Wall Street Breakfast: What Moved Markets14 Mar 2020 20:10
Stocks surged into the close Friday after President Trump declared a national emergency over the coronavirus pandemic, which will open up access to $50 billion for states and local areas affected by the outbreak. The president must have said the right things, because stocks soared into the close and recovered most of Thursday's huge losses, with all three major indexes jumping 9.3%. All 11 S&P industry groups gained, led by financials, which had plunged earlier in the week in the wake of falling interest rates. It was a hopeful end to a roller-coaster week in which the Dow plunged 10.4%, the S&P 500 sank 8.8% and the Nasdaq tumbled 8.2%.
Fears this week sent the benchmark 10-year Treasury yield below 0.4% for the first time ever, touching an all-time low of 0.3469%. In fact, yields on all maturities (including the 30-year and two-year) stumbled below 1%. Traders now expect the Fed to cut rates by 100 basis points at its March meeting, which would bring the Federal Funds target range to 0%-0.25%. On Thursday, the Fed announced over $1T in repo operations (on top of at least $175B in daily overnight transactions) to address the recent disruptions.
The failure of OPEC+ to agree on production cuts sent crude into freefall, plunging as low as $27 per barrel and marking its worst weekly decline since the financial crisis (it started the year in the mid-$60s). Besides a collapse in demand due to the coronavirus, Saudi Arabia launched an all-out oil price war by slashing pricing for its crude in an effort to push as many barrels into the market as possible. It was in response to a face slap from Russia, which refused to cut output further and insisted that U.S. shale producers should be made to share the pain.
All three major indexes plunged nearly 10% on Thursday, suffering their worst sessions since "Black Monday" in 1987. Besides suspending most travel from Europe to the U.S. for 30 days, President Trump announced efforts on deferred tax payments, payroll tax relief and low interest business loans, but investors seemed to have been looking for more. The Dow, S&P 500 and Nasdaq already had tough times earlier in the week after the WHO classified the coronavirus outbreak as a pandemic for the first time.
YouTube (GOOG, GOOGL) discontinued classifying COVID-19 content as a "sensitive event," enabling ads on some videos discussing coronavirus, according to CEO Susan Wojcicki. "It's becoming clear this issue is now an ongoing and important part of everyday conversation, and we want to make sure news organizations and creators can continue producing quality videos in a sustainable way," she said. YouTube previously did not allow monetization if a video includes more than "a passing mention" of the coronavirus.
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