. More people went to the movies the weekend after Sept. 11, 2001, than over the weekend.
DISNEY: The entertainment juggernaut shut down more operations as the Centers for Disease Control and Prevention releases new guidance on crowds. After closing hours Monday, all Disney stores in North America will remain closed. Disney has already announced the closures of theme parks in California and Florida. On Monday, it added hotels at Walt Disney World in Orlando to the list, including Disney’s Vero Beach Resort on Florida’s Atlantic Coast. Those locations will close Friday evening to give people time to change plans.
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