Mar 24, 2020 9:00 PM

Dow has best day since 1933 as Congress nears deal on aid

Posted Mar 24, 2020 9:00 PM
Image courtesy New York Stock Exchange
Image courtesy New York Stock Exchange

NEW YORK (AP) — The Dow Jones Industrial Average surged to its best day since 1933 as Congress and the White House neared a deal on Tuesday to inject nearly $2 trillion of aid into an economy ravaged by the coronavirus.

The Dow burst 11.4% higher, while the more closely followed S&P 500 index leapt 9.4% as a wave of buying around the world interrupted what has been a brutal month of nearly nonstop selling. Despite the gains, investors were far from saying markets have hit bottom. Rallies nearly as big as this have punctuated the last few weeks, and none lasted more than a day.

Both Democrats and Republicans said Tuesday they’re close to agreeing on a massive economic rescue package, which will include payments to U.S. households and aid for small businesses and the travel industry, among other things. A vote in the Senate could come later Tuesday or Wednesday.

Investors have been waiting in frustration for such aid, particularly as the Federal Reserve has done nearly all it can to sustain markets, including its latest round of extraordinary aid launched Monday.

“I don’t think there’s any more confidence in the fundamental outlook, but the fact that we’re making progress is good news,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “It’s sort of like, keep the patient alive in the emergency room so you can provide some treatment options.”

The Dow rose 2,112.98 points, its biggest point gain in history, to 20,704.91. The S&P 500, which is much more important to most 401(k) accounts, rose 209.93, or 9.4%, to 2,447.33 for its third-biggest percentage gain since World War II. The Nasdaq composite jumped 557.18 points, or 8.1%, to 7,417.86.

The buying circled the world. South Korean stocks surged 8.6%, Germany’s market jumped 11% and Treasury yields rose in a sign that investors are feeling less fearful.

The market has seen rebounds like this before, only for them to wash out immediately. Since stocks began selling off on Feb. 20, the S&P 500 has had six days where it’s risen, and all but one of them were big gains of more than 4%. After them, stocks fell an average of 5% the next day.

“One of the things to be careful about is thinking this will be the panacea or that this fiscal response will be sufficient,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

Ultimately, investors say they need to see the number of new infections peak before markets can find a floor. The increasing spread is forcing companies to park airplanes, shut hotels and close restaurants to dine-in customers.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. Those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems. Recovery could take six weeks in such cases.

Economists are topping each other’s dire forecasts for how much the economy will shrink this spring due to the closures of businesses, and a growing number say a recession seems inevitable.

Some of the market’s areas hardest hit by the closures, though, led the way higher Tuesday as expectations rose for incoming aid from the U.S. government.

Norwegian Cruise Lines, MGM Resorts and American Airlines Group were all up at least 33%. Energy companies and banks were also strong, though all remain well below where they were a month ago.

Governments and central banks in other countries around the world are unveiling unprecedented levels of support for their economies in an attempt to limit the scale of the upcoming virus-related slump. Germany, a bastion of budgetary discipline, also approved a big fiscal boost.

The gains came even as the first reports arrived showing how badly the outbreak is hitting the global economy. In the United States, a preliminary reading on business activity in March showed the steepest contraction on record, going back to 2009. Reports were also gloomy for Europe.

“Everyone was prepared for a set of shockers, and that is precisely what we got, but they are not a surprise,” said Chris Beauchamp, chief market analyst at IG. “It is at times like this that the market’s propensity to look forward is demonstrated most effectively.”

More dour data is nearly assuredly on the way. On Thursday, economists expect a report to show the number of Americans applying for jobless claims easily set a record last week. Some say the number could be way beyond 1 million, amid a wave of layoffs, topping the prior record of 695,000 set in 1982.

Helping to lift sentiment in markets is news from China that it is preparing to lift the lockdown in Wuhan, the epicenter of the outbreak, and from Italy reporting a reduction in the number of new cases and coronavirus-related deaths.

“It’s still early days, of course — perhaps investors can start to envisage life beyond the coronavirus,” said Craig Erlam, senior market analyst at OANDA Europe. “That could make stocks look a little more attractive, although anyone jumping back in now will need to have nerves of steel.”

Despite Tuesday’s big gains, it’s no time to get complacent, said Adam Taback, chief investment officer for Wells Fargo Private Bank.

“We would caution that the danger is not all behind us at this point,” he said. “We still have not seen numbers that give us an indication of just how bad things are. Today was a good day, but we would not necessarily see this as turnaround time.”

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Continue Reading Panhandle Post
Mar 24, 2020 9:00 PM
Virus outbreak poses massive challenges for US charities
The pandemic stopped the annual Girl Scout cookie sale. Above is Alliance, NE councilwomen Annora Bentley with Girl Scouts in Box Butte County. 

NEW YORK (AP)— With its global scope and its staying power, the coronavirus outbreak poses unprecedented challenges for charities and nonprofit groups that rely on donations.

The American Red Cross faces a severe blood shortage due to the cancellation of nearly 2,700 blood drives. The Girl Scouts' annual cookie sale — vital to the group's finances — has been disrupted by a top-level plea to halt in-person sales.

And a 21-member coalition of major nonprofits is pleading with Congress to allocate $60 billion so charities can keep their staff on the job and ramp up assistance programs.

The CEO of one of those groups, Brian Gallagher of United Way Worldwide, has worked with the charity since 1981, engaging in its response to the 9/11 attacks, the Ebola threat, Hurricane Katrina and other disasters.

He said the COVID-19 outbreak has no parallel: "It's as if a natural disaster is hitting in slow motion just about every country on Earth."

Already, foundations and other major donors have contributed more than $1.9 billion to combat the outbreak, according to Candid, a New York-based nonprofit that tracks philanthropic giving.

The overall total, including donations from individuals, is surely far higher. Yet nonprofit leaders fear that the needs arising from the outbreak will outstrip even the possibility of massive future giving, let alone a possible drop in giving if a recession takes hold.

“Even if we get this virus under control, there will be several months of recovery for many people,” said Patricia McIlreavy, president of the Center for Disaster Philanthropy. “Business will have closed, many families will have exhausted every reserve.”

Among the major charities bracing for future challenges is the Salvation Army, which says it annually receives about $2 billion in public support to serve about 23 million people living in poverty.

“We expect that service number to rise exponentially in the coming months," requiring "tens, if not hundreds, of millions of dollars to support our most vulnerable neighbors,” said Dale Bannon, the faith-based organization’s community relations and development secretary.”

He said the Salvation Army, like many other charities, has been forced to cancel numerous fundraising events because of the outbreak. It is now focusing on online fundraising operations.

Canceled blood drives have been devastating to the American Red Cross, which provides about 40% of the nation’s blood supply.

In a statement Wednesday, the organization estimated that there have been 86,000 fewer blood donations in recent weeks because of the wave of blood drive cancellations at workplaces, colleges and other venues as people were told to work or study from home and practice social distancing.

Patients being treated in hospitals for the coronavirus do not generally need blood transfusions, but the worsening blood shortage could affect surgery and cancer patients and victims of car accidents.

Anticipating that blood drive cancellations will continue, the Red Cross pleaded for potential donors to support drives that do take place or for donors to visit its blood-donation facilities.

The group outlined additional safety precautions being taken, including checking the temperature of staff and donors before they enter locations and requiring staff to change gloves each time they interact with a different donor.

For the Girl Scouts of the USA, calling for a halt to in-person cookie sales was momentous, given that the sales net roughly $800 million annually and are the core of the organization’s fundraising.

Girls who had been selling cookies at booths outside stores and other locations were asked to focus on online sales instead.

“The risk of interaction with large crowds is just too great,” said the Girl Scouts’ CEO, Sylvia Acevedo.

The Girl Scouts are asking their corporate supporters to consider making bulk cookie purchases. A spokeswoman, Valerie Geiss, said it would be several months before the financial outcome of the sales campaign is known.

Many local Girl Scout gatherings across the country have been suspended, though some units are meeting online. The Washington-based Girl Scouts of Nation’s Capital said it will be hosting more than 40 “virtual troop meetings” next week, potentially serving about 5,000 girls.

The Girl Scouts were among the 21 nonprofits appealing to congress on Thursday for the $60 billion infusion of support for charitable organizations.

Their appeal said America’s charities employ 12 million workers, many of them working on the front lines of the coronavirus response.

“The financial impact of the crisis has put the very survival of many essential service providers at risk,” said Steven C. Preston, president and CEO of Goodwill Industries International. “Charities are our society’s shock absorber when crisis hits.”

At the Center for Disaster Philanthropy, McIlreavy says there has been a surge of requests from would-be donors seeking guidance on how to give effectively in response to the pandemic.

‘‘Folks just want to know the money is going somewhere where it's actually going to help someone,” she said.

Her center urges donors to be wary of misinformation and do thorough research of charities before making gifts. It identifies key areas that could interest donors: urgent medical response needs, long-term medical research and assistance to vulnerable people in the U.S. or abroad.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia.

For the United Way, a current priority is to strengthen and expand the 211 network that helps people who call the number to connect with providers of urgently needed social services.

Gallagher said 211 specialists have answered about 12 million requests annually, and he predicts there will be an additional 200,000 calls per day in coming weeks because of the outbreak.

Looking broadly, Gallagher believes there will be a surge in charitable giving for the next few months, and then a downturn as a weak economy takes a toll.

Big charities like United Way will get through it, Gallagher said. “The smaller nonprofits — houses of worship, soup kitchens — they will struggle."