Stocks climb as governments signal action.
Stock rebounded from their worst day in more than 30 years, gains that were pinned partly to signs of movement in Washington and a pledge by leaders in Germany to spend heavily to support Europe’s largest economy.
The earliest gains quickly faded, however and the S&P 500 was up only about 3 percent soon after trading began. Buyers also swept through markets in Europe, with major indexes there rising as much as 10 percent before paring gains. Oil prices, which have collapsed in recent weeks, rose 7 percent, and yields on United States government bonds rose.
All those moves are signals that investors feel a touch better about the outlook for the economy than they did a day ago. But financial markets have been nothing if not inconsistent for the past three weeks, plunging and then rising, and then plunging again, as each day brought new measures to contain the outbreak and new worries that the economy, workers and businesses would take a hit as a result of them.
On Thursday, stocks on Wall Street and in Europe plunged in their biggest daily drop since the stock market crashed in 1987, as President Trump’s ban on the entry to the United States from most European countries disappointed investors, who had been waiting for Washington to take stronger steps to bolster the economy.
But late Thursday, House Speaker Nancy Pelosi said that she and Treasury Secretary Steven Mnuchin had “resolved most of our differences” on a package of economic aid for workers and companies, pledging a vote in the House of Representatives on Friday. And on Friday, Germany’s government said that it would make over $600 billion available to help companies there.
Olaf Scholz, the German finance minister, said that the government could take further steps, including taking stakes in companies, if deemed necessary. “We can’t forget the lessons of the previous financial crisis,” Mr. Scholz told reporters in Berlin.
Also on Friday, the Federal Reserve Bank of New York moved again to inject more liquidity in the Treasury markets, saying it would complete half of its planned $80 billion of government bond purchases for the month today.
“These purchases are intended to address highly unusual disruptions in the market for Treasury securities associated with the coronavirus outbreak,” it said in a statement.
The volatility in markets this week reflects the increasing concern that governments and central banks may not be able to meaningfully mitigate the economic fallout from the spreading coronavirus.
Asian indexes were hammered on Friday following the U.S. market plunge. Like Wall Street, every major financial market in Asia except for China is now firmly in bear market territory.
In Seoul, stocks finished the day down 3.4 percent. Regulators in South Korea halted the market for a second day as investors pushed it down by as much as 13 percent in early trading. After trading, they announced a six-month ban on all short selling, essentially preventing traders from betting against any stock.
In Britain, regulators made a similar announcement: temporarily banning short selling on Italian and Spanish stocks trading in London, after regulators in Italy and Spain did the same to stem the market slide.
The Fed will inject more liquidity into the Treasury market.
The Federal Reserve Bank of New York is buying up a variety of Treasury securities in a bid to keep markets functioning normally after trading in government debt broke down earlier this week — and that effort to help became even more dramatic on Friday.
The bank said it would pull forward its planned monthly purchases, which total $80 billion, so that half of them would be done by the end of the day. It would also “bring forward remaining purchases for this monthly calendar and adjust terms of operations as needed to foster smooth Treasury market functioning,” it said in a statement.
That swift action to fix market problems suggested to some investors that there could be more to come, and stock prices rallied on the back of the announcement.
But just as the Fed was pulling out the stops, President Trump was tweeting about the central bank’s inaction.
“The Federal Reserve must FINALLY lower the Fed Rate to something comparable to their competitor Central Banks,” he wrote. “Jay Powell and group are putting us at a decided economic & physiological disadvantage.”
The Fed was ahead of its global counterparts in reacting to the coronavirus’s economic threat, slashing rates by half a percentage point last week in its first emergency move since the financial crisis. It is widely expected to lower rates again at its meeting next week, and analysts think it could revive more aggressive bond-buying, among other measures meant to cushion the market and real-economy fallout of the global pandemic.
Mnuchin says U.S. in ‘second inning’ of stimulus efforts.
Treasury Secretary Steven Mnuchin vowed on Friday that the United States government would do whatever was necessary to ensure that markets have “almost unlimited” liquidity. He said that the economic relief package being negotiated with Congress was just the beginning of efforts to stimulate the economy in the wake of the coronavirus.
“I think we’re like in the second inning of getting things done,” Mr. Mnuchin said on CNBC.
The Trump administration is considering additional relief measures, including a payroll tax holiday. Mr. Mnuchin also said that the administration is working on exemptions from tariffs imposed by President Trump that are affecting businesses, and that he would be open to waiving restrictions on withdrawals for 401(k) investments so that people can more readily access their savings.
“Whatever we can waive, we will waive,” Mr. Mnuchin.
The Treasury secretary dismissed rumors that markets could shut down because of the recent volatility, and he encouraged banks to turn to the Federal Reserve’s discount window for funding if needed.
Mr. Mnuchin expressed optimism that the current “black swan” period would be over in a matter of months, and pent-up demand would jump-start the economy. He said that the current period pales in comparison to the stock market crash of 1987 and suggested that this could be a good opportunity for long-term investors to buy stocks.
China adds its central bank firepower.
China’s central bank on Friday moved to free up money to help the country’s economy, joining a growing number of global policymakers worried about the impact of the fast-moving coronavirus.
The People’s Bank of China said it would inject $79 billion into its financial system, in a move that indicated Beijing remains concerned about its domestic economy after weeks of virtual shutdown.
The central bank eased the financial cushion it requires lenders to keep — cutting the so-called reserve ratio requirement by up to 1 percentage point for some banks — to loosen up money and encourage lending.
China’s economy was already struggling with its slowest growth in nearly three decades before the coronavirus hit, disrupting business and leading to the virtual shutdown of business across China for six weeks.
The bank said on Friday that the move was done “in order to support the development of the real economy” and reduce the cost of financing for businesses.
Here’s what else is happening.
Berkshire Hathaway said it will not allow shareholders to physically attend its May 2 annual meeting in Omaha, Neb., which will be streamed online. All special events around the meeting were canceled.
“The Tonight Show Starring Jimmy Fallon,” “The Late Show With Stephen Colbert” and “Late Night With Seth Meyers” will suspend production next week, CBS and NBC said Thursday, making them the biggest daily American television series to go dark because of concerns surrounding the coronavirus pandemic
Disney will close its theme parks worldwide starting this weekend, including Disney World in Florida and the Disneyland Resort in California. Disney Cruise Line will also close.
The chief executive of the big British telecommunication company BT, Philip Jansen, has coronavirus and is self-isolating, and two other British telecom executives he met with earlier this week are self-isolating as a precaution.
Reporting was contributed by Alexandra Stevenson, Cao Li, Amie Tsang, Carlos Tejada, Brooks Barnes and Katie Robertson.