Stocks plummet as grim economic outlook grips markets - The Boston Globe (2024)

Many states and localities had already acted, or were taking even more drastic steps. In California, seven counties in the San Francisco Bay Area ordered nearly 7 million residents to stay inside, allowing them to venture out only for necessities during a three-week period starting Tuesday.

The new measures reflected the increasing gravity of global attempts to contain the virus as governments around the world, from Canada to Hungary, moved to close their borders to foreign travelers, and world leaders pledged to work together to coordinate on efforts to share information and assuage consumer fears.

Trump also said that the crisis may last until July or August.

“If everyone makes this change or these critical changes and sacrifices now,” Trump said, “we will rally together as one nation, and we will defeat the virus, and we’re going to have a big celebration all together.”

The lack of governmental consensus has resulted in a national patchwork of precautions — and public confusion about what’s OK to do and what’s not, as public health officials try to slow the spread of the virus that causes the Covid-19 disease.

“It’s chaos,” New York Governor Andrew Cuomo said Monday. ‘‘I think it actually feeds the feeling that the country’s out of control. There is no clear direction; there is no clear path.’’

The Democratic governors of Connecticut, Michigan, New Jersey, New Mexico, New York, Pennsylvania, Rhode Island, and Washington on Monday all ordered the full or partial closure of certain categories of businesses.

In Japan, Prime Minister Shinzo Abe has begun to shift his messaging on the Tokyo Olympics, in a sign he may have accepted that the deadly coronavirus will make it necessary to postpone the event planned to start in July.

Abe and his Cabinet, as well as the organizers and Tokyo Governor Yuriko Koike, had until days ago been unanimous in insisting the Games would be staged as scheduled. But, following a G-7 leaders’ video conference on the coronavirus Monday, Abe avoided comment on the timing.

“I want to hold the Olympics and Paralympics perfectly, as proof that the human race will conquer the new coronavirus, and I gained support for that from the G-7 leaders,” he told reporters after the event.

Canadian Prime Minister Justin Trudeau said Monday he will close the country’s borders to anyone not a citizen, an American, or a permanent resident.

France said Monday it would follow other European countries in confining residents mostly to their homes, while the European Union considered closing its external borders to foreign travelers to impede infections.

As of earlier Monday, six of the 10 countries with the highest numbers of reported virus cases worldwide are in Europe.

On Wall Street, the S&P 500 fell 12 percent, its biggest drop since the coronavirus outbreak began to roil US markets in the last month — and its worst daily decline since October 1987, when stocks plunged about 20 percent in what came to be known as Black Monday. For the technology heavy Nasdaq, the drop was its worst on record.

The sell-off began after the Federal Reserve took extraordinary steps Sunday afternoon to bolster the US economy, including slashing interest rates to near zero. The financial downdraft was global, with major benchmarks in Asia and Europe also falling Monday.

Then came news that factory activity in China fell 13.5 percent last month compared with February of last year. Investment in China fell by roughly 25 percent. A gauge of manufacturing activity in New York state, meanwhile, showed a record one-month plunge in the measure, which fell to its lowest level since 2009.

“Unfortunately, this is the new reality. This report is a harbinger of what is to come,” wrote economic analysts with investment bank Jefferies in New York.

Global oil prices plunged to below $30 a barrel, the lowest level in more than four years. Oil has fallen by half since the start of the year, and some analysts predict that oil prices could drop below $20 a barrel in the coming weeks.

In addition to cutting rates, the Fed on Sunday said it would buy hundreds of billions of dollars in government debt, moves that are reminiscent of its actions during the financial crisis in 2008.

But the nature of this crisis — a viral outbreak that can only be contained by massive economic disruptions — is beyond the Fed’s ability to stop, analysts said.

“They can only make sure the fallout and economic impact are softened,” Yousef Abbasi, global market strategist at INTL FCStone, a financial services and brokerage firm, wrote in an e-mail.

A major concern for stock investors now is that US efforts to contain the virus will hit consumer spending, the biggest driver of economic growth. Broadway is dark. College basketball tournaments are canceled, and professional sports are on indefinite hold. Conferences, concerts and St. Patrick’s Day parades have been called off or postponed.

“If the public stops spending, then the economy will go into a recession, and frankly, the market’s steep losses are saying that day isn’t just coming, it is now,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in an e-mail Monday.

The lobbying group for the biggest airlines in the United States on Monday called on the government to provide the industry more than $50 billion in emergency support in the form of grants, loan guarantees, and tax relief.

“This is a today problem, not a tomorrow problem,” said Nicholas E. Calio, chief executive of Airlines for America. “It requires urgent action.”

The industry group said that flight cancellations were outpacing new bookings and that the decline in demand was getting worse by the day. The request included $25 billion in grants for passenger carriers, $4 billion in grants for cargo, and $25 billion in loan guarantees.

Larry Kudlow, the director of the National Economic Council, said Monday that “we’re in touch” with the airlines “about their balance sheets and their cash flow.”

“We don’t see the airlines failing, but if they get into a cash crunch we’re going to try to help them,” he said.

Universal Pictures said Monday that it would no longer give theaters an exclusive period to play new movies, making it the first old-line studio to try a Netflix-like tactic in film distribution.

Starting Friday, three Universal movies that have already been released in theaters will become available in homes — $20 for a 48-hour rental period — through online stores iTunes and Amazon Prime Video and on cable systems such as Comcast.

Those films are “The Hunt,” “The Invisible Man,” and “Emma.”

Some businesses are improvising. Starbucks is eliminating seating at all of its company-owned stores in the United States for at least the next two weeks to encourage social distancing.