The Washington Post - 03.03.2020

TUESDAy, MARCH 3 , 2020. THE WASHINGTON POST EZ RE A

decade. Ye t with painful memo- ries of the 2008 financial crisis fresh in many Americans’ minds, fear of the coronavirus could prompt shoppers to rein it in. “Declining consumer confi- dence, 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. That threat to consumer confi- dence, coupled with the coronavirus’s blow to the manufacturing and production of toys, medical equipment, auto parts and smartphones from China, has the business community on high alert and has raised the chance of a recession, economists say. Washington state announced four more coronavirus deaths on Monday, bringing the toll in the United States to six, officials said, as the virus continues to spread despite travel restrictions aimed at c urtailing it. The U.S. Food and Drug Administration on Satur- day took steps to sharply expand testing. Meanwhile, cases contin- ue to rise in South Korea, Italy and Iran. “It is no longer possible to absolutely prevent new cases coming in,” Brendan Murphy, Australia’s chief medical officer, told reporters M onday. British Prime Minister Boris Johnson said the day before that he ex- pected 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, confirmed cases, while Iran sur- passed 1,500, with 66 deaths. [email protected] [email protected]

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 last week. Simeon Hyman, global investment strategist at P roShares, said the volatility was due to uncer- tainty. “Investors don’t know what the ultimate impact of the coronavirus will be,” Hyman said. “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 north- ern 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 purchas- es.” “Even though no one knows for sure how far this decline will go, Friday’s market action point- ed 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 Hang Seng was up roughly 0.6 percent, and the Shanghai c omposite was 3.15 percent in the green. European markets also en- tered corrections last week. They were only slightly steadier M onday, with Britain’s F TSE 100 gain- ing nearly 1.2 percent. Germany’s DAX was trading down about 0.3 percent. As last week’s sell-off fueled anxiety that the coronavirus could trigger a recession, central banks around the world faced calls to find ways to intervene, even when it wasn’t clear that

BY RACHEL SIEGEL AND THOMAS HEATH

Major U.S. stock indexes ral-
lied sharply M onday as investors
grew optimistic that the Federal
Reserve and other central banks
will soon intervene to limit the
economic impact from the
spread of the novel coronavirus.
Coming off Wall Street’s worst
week since the 2008 financial
crisis, the Dow Jones industrial
average rose nearly 1,300 points,
closing up 5.1 percent, its largest
percentage gain since March
200 9. The Standard & Poor’s
500-stock index and Nasdaq
composite also roared higher,
particularly in late-day trading.
Both finished up more than 4
percent, one of their biggest daily
gains in years.
“Today’s market rebound is all
at once an encouraging reminder
to real investors of the utter
silliness in trying to ‘time’ one’s
way in and out of this market
mayhem, and at the same time a
danger if one wants to approach
markets assuming a bottom has
been put in place,” said David
Bahnsen, c hief investment officer
of the Bahnsen Group, based in
Newport Beach, Calif.
All 11 S&P 500 stock market
sectors were positive M onday, l ed
by utilities and consumer s taples,
as investors traded on hopes that
the Fed and other central banks
will take action, such as by trim-
ming interest rates, t o stabilize
economies hurt by the coronavi-
rus fallout. The Dow’s big gainers
were Walmart and Apple.
“The market is anticipating
major responses from global cen-
tral banks, including multiple
rate cuts by the U.S. Federal
Reserve,” said Dan Ivascyn, who
oversees $1.9 trillion of assets as
group chief investment officer
a t Pimco.
The gains were welcome news
after last week, when all three
indexes dropped into correction

Economy & Business

TECHNOLOGY

Apple to pay iPhone

owners in settlement

Owners of Apple’s iPhone
could get $25 from the company
after it agreed to pay up to
$500 million to settle claims over
intentionally slowing down older
phones to preserve older
batteries.
Apple and lawyers
representing iPhone consumers
agreed to a deal stemming from
Apple’s 2017 admission that it
was slowing down phone
performance in older models to
avoid unexpected shutdowns
related to battery fatigue.
That admission led to Apple
offering discounted battery
replacements at $29, but many
people claimed they had already
spent hundreds of dollars to buy
new phones because Apple didn’t
reveal the cause of the problem.
If they had known they could
just buy new batteries, they
might not have bought new
phones, some consumers in the
case said.
Apple did not admit
wrongdoing. As part of the
settlement, the company will pay
$310 million to $500 million,
including about $93 million to
lawyers representing consumers.
Users who were named in the
class-action lawsuit will get up to
$3,500 each. The rest of the

settlement money will be distributed to owners of iPhone 6, 6S, 7 and SE models who meet eligibility requirements related to the operating system they had running. They must file claims to get the award. Depending on how many people file, the $ amount could shrink. — Associated Press

HOUSING

Construction spending jumped in January

Spending on U.S. construction projects rose to an all-time high in January, helped by strong gains for home construction and government building projects. The Commerce Department said Monday that construction spending increased 1.8 percent in January, the strongest monthly rise in nearly two years, pushing total spending to a record seasonally adjusted annual rate of $1.37 trillion. Home construction spending jumped 2.1 percent, the strongest gain since August. The strength came from single-family home construction, which rose nearly 3 percent, while apartment building was unchanged. Home building has been seeing strong gains since the summer as falling mortgage rates have helped to spur a rebound after more than a year

of lagging activity. Nonresidential construction was up 0.8 percent in January. Spending on government building projects rose 2.6 percent. — Associated Press

MANUFACTURING

Production index retreated in February

A key gauge of U.S. manufacturing retreated to n ear-stagnation in February amid mounting concern that the world’s largest economy won’t be able to dodge a hit from the coronavirus. The Institute for Supply Management index slid to 50. from 50.9 a month earlier, according to data. The factory gauge clinging just above 50, the dividing line between expansion and contraction, follows January’s surprisingly strong rebound that snapped a five-month run of shrinking activity. Coronavirus concerns flaring around the globe will test just how durable that figure can be amid supply- chain disruptions and weaker production. — Bloomberg News

ALSO IN BUSINESS New York City is suing a s tart-up that provides concierge

services for listings on Airbnb and other home-sharing sites, saying its business model is focused on helping people flout laws against short-term rentals. The city filed suit against Guesty in state court in Manhattan, seeking records and testimony as part of an investigation of illegal short-term rentals in New York. Filed by the mayor’s Office of Special Enforcement, the suit says the information is needed to

determine the impact of Guesty’s business on New York’s housing market and neighborhoods. Clorox’s chief executive said sales of his cleaning wipes are surging as the coronavirus continues to spread. Benno Dorer said in an interview that the company is ramping up production to accommodate higher demand in United States, which accounts for 85 percent of its revenue. As concerns around

the spread of the virus intensify, sales of product categories such as wipes rose in double digits last week, he added. Gilead Sciences agreed to b uy Forty Seven for about $4.9 billion to advance into one of the hottest areas of pharmaceutical research: cancer treatments that harness the immune system to fight tumors. Gilead will acquire Forty Seven for $95.50 per share in cash in a transaction cleared by both boards, the California-based company said in a statement. Forty Seven’s experimental medicine, called magrolimab, is a monoclonal antibody in early studies for several cancers affecting the blood and lymph nodes, including acute myeloid leukemia and diffuse large B-cell lymphoma. Carmaker Tesla registered 8 3 new cars in Norway last month, compared with 1, vehicles during the same period last year, according to data from the country’s transport authority. In the Netherlands, registrations plunged 68 percent to 155 units. The results are a bad omen for two of only four countries for which Te sla breaks out revenue on a quarterly basis. — From news services

COMING TODAY Earnings: Ta rget.

DIGEST

EPA-EFE/SHUTTERSTOCK An Indian farmer watches his newly planted agricultural field from a makeshift hut on the outskirts of Guwahati, India, as the sun goes down Monday.

ministration will surely press Britain to open its markets to American agricultural goods. Britain, while a member of the European Union, essentially banned imports of the United States’ hormone-injected beef and its chlorine-washed chick- ens. On Monday, Britain’s international trade secretary, Liz Truss, told the BBC, “We will not dimin- ish our food safety standards.” She also said the country’s Na- tional Health Service “is not on the table,” n or will Britain bend to see the United States set the prices that the NHS pays for drugs. “Those are two very clear red lines in our trade deal,” she said. [email protected]

demands that run contrary to U.S. interests. Speaking ahead of the release of Britain’s trade negotiating mandate, Johnson on Monday said, “We have the best negotiators in the business, and of course we’re going to drive a hard bar- gain to boost British industry.” The prime minister said, “Trading Scottish smoked salmon for Stetson hats, we will deliver lower prices and more choice for our shoppers.” And while the dollar benefit might not be all that fantastic, Johnson said the most important thing is, “this transatlantic trade deal will reflect the unique close- ness of our two great nations.” Congress and the Trump ad-

the economic hit Britain is forecast to suffer by leaving the Euro- pean Union’s single market next year. No matter, Britain is raring to make a start, talking with U.S. Trade Representative Robert E. Lighthizer, who was in London last week. About 100 negotiators from the two countries will prob- ably start shuttling across the Atlantic in coming weeks. The talks face brisk geopoliti- cal head winds, as they are set to begin during the middle of a presidential election, alongside a possible coronavirus pandemic. The negotiations will also run in parallel with Britain’s attempt to strike a new post-Brexit deal with the E.U., which has its own set of

America already do a brisk trade in goods and services — some $280 billion in 2019. Britain is the world’s fifth-largest economy, and the United States is its largest trade partner after the European Union, ac- counting for 19 percent of all exports and 11 percent of imports in 2018. In an analysis published Mon- day by Britain’s Department for International Trade, in anticipa- tion of U.K.-U.S. trade talks set to begin in coming weeks, economists forecast that a free-trade deal with the United States could boost the British economy by 0. percent. Brexit critics say that incremental increase will not come close to compensating for

would be “fantastic and big.” Trump has heaped praise on Johnson for his winning cam- paign to leave the European Union. Both leaders have prom- ised that once the United King- dom is free of Europe’s r egulatory shackles, a boom in transatlantic trade is in the offing. But in the best-case scenario, in a tariff-free and quota-free deal, trade between the two countries would increase by $20 billion over the next 15 years, according to the British government. The United Kingdom’s end of that? About $4.3 billion by the mid-2030s. One reason for the relatively humble sum is that Britain and

BY WILLIAM BOOTH

london — As Britain and the
Trump administration prepare to
launch talks to craft a free-trade
agreement between the two close
allies, Prime Minister Boris John-
son’s government revealed Mon-
day that even a super deal won’t
be worth that much money to
either side.
President Trump has boasted
that a trade pact with Johnson

Even best-case version of U.S.-Britain trade deal wouldn’t be that lucrative

After big promises, U.K. predicts only $20 billion increase over 15 years

U.S. stocks surge, global markets stabilize after big sell-off

Coming off Wall Street’s worst week since 2008, major indexes rally on hopes that Fed and other central banks will try to limit fallout from coronavirus

economy remain strong. Howev- er, 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.” There were concerns that last week’s Wall Street rout could push consumers to pull back on their spending and for compa- nies to put a pause on hiring. Consumer spending has propped up not just the U.S. economy, but also the global economy for a

H. Powell. “A s usual, Jay Powell and the Federal Reserve are slow to act,” Trump tweeted. “Germany and others are pumping money into their economies. Other Central Banks are much more aggressive. The U.S. should have, for all of the right reasons, the lowest Rate. We don’t, putting us at a competitive disadvantage. We should be lead- ing, not following!” On Friday, Powell said the central bank will act if the economy takes a toll from the coronavirus. “The fundamentals of the U.S.

their traditional methods for staving off an economic down- turn 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 Re- serve meets next, on March 18. Interest rates are j ust below 1. percent, a low level by historical standards but higher than the rates in much of the rest of the world. On Monday, President Trump criticized the Federal Reserve for being “slow to act” a nd continued his attacks on Fed Chair Jerome

SPENCER PLATT/AGENCE FRANCE-PRESSE/GETTY IMAGES People walk along Wall Street, where stocks rebounded Monday following a week of massive sell-offs that fueled anxiety about the novel coronavirus triggering a recession.

○

DOW 26,703. UP 1,293.96, 5.1% ○

NASDAQ 8,952. UP 384.80, 4.5% ○

S&P 500 3,090. UP 136.01, 4.6% ○

GOLD $1,594. UP $28.10, 1.8% ○

CRUDE OIL $46. UP $1.99, 4.4% ○

10-YEAR TREASURY UP $0.50 PER $1,000; 1.15% YIELD

CURRENCIES $1=108.34 Y EN, 0.90 EUROS

The Washington Post - 03.03.2020

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