U.S. stocks go positive, global markets stabilize on heels of worst week since Great Recession - The Washington Post

The gains were welcome news after last week, when all three indexes dropped into correction territory. A correction is a 10 percent reversal from recent highs. The Dow shed 12.36 percent, the S&P 500 erased 11.49 percent and the Nasdaq lost 10.54 percent over last week.

”It’s just uncertainty,” said Simeon Hyman, global investment strategist at ProShares. “Investors don’t know what the ultimate impact of the coronavirus will be. But if history is a guide, this will eventually pass and markets will recover.”

Japan’s Nikkei, which plunged last week as officials declared a state of emergency in the northern island of Hokkaido and schools closed through early April, was up roughly 1 percent. The markets were no doubt lifted by remarks from Bank of Japan Gov. Haruhiko Kuroda, who said the central bank “will monitor developments carefully, and strive to stabilize markets and offer sufficient liquidity via market operations and asset purchases.”

“Even though no one knows for sure how far this decline will go, Friday’s market action pointed to the likelihood of a near-term reflex rally, as many of the ‘loose hands’ may have been shaken free,” said Sam Stovall of CFRA Research.

Hong Kong’s Heng Seng was up roughly 0.6 percent and the Shanghai composite was 3.15 percent in the green.

European markets also entered corrections last week. They were only slightly steadier on Monday, with Britain’s FTSE 100 gaining 0.44 percent. Germany’s DAX was trading down 0.80 percent.

As last week’s sell-off fueled anxiety that coronavirus could trigger a recession, central banks around the world faced calls to find emergency salves, even when it wasn’t clear that their traditional methods for staving off an economic downturn would be a match for the flu-like virus. Wall Street traders are now predicting at least three rate cuts this year, including one reduction when the Federal Reserve meets next on March 18. Interest rates are currently just below 1.75 percent, a low level by historical standards, but higher than the rates in much of the rest of the world.

On Friday, Fed Chair Jerome H. Powell said the central bank would act if the economy takes a toll from coronavirus.

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity,” Powell said. “The Fed is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”

Still, there were concerns that last week’s Wall Street rout could push consumers to pull back on their spending and for companies to put a pause on hiring. Consumer spending has propped up not just the U.S. economy but also the global economy for a decade. Yet with painful memories of the 2008 financial crisis fresh in many Americans’ minds, fear around coronavirus could prompt shoppers to rein it in.

“Declining consumer confidence, potentially severe retail traffic declines and temporary store closures are evolving risk factors that depend on uncertain variables like the geographic spread of the virus and the timing of containment [or] eradication solutions,” analysts at Cowen wrote Monday morning.

“It is no longer possible to absolutely prevent new cases coming in,” Brendan Murphy, Australia’s Chief Medical Officer, told reporters on Monday. British Prime Minister Boris Johnson said the day before that he expected the outbreak to “spread a bit more” in Britain, where there are 39 confirmed cases.

The global death toll has passed 3,000, and South Korea said Monday it had confirmed 599 new cases, far higher than the daily tally reported in China. Italy now has more than 1,600 confirmed cases, while Iran surpassed 1,500, with 66 deaths.

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https://news.google.com/__i/rss/rd/articles/CBMiYGh0dHBzOi8vd3d3Lndhc2hpbmd0b25wb3N0LmNvbS9idXNpbmVzcy8yMDIwLzAzLzAyL3N0b2NrLW1hcmtldC1kb3ctY29yb25hdmlydXMtcmVjZXNzaW9uLXRvZGF5L9IBb2h0dHBzOi8vd3d3Lndhc2hpbmd0b25wb3N0LmNvbS9idXNpbmVzcy8yMDIwLzAzLzAyL3N0b2NrLW1hcmtldC1kb3ctY29yb25hdmlydXMtcmVjZXNzaW9uLXRvZGF5Lz9vdXRwdXRUeXBlPWFtcA?oc=5

2020-03-02 14:55:00Z
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