THE WALL STREET JOURNAL. ***** Friday, March 6, 2020 |A
U.S. NEWS
with shares of airline operators
falling to the lowest levels in
years.
American Airlines dropped
13%, setting a record low, while
United Airlines fell 13% to its
lowest close since September- Cruise-operatorCarnival
fell 14% to its lowest level since
The Dow Jones Transporta-
tion Average—which tracks the
performance of 20 large air-
lines, truckers, railroads and
shippers—dropped 5.3%, its
biggest one-day percentage de-
cline since September 2011.
Investors are analyzing eco-
nomic data for any signs of wilt-
ing growth.
Data on Thursday showed
that U.S. factory orders fell in
January. New orders for manu-
factured goods decreased 0.5%,
the Commerce Department said,
a steeper fall than what econo-
mists surveyed by The Wall
Street Journal expected.
On Friday, investors will be
parsing the monthly jobs report
to see if U.S. hiring remained
strong in February.
The number of people in the
U.S. applying for first-time un-
employment benefits fell last
week, the Labor Department said
Thursday, suggesting anxiety
about the spread of the coronavi-
rus hasn’t yet affected layoffs.
In one warning sign, some ofthe recent stock declines suggest
investors are skeptical of how
much the Federal Reserve and
U.S. lawmakers can contain the
negative effects of the virus.
The Federal Reserve exe-
cuted an emergency half-per-
centage-point rate cut earlier
this week, its first such move
since the 2008 financial crisis.
Stocks fell after the announce-
ment. Investors are still betting
on more interest-rate cuts later
this year, CME Group data
show.
“You can cut rates to zero
and the virus could continue to
spread,” said Amy Kong, chief
investment officer at Barrett
Asset Management. “They can’t
control the virus.”
The Senate passed a roughly
$8.3 billion emergency spend-
ing bill to combat the coronavi-
rus on Thursday.
The government-bond rally
continued for the 11th consecu-
tive session, marking the larg-
est 11-day yield decline since
August 2011, according to Dow
Jones Market Data. Yields fall
as bond prices rise.
The falling yields have wide-
ranging effects on borrowing
costs and bank profitability.
Shares of financial companies
were some of the hardest hit in
Thursday’s market as falling
yields can crimp profits for big
banks. The S&P 500’s financial
sector dropped 4.9%.
Investors and analysts say
they are bracing for more vola-
tility. “I know that these wild
swings are overwhelming for
all of us,” Ms. Kong said.
“There’s so many headlines
around this situation.”
—Avantika Chilkoti
and Chong Koh Ping
contributed to this article.hard-hit by the virus, King and
Snohomish, reported Wednes-
day that the majority of its
schools have been affected by
direct and indirect exposure to
the virus. Numerous calls and
emails came from parents and
staff who decided to self-quar-
antine or keep their children
home. On Wednesday, its stu-
dent absentee rate was 20%,
the district said.
“The time has come for our
district community to make animportant shift,” said Michelle
Reid, Northshore’s superintend-
ent, in a letter to families. “We
want to do our part to slow the
spread of this coronavirus.”
Facebook closed one of its 18
Seattle offices Wednesday night
after a contract worker there
was diagnosed with the virus.
Amazon asked many of its
Seattle-area employees to work
from home until the end of
March. On Tuesday, an em-
ployee at the company’s Seattleheadquarters tested positive.
Microsoft told employees at its
Redmond, Wash., headquarters,
as well as at its San Francisco
Bay Area offices, that those
who are able to work from
home should do so.
As the new virus tested local
systems and preparedness, the
U.S. Senate on Thursday passed
a roughly $8.3 billion emer-
gency spending bill to combat
the infection’s spread. President
Trump is expected to sign theA suburban Seattle school
district launched the farthest-
reaching school closures in the
U.S. Thursday in an attempt to
contain the coronavirus, direct-
ing more than 23,500 students
to stay home for up to two
weeks in a last-resort step that
districts across the country are
considering.
The number of deaths in
Washington state rose to 11
Thursday and confirmed cases
jumped to 70 from 39 a day
earlier, prompting companies
including Microsoft Corp., Am-
azon Inc. and Facebook Inc. to
encourage employees in the
region to work from home.
Ten of those fatalities have
been in King County, where
Seattle is located.
As new coronavirus cases
continued to climb globally,
some health officials warned it
would be impossible to fully
contain the pathogen now that
infections are spreading within
many communities.
BYJENNIFERCALFAS
ANDTAWNELLD.HOBBS
Washington Gov. Jay Inslee
encouraged residents and or-
ganizations to give “serious
consideration” to canceling or
postponing large events. He
also directed state insurance
providers to waive copays and
deductibles for anyone quali-
fied for testing for the virus,
and directed the state’s labor
department to ensure compen-
sation for health-care workers
and first responders who are
quarantined.
“We are attempting to do ev-
erything humanly possible to
slow the spread of this virus,”
Mr. Inslee said.
North of Seattle, North-
shore School District said it
would close its 33 campuses
forupto14daysandthatits
students would continue their
lessons online.
The decision, which officials
said came after a parent at an
elementary school tested posi-
tive for the virus, mirrors the
actions of schools in Hong
Kong, mainland China and Italy,
among other affected countries.
Two smaller school districts in
New York state—Hastings-on-
Hudson Unified Free School
District and Mount Vernon City
School District—also an-
nounced closures.
The Northshore district,
which straddles two countiesagreement, which includes
funding for research efforts to
develop a vaccine, allocates
money to state and local gov-
ernments to battle the outbreak
and sends dollars overseas to
assist response efforts.
Across the U.S., the number
of cases Thursday rose to 215
and the death toll reached 12,
according to data from Johns
Hopkins University on Thursday
evening. Tennessee and Nevada
reported their first cases; both
patients had been traveling do-
mestically. Officials in Harris
County, Texas, announced two
new cases outside of Houston,
while Florida and Illinois each
announced one additional case.
The number of confirmed di-
agnoses in New York rose to 22,
including two new ones in New
York City. And San Francisco of-
ficials announced the city’s first
confirmed cases of Covid-19.
Globally, there were 97,
confirmed cases of the virus,
with 3,348 deaths, as of Thurs-
day evening, according to Johns
Hopkins. In China, where the
epidemic began late last year,
authorities reported 139 new
cases, up from 119 Wednesday.
Infections outside of China
have been outpacing infections
inside, with the number of
cases rising rapidly in South
Korea, Iran, France and Italy.Washington State Steps Up Coronavirus Fight
Some schools close
and governor directs
insurers to waive fees
as the death toll rises
An ambulance crew on Thursday outside a Kirkland, Wash., nursing home where several patients fell ill.JASON REDMOND/AGENCE FRANCE-PRESSE/GETTY IMAGESsome U.S. companies, includ-
ing home builders. That is a
problem in a market that is al-
ready short on supply, said Re-
altor.com senior economist
George Ratiu.
There are “barely enough
homes for sale to last three
months at the current sales
pace,” he said. (News Corp,
parent of The Wall Street
Journal, operates Realtor.com
under license from the Na-
ContinuedfromPageOne
tional Association of Realtors.)
Already, signs of a slow-
down are appearing in the
housing market. Low rates
pushed home sales to a high
mark for the year in Decem-
ber. But existing home sales
fell in January from a month
earlier, an indication that
cheaper borrowing costs are
no longer enough to overcome
five straight months of rising
home prices and limited hous-
ing supply.
For now, though, plenty of
buyers are using the opportu-
nity to refinance and buy.
Charles and Thomas Porter
of Raleigh, N.C., took advan-
tage of falling rates to save on
their mortgage payments
twice. They refinanced about a
year ago with online mortgage
company Better.com to cuttheir 30-year fixed rate to
3.5% from 4.375% and to get
rid of mortgage insurance.
Now, they are in the process
of buying a four-bedroom house
in Charlotte. Charles Porter,
who works for a home-building
company, and Thomas Porter,
who works in pharmaceutical
research, locked in a rate of
3.125%, also with Better.com.
The lower rate “helped us
feel confident in the move,”
Thomas Porter said.
The decline in rates is likely
to continue to fuel a refinanc-
ing frenzy that pushed mort-
gage lending to its highest
level since 2006 last year.
About 14.5 million home-
owners would benefit from re-
financing if 30-year rates hit
3.25%, just below their current
level, according to mortgage-data firm Black Knight Inc.
Refinancing applications
were up 26% from the previ-
ous week and more than 200%
from the same time last year,
according to Mortgage Bank-
ers Association data released
Wednesday.
The jump in refinancings
poses a challenge for banks
and other mortgage lenders,
which often hire staff when
the housing market picks up
each spring.
“You can never anticipate a
drop like this, and there’s no
way you can staff up fast
enough,” said Esther Phillips,
senior vice president of sales
at Key Mortgage Services Inc.
Some homeowners and real-
estate agents have complained
of delays in closing their mort-
gages in recent weeks.JPMorgan Chase & Co.
moved some of its home-eq-
uity employees to the mort-
gage business last week to
handle an increase in purchase
applications and maintain its
closing window.
This week, the bank paused
email marketing campaigns on
refinancing because of high
application numbers, said
Chase Home Lending Chief
Marketing Officer Amy Bonita-
tibus. Chase is encouraging
people to complete their appli-
cations online, she said.
Wells Fargo & Co., the larg-
est mortgage lender in the U.S.
by originations, said it has
been hiring people to under-
write, process and close mort-
gages to meet demand.
Lenders can control the in-
flux by holding their rates at alevel that will attract a man-
ageable number of applications.
During those periods, mortgage
rates tend to fall slower than
the yield on the benchmark 10-
year Treasury note, widening
the gap between them. On
Thursday, that gap widened to
2.19 percentage points, its big-
gest since February 2009, ac-
cording to an analysis by Dow
Jones Market Data.
Still, many say lenders are
better equipped to handle a
rush of mortgage demand than
last year, when the refinancing
boom caught many off guard.
“This year maybe they are
in a position to capitalize on it
better than they were in
2019,” said John Toohig, head
of the group that trades whole
loans, including mortgages, at
Raymond James Financial Inc.Mortgage
Rates Hit
A New Low
azon.comInc. asked many of its
employees in the area to work
from home until the end of
March. The number of cases in
New York has also risen.
“We are all dealing with an
unknown,” said Stephen Lee,
founding principal at Logan
Capital Management. “It’s test-
ing a lot of businesses.”
This week’s wild swings in
the stock market followed a
seven-session losing streak for
the S&P 500, leaving the broad
index down nearly 11% from its
Feb. 19 high.
That volatility has been a
wake-up call for many investors
accustomed to years of steadily
climbing markets.
“For years it was ‘buy the
dip,’ ‘buy the dip,’ ‘buy the
dip,’” said JJ Kinahan, chief
market strategist at TD Ameri-
trade. “It’s very unsettling for
people to see these kinds of
moves every day.”
All 11 of the S&P 500’s sec-
tors fell, sending the broader
gauge down 106.18 points, or
3.4%, to 3023.94. The Dow
Jones Industrial Average closed
down 969.58 points, or 3.6%, to
26121.28. The tech-heavy Nas-
daq Composite shed 279.
points, or 3.1%, to 8738.60.
The losses continued in Asia
early Friday. Japan’s Nikkei Stock
Average was down 3.2% at mid-
day, Hong Kong’s Hang Seng In-
dex was off 2.1% and the Shang-
hai Composite was down 1%.
All three major U.S. indexes
are still on track for weekly
gains of at least 2%. That is
partly because of a dramatic
rally Wednesday that was
spurred by former Vice Presi-
dent Joe Biden’s surprise victo-
ries in the race for the Demo-
cratic presidential nomination
on Super Tuesday.
But much of that enthusiasm
receded Thursday. As investors
fled stocks, the rush for tradi-
tionally safer assets continued,
sending 10-year Treasury yields
to a record low of 0.924% as
mortgage rates fell to the low-
est level ever.
Travel and leisure stocks
continued to take a beating,
ContinuedfromPageOne
Stocks Fall
As Jitters
Resume
DowJonesIndustrialAverage,dailymovesSource: FactSet402%Jan.2020 Feb. MarchAll three major
indexes are still on
track for weekly
gains of at least 2%.Perfect score from Italy’s top critic
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