Stocks plunge despite Fed liquidity measures as bill falters on Capitol Hill
The S&P 500 and other major averages were all pointed to open deep in the red in pre-market trading before the Fed announced new emergency liquidity measures, which briefly resulted in a sharp rebound. However, the Fed alone cannot, and did not, support the market for long as lawmakers in D.C. continue to fight over passing stimulus measures to help support the economy in the face of the COVID-19 crisis. Treasury Secretary Steven Mnuchin told CNBC on Monday that Democrats and Republicans are nearly in agreement on a congressional stimulus package after one was shot down by federal lawmakers over the weekend.
ECONOMIC EVENTS: The Federal Reserve said it is "committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time." In order to "provide powerful support for the flow of credit to American families and businesses," the Federal Open Market Committee will purchase Treasury securities and agency mortgage-backed securities "in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy," the central bank committed. In addition, the FOMC will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases and is establishing new programs that, taken together, will provide up to $300B in new financing for employers, consumers, and businesses.
In U.S. data, the Chicago Fed national activity index rose 49 points to 0.16 in February.
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 353,692 cases of COVID-19 and 15,430 deaths.
TOP NEWS: Late Friday, Boeing (BA) announced it will suspend its dividend until further notice and will extend its pause of any share repurchasing until further notice. "Boeing is drawing on all of its resources to sustain operations, support its workforce and customers, and maintain supply chain continuity through the COVID-19 crisis and for the long term," the company stated. Afterward, Goldman Sachs analyst Noah Poponak upgraded Boeing to Buy from Neutral with a price target of $173, down from $256.Boeing will remain a going concern, and travel by flight will be "as popular as ever" once the COVID-19 outbreak is resolved, Poponak told investors in a Sunday night research note.
General Electric (GE) Chairman and CEO H. Lawrence Culp, Jr. said GE Aviation is "announcing several steps that, while painful, preserve our ability to adapt as the environment continues to evolve." GE Aviation will reduce approximately 10% of its total U.S. workforce and there will be a temporary lack of work impacting approximately 50% of its U.S. maintenance, repair and overhaul employees for 90 days. Meanwhile, Culp and some other executives will forgo pay and other GE businesses and Corporate "will need to adjust," the executive said in message to employees that was also shared publicly.
CVS Health (CVS) said it is "embarking on the most ambitious hiring drive in the company's history," with plans to immediately fill 50,000 full-time, part-time and temporary roles across the country. Many roles will be filled by existing CVS Health clients who have had to furlough workers, including Hilton (HLT) and Marriott (MAR), the company noted.
Moderna's (MRNA) CEO Stephane Bancel said that its experimental vaccine for COVID-19 could be available to a select few, such as healthcare workers, in the fall of 2020. This comes as the Food and Drug Administration and the National Institutes of Health slash red tape to expedite research as the deadly outbreak of the novel coronavirus continues worldwide. Over the weekend, Stephen Hoge, President of Moderna, appeared in an interview on the television program "60 Minutes" and discussed the company's work on mRNA-1273.
Also present during the "60 Minutes" interview, Senior Vice President of Research and Development at Inovio Pharmaceuticals (INO) Kate Broderick said that, "We're hoping to have our vaccine tested in what we call a large, phase two trial by the end of the year, which would be potentially hundreds, if not thousands, of subjects being treated. But to have it rolled out to the public is likely to take longer than that."
MAJOR MOVERS: Among the noteworthy gainers was Latam Airlines (LTM), which rose 13.5% after Raymond James analyst Savanthi Syth upgraded the stock to Outperform from Market Perform. Also higher was Hasbro (HAS), which gained 13% after CEO Brian Goldner said in an interview on CNBC that the company is in "really good financial position" and that he doesn't foresee making any layoffs due to the coronavirus outbreak.
Among the notable losers was Signet Jewelers (SIG), which slid 23% after it said it would temporarily close all North America stores and said it would not provide Q1 or FY21 guidance.
Also lower was RealReal (REAL), which fell 20% after Needham analyst Rick Patel downgraded the stock to Hold from Buy.
INDEXES: Near midday, the Dow was down 726.40, or 3.79%, to 18,447.58, the Nasdaq was down 150.21, or 2.18%, to 6,729.31, and the S&P 500 was down 86.51, or 3.75%, to 2,218.41.