The broad based selloff on Thursday marked the greatest manifestation yet of how the one-two punch of the coronavirus and an oil-price war are destroying global growth prospects and fueling jitters around the world. Now investors are trying to guess at the effectiveness of policy makers' efforts to limit economic damage, with Trump's travel ban and tepid fiscal measures failing to impress most observers. Spirits were further damped by new bans on public gatherings in the U.S. and professional sports leagues' move to suspend operations.
The Fed said it would inject $1.5 trillion into the short-term lending markets that banks use to lend to each other on Thursday and Friday. The central bank also announced it will buy $60 billion worth of Treasury bonds for the next month (March 13 through April 13) to help keep that market functioning appropriately. But it did little to reassure traders, who were apparently dismayed by the lack of concrete plans from President Donald Trump in his address Wednesday night and announcement that he would restrict nearly all travel from Europe for 30 days to stem the spread of the coronavirus, and disappointed that Congress has not yet come to an agreement on a wide-ranging aid bill.
Meanwhile, reports said measures to stop the spread of the coronavirus could force the U.S. economy to contract by a stunning 4% in the second quarter, pushing the economy into recession.
More bad news about the impact of the coronavirus emerged throughout the day. The leading U.S. infectious-disease official said the testing system in the country is a failing. The European Union warned the sickness threatens to exceed health-care capacity across the region in a few weeks or even days. The National Hockey League followed the National Basketball Association's lead and suspended its season, while Major League Baseball said opening day would be delayed.
Crude oil futures continued to fall on late hour trading on Thursday. West Texas Intermediate crude for April delivery fell 2.4% to $30.75 a barrel, while May Brent crude, the global benchmark, was down 2% at $32.51 a barrel.
Economic news: US Weekly Jobless Claims Edge Down To 211,000- US first-time claims for unemployment benefits unexpectedly showed a modest decrease in the week ended March 7th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims dipped to 211,000, a decrease of 4,000 from the previous week's revised level of 215,000. Meanwhile, the Labor Department said the less volatile four-week moving average crept up to 214,000, an increase of 1,250 from the previous week's revised average of 212,750. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, fall by 11,000 to 1.722 million in the week ended February 29th.
Fed To Inject More Than $1 Trillion Amid Economic Fallout From Coronavirus Outbreak-- The New York Fed said that it will offer banks more than $1 trillion worth of additional short-term cash loans as part of an effort to smooth operations in the Treasury and money markets. Amid the economic fallout from the coronavirus outbreak, the Federal Reserve is taking significant steps to provide liquidity to the financial markets. "These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak," the New York Fed said in a statement. In addition to pumping substantial amounts of money into the banking system, the Fed said it will extend its monthly purchases of $60 billion worth of Treasury securities across a range of maturities beyond just short-term T-bills.
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