Wall Street gains on hopes of coronavirus slowdown

(Reuters) – Wall Street rose on Tuesday on early signs of the coronavirus outbreak plateauing in some of the biggest U.S. hot spots, with the New York governor saying social distancing measures to curtail the spread of the virus were working.

The S&P 500 was set for its biggest two-day gain in nearly two weeks, building on a 7% jump on Monday, as health officials also said the pandemic may kill fewer Americans than recent projections.

Gains were led by the energy, materials and financials sectors, with an aggressive round of U.S. fiscal and monetary stimulus in the past month also boosting risk appetite.

“The rally is sentimental and a little premature because if we lift these lockdown measures too soon and try to resume economic activity, we’re going to get a very severe pandemic rebound,” said Indranil Ghosh, chief executive officer of Tiger Hill Capital in London.

The S&P 500 is up about 22% from March intraday lows, but remains 19% below its mid-February record high as strict stay-at-home orders crushed demand across industries including airlines, automakers and hotels.

At 1:26 p.m. ET the Dow Jones Industrial Average was up 626.56 points, or 2.76%, at 23,306.55, the S&P 500 was up 63.85 points, or 2.40%, at 2,727.53 and the Nasdaq Composite was up 143.16 points, or 1.81%, at 8,056.40.

Wall Street’s fear gauge has steadily retreated from 12-year peaks, but volatility is expected to remain high as companies prepare to report an expected slide in first-quarter earnings and outline more drastic plans to bolster cash reserves.

“I’d like to think that the bottom is behind us, but I wouldn’t say that’s necessarily the case,” said Bert Brenner, director of asset allocation strategy at People’s United Advisors in Bridgeport, Connecticut.

Analysts now expect first-quarter earnings for S&P 500 firms to fall 6.4% compared to a Jan. 1 forecast for a rise of 6.3%.

Exxon Mobil throttled back a multi-year investment spree in shale, LNG and deep water oil production, saying it would cut planned capital spending this year by 30% as the pandemic saps energy demand.

Oilfield services firm Halliburton Co said it would cut about 350 jobs in Oklahoma and that its executives would reduce their salaries.

Exxon and Halliburton shares jumped 6% and 7%, respectively.

Norwegian Cruise Line, Royal Caribbean and Carnival Corp, among the most heavily battered stocks this year due to a near halt in global tourism, rose between 16% to 21%.

Advancing issues outnumbered decliners for a 6.01-to-1 ratio on the NYSE and a 2.44-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and no new low, while the Nasdaq recorded nine new highs and 14 new lows.

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Trump campaign spokeswoman McEnany to become White House press secretary: CNN

WASHINGTON (Reuters) – A spokeswoman for President Donald Trump’s campaign, Kayleigh McEnany, will become the new White House press secretary, CNN reported, in the latest shakeup of the president’s communications office.

The newspaper said McEnany, who was spokeswoman for the Republican National Committee before joining Trump’s re-election team, will take over from Stephanie Grisham. Grisham had only been in the post since June, when she took over from Sarah Sanders.

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Alaska's RavnAir bankruptcy while awaiting government aid shows regional airlines' challenges

WASHINGTON/CHICAGO (Reuters) – RavnAir Group, the largest regional carrier in Alaska, filed for bankruptcy on Sunday and grounded all of its 72 planes, saying it was clear that government aid would not arrive before it ran out of cash in the midst of an “astonishing” decline in bookings and revenue due to the coronavirus.

Its Chapter 11 filing underscores the challenges facing other U.S. regional carriers that, like larger airlines, are seeking federal aid to help them through the worst downturn the industry has ever faced.

RavnAir – which has a partnership with Alaska Airlines and interline agreements with American Airlines, United Airlines and Delta – said it applied on Friday for federal payroll support but did not know if or when it would be granted.

The Trump administration is weighing applications from numerous airlines as it considers how to distribute as soon as this week up to $32 billion for passenger and cargo carriers and airport contractors under the CARES Act meant to help the sector cover payroll costs.

Regional airlines, which tend to serve remote communities, are particularly vulnerable to the downturn because they are not publicly traded and cannot access capital markets. They have asked the U.S. Treasury Department to prioritize assistance for them when awarding the grants.

Many of RavnAir’s customers fly on Medicaid-subsidized tickets, it said, while other key customers include companies in industries like oil & gas, mining, and tourism where business is suffering. In addition, by mid-March it was receiving demands from rural hubs and villages around Alaska not to fly passengers to or from their communities, it said in a court filing.

The tale of RavnAir reflects airlines’ woes across the country that began seeing a dramatic drop in bookings around March 12 when it became clear that coronavirus outbreaks were increasing across the world.

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RavnAir said it had laid off almost all of its workforce and suspended operations before filing for Chapter 11 in Delaware on Sunday, but hopes to be able to restart on the other side of bankruptcy, particularly if it receives government relief.

In a letter posted Sunday, RavnAir Chief Executive Dave Pflieger said the airline was working to “resume the vital air service you depend on to get home to your families, to your businesses, to medical appointments, and to other duties that are essential to our communities and the state of Alaska.”

On Sunday, top Democrats urged Treasury Secretary Steven Mnuchin to move quickly to release the grants without imposing unreasonable conditions.

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Tiger at New York's Bronx Zoo tests positive for coronavirus

(Reuters) – A tiger at the Bronx Zoo in New York City has tested positive for the respiratory disease caused by the novel coronavirus, in the first known case of a human infecting an animal and making it sick, the zoo’s chief veterinarian said on Sunday.

Nadia, the 4-year-old Malayan tiger that tested positive, was screened for the COVID-19 disease after developing a dry cough along with three other tigers and three lions, the Wildlife Conservation Society, which manages the zoo, said in a statement. All of the cats are expected to recover, it said.

The virus that causes COVID-19 is believed to have spread from animals to humans, and a handful of animals have tested positive in Hong Kong.

But officials believe this is a unique case because Nadia became sick after exposure to an asymptomatic zoo employee, Paul Calle, chief veterinarian at the Bronx Zoo, told Reuters. Calle said they did not know which employee infected the tiger.

“This is the first time that any of us know of anywhere in the world that a person infected the animal and the animal got sick,” Calle said, adding that they planned to share the findings with other zoos and institutions. “Hopefully we will all have a better understanding as a result.”

While the other tigers and lions were also exhibiting symptoms, the zoo decided to test only Nadia because she was the sickest and had started to lose her appetite, and they did not want to subject all the cats to anesthesia, Calle said.

“The tigers and lions weren’t terribly sick,” he said.

Nadia underwent X-rays, an ultrasound and blood tests to try to figure out what was ailing her. They decided to test for COVID-19 given the surge in cases in New York City, the epicenter of the outbreak in the United States.

The first tiger at the zoo, which has been shut since mid-March, began showing signs of illness on March 27, according to the U.S. Department of Agriculture National Veterinary Services Laboratories, which performed the test.

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Amid confusion, U.S. small business bailout program off to rocky start

(Reuters) – A flood of loan applications from coronavirus-hit businesses inundated lenders on Friday as the U.S. government launched its $349 billion bailout fund for small and midsize companies amid widespread confusion about just how the program works.

The Trump administration was still finalizing details, including the interest rate, as late as Thursday evening, leaving borrowers and lenders alike frustrated at the lack of information.

“It’s not like you just snap your fingers and, ‘Oh, let’s start offering this brand new loan product where we just found out the interest rate yesterday,’” said Scott Pearson, a lawyer at Manatt, Phelps & Phillips who advises commercial and investment banks on compliance. “Any bank that’s able to offer loans today, they should get a medal.”

The loan program, part of a $2 trillion economic rescue package, is aimed at businesses with fewer than 500 employees, a segment that contributes more than 40% of U.S. GDP and employs some 60 million people. The novel coronavirus pandemic has proven devastating, as a majority of U.S. states have ordered non-essential businesses closed and residents sequestered at home to combat the infection’s spread.

Administration officials quickly praised the kickoff on Friday. Treasury Secretary Steven Mnuchin said on Twitter just before noon that the program had processed $875 million, “almost all from community banks,” and said large banks would soon be up and running.

White House economic adviser Larry Kudlow said on Bloomberg TV that banks are “ready to go” with the loan program.

A number of bankers, however, told Reuters Friday morning they were not able to make loans yet because they were waiting for information or processing details from the SBA and Treasury.

Bank of America became the first major bank to accept applications on Friday morning, but other competitors were not yet doing so.

Citibank’s website, for instance, featured a message asking customers for patience because of high call volume and said it was not yet taking applications.

JUST A BAND-AID

Under the program, the U.S. Treasury will back loans of up to $10 million to cover about eight weeks of payroll and some other expenses such as rent and utilities. It’s a key part of the administration’s plan to keep the U.S. economy from diving into a depression. Millions of applications are expected on Friday.

But lenders have complained in recent days that the Treasury and SBA hadn’t provided clear guidance about their liabilities and responsibilities, or functioning technology to process borrowers.

Many banks declined to participate due to the uncertainty, leaving some business owners struggling to find alternatives.

Most banks were expected to prioritize existing customers. Bank of America Chief Executive Brian Moynihan, in an interview on CNBC, advised borrowers to seek help from their own bank first.

Dan Kluger, who owns the New York City restaurant Loring Place and had to lay off 122 employees, spent days navigating the shifting rules to prepare to seek a loan. But his regular banker at First Republic Bank told him on Thursday that he should find another lender.

“I don’t necessarily blame them,” he said of First Republic, noting the lack of detail available about the program.

But he compared the process to a warped reality show, in which contestants race to understand the terms and “when you finally get to the finish line, they say now you’ve got to start all over again with a new bank.”

“It’s emotionally draining and very frustrating,” he added. “It’s a really constant sense of not knowing what’s next at an already stressful time.”

Kelly Conklin, who owns an architectural woodworking firm in Kenilworth, New Jersey, said he had spent three days pulling together paperwork to apply for a $160,000 loan on Friday. But he said many small businesses might face challenges in repaying the money, given how uncertain the future remains.

“I think of it as a Band-Aid on a gushing carotid artery wound,” Conklin said.

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Wall Street falls as coronavirus shreds U.S. payrolls

NEW YORK (Reuters) – Wall Street’s main indexes fell more than 1.5% on Friday as the coronavirus abruptly ended a record U.S. job growth streak of 113 months, intensifying fears of a deep economic slowdown.

Even the loss of 701,000 jobs that Labor Department data showed for March did not completely capture the economic damage from the virus. The survey considered data only until mid-March, before widespread U.S. lockdowns put more people out of work.

The worldwide spread of the virus has forced billions of people to stay indoors and pushed entire sectors to the brink of collapse, triggering mass layoffs and dramatic steps by companies to raise cash.

“Even as investors may be bracing for some grim economic reports over the next several weeks, we got a very sober reminder of what is to come by way of today’s jobs report,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Investors were also anxious heading into the weekend due to the possibility for “particularly ugly” weekend news on coronavirus case counts or new hot spots around the country, Luschini said.

The S&P 500 closed down almost 27% from its mid-February record high close, or about $7 trillion in market value, and economists have cut their forecasts for U.S. GDP, with Morgan Stanley now predicting a 38% contraction in the second quarter.

“This is not like December 2018. We’re not likely to see a V shaped recovery because we haven’t even begun to really tackle the main issue behind why this is happening. That’s still an ongoing process. It’s going to take time,” said Mike Turvey, TD Ameritrade’s institutional senior trading strategist

The Dow Jones Industrial Average .DJI fell 360.91 points, or 1.69%, to 21,052.53, the S&P 500 .SPX lost 38.25 points, or 1.51%, to 2,488.65 and the Nasdaq Composite .IXIC dropped 114.23 points, or 1.53%, to 7,373.08.

Of the S&P 500’s 11 major sectors utilities .SPLRCU was the biggest laggard, down 3.6%, followed by materials .SPLRCM and financials .SPSY, with declines of more than 2%.

Only consumer staples .SPLRCS rose and ended the day up 0.5% as the sector is seen as a defensive play, with consumers still needing to eat and buy household goods in a recession.

The energy sector .SPNY was one of the best performers. U.S. President Trump met with U.S. oil company executives at the White House and said Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin both want something to happen to stabilize the global oil market, where prices have fallen by about two-thirds this year.

Walt Disney Co (DIS.N) shares fell 3% after it said it would furlough some U.S. employees this month, while sources said luxury retailer Neiman Marcus was stepping up preparations to seek bankruptcy protection.

Raytheon Technologies Corp RTX.N, formed by the merger of United Technologies and Raytheon Co, shed 7.75% as it pulled its 2020 outlook for its aerospace units.

Tesla Inc (TSLA.O) rose 5.6% after the electric-car maker said production and deliveries of its Model Y sport utility vehicle were ahead of schedule.

On U.S. exchanges 11.57 billion shares changed hands compared with the 15.75 billion average for the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by a 3.53-to-1 ratio; on Nasdaq, a 2.73-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 11 new lows; the Nasdaq Composite recorded 5 new highs and 179 new lows.

The Cboe Volatility Index , widely known as “Wall Street’s fear gauge,” ended at 46.80, its lowest closing level since March 6.

Graphic: End of a historic jobs boom here

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U.S. biofuels industry seeks bailout to weather 'collapsing demand': letter

(Reuters) – The U.S. biofuel industry has asked the Trump administration for funds from the U.S. Department of Agriculture’s Commodity Credit Corporation to help it survive a demand slump triggered by the coronavirus outbreak, according to a letter seen by Reuters.

The funds could be used to offset a portion of the industry’s corn and soy bean purchases, or as direct assistance to companies to help them retain staff, according to the April 1 letter addressed to Agriculture Secretary Sonny Perdue.

The letter, signed by representatives of the nation’s top biofuel trade groups including the Renewable Fuels Association, said that “collapsing demand” for fuel during the outbreak had idled some 3.5 billion gallons of annualized ethanol output at a quarter of the nation’s production facilities.

“The biofuels industry has been hit especially hard by the sharp decline in fuel demand across the country, as residents follow local, state, and federal guidance to practice social distancing and minimize travel,” it said.

“With these realities in mind, we ask that USDA use its CCC authority to directly assist biofuel producers,” it said.

The biofuels groups pointed out that the U.S. ethanol industry accounts for about 40% of U.S. corn demand, making it an important market for farmers.

An official at the U.S. Department of Agriculture did not immediately respond to a request for comment.

The biofuel industry is part of a long list of businesses seeking help to counter the impact of the global pandemic, which has infected more a million people worldwide, decimated travel, and forced massive disruptions in daily life around the world.

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U.S. unemployment to shoot up while GDP declines in second quarter: congressional estimators

WASHINGTON (Reuters) – The U.S. unemployment rate will shoot past 10% in the second quarter and the growth rate of gross domestic product will decline by more than 7% as the coronavirus crisis grips the U.S. economy, according to projections released by the Congressional Budget Office (CBO) on Thursday.

Interest rates on 10-year Treasuries will likely be below 1% during the quarter as well, according to the office, which provides nonpartisan economic analysis to the U.S. Congress. On Thursday the yield on the benchmark U.S. 10-year Treasury note hovered around 0.62% US10YT=RR.

The CBO said its projections were based on information available through March 27 and that it is currently working on new estimates factoring in more recent information on the crisis, which “has been more negative than anticipated.”

It also said it included the possibility of later coronavirus outbreaks and a slow drop-off of social distancing in its projections, and expected an unemployment rate at the end of 2021 of 9%.

In recent weeks U.S. lawmakers have raced to pass bills that would quell the public health emergency and economic turmoil unleashed by the coronavirus epidemic. Currently they are negotiating with President Donald Trump’s administration to draft a fourth legislative package aimed at boosting the economy.

U.S. House of Representatives Speaker Nancy Pelosi said on Thursday she will form a bipartisan select committee to oversee the spending of the more than $2 trillion Congress has already approved to respond to the pandemic.

The CBO said it would incorporate the effects of the legislation in projections to be published later this year.

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Exclusive: Trump does not plan to ask U.S. oil producers for coordinated cuts – official

WASHINGTON (Reuters) – The United States does not know formal details of Saudi Arabian and Russian plans to reduce oil supply yet and will not ask U.S. domestic oil producers to chip in with their own cuts, a senior administration official told Reuters on Thursday.

Earlier, President Donald Trump said in a tweet that he expected Saudi Arabia and Russia to cut approximately 10 million barrels from daily production, a comment that sparked a jump in oil prices following weeks of steep declines.

The official said details of planned reductions remained unclear, but a big cut was expected.

Trump was set to meet with leaders of U.S. oil companies on Friday. He will discuss domestic production cuts but will not ask executives to agree on a coordinated drop in supplies, said the official, who spoke on condition of anonymity.

The official said the United States cannot orchestrate a mandated cut in domestic production. Trump has emphasized U.S. energy independence, approval of pipelines, deregulation and less stringent environmental standards as part of his push to build up the industry.

U.S. companies had already cut production in response to a collapse in market demand and as storage space filled up, the official said.

Global oil prices have tumbled by roughly two-thirds this year as the coronavirus slammed global economies even as Saudi Arabia and Russia flooded the market in a price war. Crashing prices have threatened the once-booming U.S. drilling industry with bankruptcies and massive layoffs, and Washington has scrambled to protect the sector.

The official described Trump as a broker between Saudi Arabia and Russia, calling their leaders multiple times to help solve the impasse. The president was in a good mood about the developments, he said.

Trump on Wednesday had suggested he knew a way to solve the problem with Russia and Saudi Arabia if the two countries did not reach a deal, but declined to elaborate.

“I do believe there’s a way that that can be solved or pretty well solved. And I’d rather not do that. I think that Russia and Saudi Arabia, at some point, are going to make a deal in the not-too-distant future,” he told reporters on Wednesday.

The official said tariffs on imported crude oil had come up as a potential solution to help domestic producers but indicated they were not under serious consideration. It would be difficult to impose tariffs when transactions were down, he said.

The government was also considering suspending royalty payments on oil production on federal property to help domestic suppliers, the official said.

Separately, the U.S. Department of Energy on Thursday announced it would lease out space to U.S. oil producers to store oil in the nation’s emergency stockpile, to help them with a shortage of available commercial storage capacity.

The official predicted a shakeout within the U.S. oil industry, in which an output boom in recent years has made the United States the top global producer of oil and gas.

Whether the government will provide financial support to mid- and small-sized oil companies remained to be seen, he said. The official noted bigger suppliers generally squeeze out the smaller ones.

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Trump says expects Russia-Saudi oil deal soon, invites U.S. oil chiefs to White House

WASHINGTON (Reuters) – U.S. President Donald Trump said he has invited U.S. oil executives to the White House to discuss ways to help the industry “ravaged” by slumping energy demand during the coronavirus outbreak and a price war between Saudi Arabia and Russia.

Trump also said he had talked recently with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal to end their price war within a “few days” – lowering production and bringing prices back up.

“I’m going to meet with the oil producers on Friday. I’m going to meet with independent oil producers also on Friday or Saturday. Maybe Sunday. We’re going to have a lot of meetings on it,” Trump told reporters at a media conference.

“Worldwide, the oil industry has been ravaged,” he said. “Its very bad for Russia, its very bad for Saudi Arabia. I mean, its very bad for both. I think they’re going to make a deal.”

Global oil prices have fallen by roughly two-thirds this year as the coronavirus has slammed global economies at the same time major producers Saudi Arabia and Russia have started to flood the market with oil.

The collapse in prices has threatened the once-booming U.S. drilling industry with bankruptcies and massive layoffs, and Washington has scrambled for ways to protect the sector.

In the coming meetings with oil executives, Trump is expected to discuss a range of options to help the industry, including the possibility of tariffs on oil imports from Saudi Arabia, according to the Wall Street Journal, which was first to report the planned meetings.

Major drillers expected to participate in the initial meeting on Friday include Exxon Mobil Corp (XOM.N), Chevron Corp (CVX.N), Occidental Petroleum Corp (OXY.N), and Continental Resources (CRL.N), according to the Journal.

Occidental said it had no comment, while officials at the other companies did not respond to requests for comment.

A source familiar with the plan told Reuters that oil refiners and small producers would also be represented and the issue of potential waivers for royalties on existing federal offshore and onshore leases would be discussed.

The American Petroleum Institute, which represents the U.S. oil and gas industry, said its president Mike Sommers would attend the initial meeting, but added: “We are not seeking any government subsidies or industry-specific intervention to address the recent market downturn at this time.”

The API, many of whose members operate globally, has said in the past it opposes trade tariffs because it can complicate projects and business relationships in other countries.

The group on March 20, however, sent a letter to the Trump administration requesting relief from some regulatory requirements to ensure steady supplies during the coronavirus. The administration has since announced it will temporarily ease some environmental enforcement.

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Trump this week called Russia and Saudi Arabia’s price war “crazy” and spoke with Russian President Vladimir Putin about the issue. Top energy officials from the two countries later spoke and agreed to continue discussions alongside other major global oil producers and consumers, according to the Kremlin.

The Trump administration said it is also planning to send a special envoy to Riyadh to push for lower output.

Saudi Arabia’s crude supply rose on Wednesday to a record of more than 12 million barrels per day, two industry sources said, despite a plunge in demand triggered by the coronavirus outbreak and U.S. pressure on the kingdom to stop flooding the market.

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