Global markets and businesses big and small opened the week to a landscape seemingly altered by the coronavirus pandemic. A host of retail chains have shut their doors or diminished hours of business. Banks are taking steps to keep cash on hand, lots of it. Markets in Asia, Europe and the U.S. are plunging. Following is a quick look at how the outbreak is impacting the financial and business sector, as well as millions of workers and customers.
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 17%, 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.
MARKETS: Global stock markets are plunging as airlines cut service and public facing companies shut their doors. Stocks dropped nearly 10% at the opening of trading Monday on Wall Street, triggering an automatic 15-minute halt, as huge swaths of the economy come closer to shutting down. 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. The Fed on Sunday cut its key interest rate to near zero. 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.
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.
SORRY, WE’RE CLOSED: Shopping binges are out, social distancing is in. Nike, 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: A number of states, California, Ohio, Massachusetts, Washington and Illinois among them, are ordering restaurants, cafes and bars, to close. National chains are trying to stay ahead. Starbucks is announcing it will fill only to-go orders for at least the next two weeks in the U.S. and Canada. The Seattle brewer completely closed company-owned stores in what were crowded areas such as malls and university campuses. Stores in communities with high clusters of COVID-19 cases will close or reduce hours. There are also confrontations between local governments and some restaurants that have ignored orders to close or reduce capacity. 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. Not since 2000 have weekend box office revenues fallen so far, according to data firm Comscore. Between the previous weekend to the one that just passed, overall ticket sales plunged 45%, according to Comscore.
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.
ORACLE OF OMAHA: The daughter of billionaire investor Warren Buffett has been exposed to the new coronavirus and has isolated herself at her Omaha home for two weeks. Susie Buffett told the Omaha World-Herald on Sunday that she feels fine and doesn’t think she’s contracted COVID-19, the disease caused by the coronavirus. She has not been around her 89-year-old father since her exposure last week.
________
The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.
