The Lamborghini Special Super on the automaker’s Huracán production line.
Lamborghini is closing its closing its headquarters as well as both its factories in the face of Northern Italy’s coronavirus crisis.
They will remain closed until at least March 25, the company said. The facilities are located together in Sant’Agata Bolognese near Bologna in Northern Italy.
“This is an act of social responsibility and high sensibility towards our people, in the extraordinary situation in which we find ourselves in Italy, and which is also evolving abroad,” Lamborghini CEO Stefano Domenicali said in a statement Thursday.
One factory produces Lamborghini’s famous supercars, the Aventador and the Huracán. The other factory produces the new Lamborghini Urus SUV. Together, the two factories turn out about 8,000 cars a year.
That’s a tiny figure compared to most car factories, such as that of parent company Volkswagen in Wolfsburg, Germany, which turns out 3,500 cars a day. But Lamborghinis cost hundreds of thousands of dollars each and the great majority are built to order. The two factories and the company’s headquarters employ about 1,800 people.
Fiat Chrysler (FCAU) temporarily closed four plants in Italy as the novel coronavirus takes its toll there. On Wednesday, the Italian-American automaker said in a statement that plants will be closed and production rates reduced “to support the nationwide campaign addressing the Covid-19 crisis.”
Wall Street is betting the Federal Reserve will respond to the coronavirus panic by returning to 2008-style interest rates.
Barclays predicted Thursday the Fed will slash interest rates by a full percentage point to zero at next week’s meeting – if not earlier, in an emergency action.
“Given the ongoing weakness in investor sentiment and deterioration in market functioning, we now believe a more aggressive response is warranted,” Barclays economists wrote in a note to clients.
It was almost unthinkable just a few weeks ago that the Fed would need to go back to zero in 2020. Now, the market is pricing in a return to zero, not later this year but imminently.
After the Dow suffered its worst day since 1987 on Thursday, the market priced in a 95% chance the Fed cuts rates to a range of zero to 0.25%, according to the CME FedWatch Tool. That compares with no chance of that just a week ago: a truly stunning reversal.
And the Fed is taking other dramatic steps to calm panicky markets. It promised to pump $1.5 trillion into financial markets Thursday and effectively relaunched the 2008-era bond buying program known as quantitative easing, or QE.
It’s hard to know exactly how long the new bear market will last. The average bear market has lasted 21 months, with the shortest in 1990 and the longest beginning in 1937.
Here’s how long previous bear markets have lasted:
Less than a month after hitting a high of 3,386 on February 19, the S&P 500 sold off sharply, falling more than 25% as novel coronavirus spreads around the world. An oil price war between Saudi Arabia and Russia also emerged, threatening US shale producers and exacerbating selling over the past week.
The S&P 500 closed below 2,708.92, officially marking the end of the bull rally and the start of the new bear market. Here are the previous 13 bear markets since 1929.
CNN Business’ Fear and Greed Index sits at “2” out of 100. That’s just about as fearful as the market can get.
The VIX volatility index soared 39.5% Thursday to its highest level since October 2008 during one of the scariest moments of the global financial crisis.
US stocks recorded their worst day since 1987 Thursday as worries about the coronavirus pandemic mounted.
Wall Street officially fell into a bear market with the S&P 500 dropping more than 20% from its February 19 peak. The Dow, a smaller index than the S&P, fell into a bear market Wednesday.
That officially ended the 11-year bull market – the longest in history – which started in March 2009.
On Thursday, the S&P 500 closed down 9.5%. It was its worst day since October 19, 1987, also known as “Black Monday”.
The index dropped 7% in the first minutes of trading, which triggered a circuit breaker and led the New York Stocks Exchange to suspend trading for 15 minutes.
The Dow was down 2,353 points, nearly 10% lower, in its biggest one-day percentage drop since “Black Monday.” The index is at its lowest level since the summer of 2017.
The Nasdaq Composite closed down 9.4%. It is now also in a bear market.
With only minutes left in the trading day, Wall Street is on course to close in a bear market.
Only the Dow slipped into a bear market Wednesday, but now the S&P 500 – the broadest measure of the US stock market – is squarely in bear territory as well. A bear market is defined at 20% below the most recent peak, which for the major US indexes was in February. The pace at which the market has gone from record highs to a bear is remarkably fast.
The S&P 500 was down 7.7%, while the Dow was 8.3%, or 1,945 points, lower with just minutes remaining in the session.
The stock market was at an all-time high just a month ago and many blue chip companies were hitting records constantly. What a difference the novel coronavirus makes.
Today, there are many blue chip companies plunging to new all-time lows. And the list could keep growing. There seems to be no end in sight to the sell-off, despite more moves by the Federal Reserve to try and prop up the market.
Here are just a few of the most well-known stocks that fell to their lowest point ever today – courtesy of Barchart.
The Small Business Administration announced it would provide disaster assistance loans to businesses affected by the coronavirus pandemic.
These loans offer up to $2 million per small business and “can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing,” the SBA said in a statement.
The loans are intended to pay debts, accounts payable and bills, as well as payroll, that can’t be paid because of coronavirus. They will carry an interest rate of 3.75% for small businesses and 2.75% for non-profit organizations.
JPMorgan (JPM) CEO Jamie Dimon has left the hospital and is recovering at home, according to a statement from the bank’s co-presidents Daniel Pinto and Gordon Smith.
Dimon had emergency heart surgery last week.
Even though the bank isn’t planning regular updates on Dimon’s recovery, “we want you to know that his doctors said he is doing very well in all aspects of his recovery,” Pinto and Smith said in the statement.
New leadership for Tupperware (TUP) is sending shares soaring 25%.
The 74-year-old container company has named a CEO after four months operating without one. Miguel Fernandez, a former president of Avon, is taking the top job on April 6.
The company said in a release that Fernandez brings “global direct-selling industry experience and a strong record of implementing positive global transformations.”
It’s a much-needed change for Tupperware. The company has faced declining sales as customers buy cheaper alternatives and has seen its glory days of fervent customers hosting Tupperware parties fade away.
With today’s gains, the stock is now only down 70% for the year.
US stocks rebounded from their lows in the early afternoon after the New York Fed gears up for a more than $1 trillion capital injection.
While stocks are still sharply in the red, they have come off their lowest points.
The S&P 500 was last down 5.7%. At its lowest, it was down 8.7%. The Dow is down 1,500 points, or 6.2%. The index was down more than 2,200 points at its low point today.
The New York Federal Reserve is taking extraordinary steps aimed at calming panicky financial markets.
The NY Fed just announced it will offer $500 billion in a three-month repo operation Thursday afternoon – and then will do the same thing the next day. Moreover, the Fed said it will offer a $500 billion one-month repo operation Friday and take additional steps as well.
The dramatic moves sent US stocks surging off their worst levels of the day. At one point, the Dow was on track for its worst day since 1987. More recently, the Dow was only down 900 points, or 4%.
The NY Fed said these capital injections are being made to “address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak.”
The Fed has repeatedly ramped up its cash injections this week in an effort to keep markets operating smoothly despite the coronavirus fears.
European stocks had their worst day in history Thursday as fears mounted over economic fallout from the novel coronavirus and measures taken by the European Central Bank to cushion the blow from the crisis failed to impress investors.
The ECB said it would ramp up bond purchases to help support the economy, joining policymakers around the world in a rush to contain the fallout from the coronavirus pandemic.
But the central bank, which also took steps to boost liquidity, did not push interest rates deeper into negative territory, a move that some investors had been expecting. That fed a freefall in European stocks, which were also hit by President Donald Trump’s decision to ban travel from more than two dozen countries on the continent.
Europe’s Stoxx 600 fell 11%, the index’s worst day on record. Germany’s DAX and France’s CAC 40 both plunged over 12%.
The selloff didn’t take a break for lunch. At midday, US stocks are near their low-points of the trading day.
The Dow fell more than 9%, or 2,140 points. At its low-point, the index had shed more than 2,200 points.
The S&P 500 slid by 8.2%. The index tripped a circuit breaker this morning, falling 7%, which briefly halted trading. The next circuit breaker will be triggered if today’s decline stretches to 13%.
The Nasdaq Composite is down 8.1%.
The policy response to combat the fallout from the coronavirus outbreak is still leaving investors wanting something more.
A bill for a coronavirus response package will be brought to a vote in the House of Representatives today, but the White House has been skeptical of it.
“The virus remains uncontained in Europe and the US, and although we have seen some stimulus measures from policymakers, it is unclear if it will prove comprehensive enough to mitigate the economic damage arising from coronavirus containment measures,” said Mark Haefele, UBS Global Wealth Management’s chief investment officer.
Boeing shares were down another 13% Thursday, meaning that the Dow component has lost half its value since the index hit a record high close on February 12.
The company has been struggling with getting approval for its best-selling jet, the 737 Max, to fly again. And now investors are worried about the impact the coronavirus will have on it its airline customers and on their ability to buy planes. That uncertainty prompted JPMorgan to cut its guidance on Boeing early Thursday to neutral. It had been one of few to have an overweight or buy recommendation.
The Dow is calculated based on the price of each of the 30 components, and Boeing stock, which was one of the more expensive components on the blue chip index not long ago, could move the index more than some of the less expensive shares.
As of midday trading Thursday, Boeing shares had lost $183 since the Dow’s record close. And that means Boeing has cost the Dow 1,243 points all by itself, or about 15% of the Dow’s overall decline.
The US dollar is climbing higher as markets are flashing red around the globe. Why? Investors see a funding and liquidity squeeze on the horizon.
The ICE US Dollar Index, which measures the American currency against a basket of six others, was up 1.4% around midday. The euro – the dollar’s main rival – was down 1.5% at $1.11.
In other words, the greenback is trapped in the cross currents of the market turmoil.
US assets got slammed in a massive sell-off of risk assets, the Federal Reserve cut interest rates and is expected to lower them further. Ordinarily this wouldn’t be good for the dollar. But these are hardly ordinary times.
Tensions are beginning to build in the dollar funding markets. The US currency is used in contracts around the world.
Despite the similarities to the 2008 liquidity crunch and companies dashing to bolster their US dollar holdings, things are by no means as bad now as they were then, they added.
The release date for “A Quiet Place Part II” has been delayed amid growing concerns over the coronavirus’ impact on the global theater marketplace.
Originally scheduled for March 20, director John Krasinski on Twitter said that it’s “clearly not the right time” to release the horror film sequel.
Paramount Pictures, the film’s distributor, hasn’t set a new global release date. It said in a statement the decision was made because of the “ongoing and developing situation concerning coronavirus and restrictions on global travel and public gatherings.”
This is the second major film’s release date to be pushed back. Last week, MGM and Universal announced that the upcoming James Bond film “No Time To Die” will be released in November instead of April.
The coronavirus selloff is asset class-agnostic: everything is getting hammered.
Stocks are in the red, so are commodities, led by plummeting oil prices.
Risk aversion has manifested itself in Treasury yields, that are lower than ever before. A “Japanification” of the US government bond market is under way, MacKinnon said.
Japan has had ultra-low interest rates and bond yields for years, but the desired growth bump never came. Market participants refer to this set of circumstances as “japanification”. It has also been observed in Europe.
Central banks around the world have loosened monetary policy in the face of the coronavirus crisis, but “the risk is that these policies fail to work in generating sustainable economic growth, as has been the case in Japan,” MacKinnon said.
Bitcoin is supposed to be a safe haven – a digital version of gold if you will. It’s not backed by a government and shouldn’t be hurt like the dollar, euro and other paper currencies are when central banks cut rates.
So much for that argument. Bitcoin plunged more than 20% Thursday and has now fallen more than 30% in the past week. It’s trading barely above $6,000 after soaring to more than $10,000 just a few weeks ago.
The cryptocurrency has been shellacked along with just about every other major financial asset as a result of the coronavirus pandemic.
Except for actual gold, that is. The price of the yellow metal did fall along with the rest of the market Thursday but it is still up about 4% in 2020 and is not far from a seven-year high.
So when it comes to safe havens, it looks like investors want something they can actually touch and feel instead of an asset they have to mine in a server farm.
