Stocks end lower as Senate lacks votes to pass stimulus bill
Futures for the major averages pointed to steep losses 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 this morning that Democrats and Republicans are nearly in agreement on a congressional stimulus package after one was shot down by federal lawmakers over the weekend, but then a procedural vote to advance a stimulus bill in the Senate failed for the second time in as many days.
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.
In Capitol Hill news, the Senate failed to gather enough votes to advance an economic stimulus bill, according to media reports. Senate Minority Leader Chuck Schumer has warned that a deal would not pass until Republicans agreed to key changes, noting that talks would continue even while the Senate took the procedural vote. CNBC noted that Senate Democrats have criticized the $500B fund that the Republican proposal sets aside for distressed companies, referring to it as a bailout fund "with no strings attached."
Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 372,563 cases of COVID-19 and 16,381 deaths.
Additionally, the governors of Maryland, Wisconsin, and Massachusetts all issued stay-at-home orders for non-essential workers amid the coronavirus pandemic. The moves follow similar decisions made in recent days by the governors of New York, California, New Jersey and several other states.
TOP NEWS: Boeing (BA) shares closed 11.2% higher after the company announced the temporary suspension of production operations at its Puget Sound area facilities in light of the coronavirus pandemic. The news comes after the company said on Friday that it would suspend its dividend until further notice and will extend its pause of any share repurchasing until further notice. Of note, Boeing said that 32 of its employees have tested positive for the virus, including 25 in the greater Seattle area.
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."
Meanwhile, shares of Comcast (CMCSA) closed 2.4% lower after Veteran International Olympic Committee member Dick Pound told USA TODAY Sports that the 2020 Tokyo Olympic Games will be postponed, likely to 2021, in light of coronavirus concerns. Comcast previously has said that its upcoming streaming service Peacocok would feature live coverage of the 2020 Olympics.
MAJOR MOVERS: Among the noteworthy gainers was Latam Airlines (LTM), which rose 4.9% after Raymond James analyst Savanthi Syth upgraded the stock to Outperform from Market Perform. Also higher was Hasbro (HAS), which gained 12.5% 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 24.5% after it said it would temporarily close all North America stores and said it would not provide Q1 or FY21 guidance. Also lower was Altria Group (MO), which fell 8.5% after the tobacco giant said in a note to employees dated Thursday that CEO Howard Willard has been diagnosed with the coronavirus.
INDEXES: The Dow fell 582.05, or 3.04%, to 18,591.93, the Nasdaq lost 18.84, or 0.27%, to 6,860.67, and the S&P 500 declined 67.52, or 2.93%, to 2,237.40.
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