Stocks rose today after the Federal Reserve announced an expansion of its emergency lending powers in another bid to backstop the U.S. economy, but the gains faded in the afternoon after oil prices fell and shares of energy companies followed.
Still, the S&P 500 rose about 1.5%, bringing its gains this week to 12%. Markets in the U.S. are closed on Friday before Easter.
The Fed’s announcement coincided with more grim news about the U.S. economy. Another 6.6 million people filed for unemployment benefits last week, the Labor Department reported today.
But investors largely shrugged off the bad news as they had on several occasions recently. As economically damaging as the pandemic will be, Wall Street is starting to see a path forward that was not clear a few weeks ago. Slowing infection rates, hefty government relief packages and the Federal Reserve’s efforts to calm the markets have helped eased investors’ minds.
Shares of companies that have been hardest hit by the outbreak rallied. Retailers Gap, Nordstrom and Kohls all rose more than 10%, while United Airlines gained more than 14%.
On the flip side, energy stocks weighed on the S&P 500 as crude oil futures fell. Schlumberger dropped about 4%, and Halliburton fell about 6%.
REGIONAL AIRPORTS SUFFER AS DELAYS AND CANCELLATIONS MOUNT
The steep drop in demand caused by the pandemic has airlines instituting last-minute cancellations while significantly reducing future schedules, making it hard for passengers to know if a purchased ticket will result in an actual flight. Major airlines including American, Alaska, Delta and United have all announced domestic flight reductions of about 70%.
But as bad as things are at major airports, for small-market cities, which may have a limited number of carriers, the effect has been amplified.
On April 5, 21 of 27 flights scheduled to depart from the Charlottesville, Virginia, airport were canceled, according to Flightradar24, a global flight tracking service and app. Alaska and United, which began commercial flights to California, Denver and Las Vegas from Paine Field Airport north of Seattle in March 2019, had 38 departures scheduled for March 8 of this year. Scheduled departures fell to 24 by April 5, 13 of which were canceled.
Cities that may have only recently gained nonstop flights are losing them, and passengers hoping to travel from those cities may have to fly circuitous routes that go through an airline’s hubs.
United changed about 130 nonstop flights to connecting flights through one or even two of its hubs. Appleton, Wisconsin, a small city in the northeast part of the state, got its first nonstop flights to Denver in June 2018. Now flyers are being offered a route that goes from Denver south to Atlanta, back north to Chicago, and then on to Appleton.
THE BRITISH GOVERNMENT WILL GET CASH DIRECTLY FROM THE CENTRAL BANK
Britain moved a step closer to printing money to fight the coronavirus Thursday after the Bank of England said it would give the government cash to help it get through the crisis.
The central bank said it would temporarily extend an existing program that allows the government to overdraw its account. The government will pay the money back, the Bank of England said. The British government pays the same interest rate as commercial banks, currently 0.1%.
Still, the action appears to be a form of so-called monetary financing, in which the central bank prints money to support government spending.
Other countries may be tempted to follow suit. By getting money from the central bank rather than borrowing it on financial markets, governments would avoid accumulating huge debt loads as they try to counteract the economic effects of the pandemic.
The downside is that too much money-printing can fuel inflation. That is one of the reasons that the European Central Bank is, by law, not allowed to engage in monetary financing. But some central bankers may conclude that, in the face of an economic upheaval not seen since World War II, it’s worth breaking the rules.
CATCH UP: HERE’S WHAT ELSE IS HAPPENING
— The University of Michigan’s consumer sentiment index fell 18.1 points in the first week of April, the steepest one-month decline in the more than four decades that the survey has been conducted. Over the past two months, the index has fallen by 30 points, 50% more than any other drop on record. The April data, released Thursday, was preliminary; the university will release final data for the month April 24.
— Yelp said Thursday that it had laid off 1,000 employees and furloughed 1,100 more in response to a substantial decline in its business caused by the coronavirus pandemic. Jeremy Stoppelman, Yelp’s chief executive, said in a blog post that he would not take a salary or vest any of his 2020 stock awards for the rest of the year. The collapse of local businesses has hit Yelp hard, with interest in restaurant listings on the site dropping 64% since early March. Interest in nightlife dropped 81%.
— WeWork has not made scheduled rent payments to the landlords of some of the buildings where it operates its coworking spaces, according to a person briefed on the situation. The decision to hold back rent is part of WeWork’s efforts to renegotiate better deals with building owners as the company tries to cut costs and limit its losses.