The Wall Street Journal - 16.03.2020

© 2020 Dow Jones & Company. All Rights Reserved. ***** THE WALL STREET JOURNAL. Monday, March 16, 2020 |B1

TECHNOLOGY: WORK-FROM-HOME PLANS RUN INTO GLITCHES B4

LastWeek:S&P2711.02g8.79% S&PFINg9.83% S&PITg5.20% DJ TRANSg11.35% WSJ$IDXÀ3.09% LIBOR3M0.843 NIKKEI17431.05g15.99% See more at WSJ.com/Markets

BUSINESS & FINANCE

“We’re all committed to

making sure we’re keeping our

stores open to serve the Ameri-

can consumer who’s rapidly

stocking up on household es-

sentials,“TargetInc. Chief Ex-

ecutive Brian Cornell said at a

White House news conference

on Friday.

On Saturday,AppleInc. said

all of its stores outside Greater

China would be closed until

March 27 in light of the wors-

ening spread of the virus. Apple

stores in China were open Sat-

urday, a sign of how the threat

of the epidemic has shifted. Ap-

ple said a retail employee at its

Santa Monica, Calif., store

tested positive for the virus.

Walmart said its 4,700 U.S.

stores would stay open but

close overnight to help the

company clean and disinfect

surfaces. Previously, about

2,200 of its U.S. stores were

open 24 hours. The company

BOX OFFICE

Weekend ticket sales

drop to lowest since

2000 as people

stay home.B5

U.S. grocers are adjusting

their operations to try to keep

up with customers who are

emptying their shelves amid

angst over the new coronavirus,

even as their own employees

face heightened risk of infec-

tion.

Across the country, lines to

get into stores snaked around

corners, checkout times

stretched as long as an hour

and entire aisles were rendered

bare in recent days as compa-

nies told more workers to stay

home and schools began to can-

cel classes.

President Trump on Sunday

held a conference call with

more than two dozen grocery

and supply chain executives, in-

PleaseturntopageB2

BYJAEWONKANG

ANDANNIEGASPARRO

Grocers

Fall Behind

Demand

INSIDE

The country’s large technol-

ogy companies have joined

with the White House in a task

force to fight the new coronavi-

rus, as Silicon Valley escalates

its efforts to tackle the fast-

moving pandemic, according to

people familiar with the group.

The companies, including

FacebookInc.,AlphabetInc.’s

Google unit,MicrosoftCorp.

andAmazon.comInc., on Sun-

day conducted a nearly hour-

long meeting with White House

officials, including Michael

Kratsios, chief technology offi-

cer of the U.S., one of these

people said. Forty-five people

joined.

Among the topics: how citi-

zens could be diagnosed with-

out visiting a doctor and how

the companies could work with

the Centers for Disease Control

and Prevention on its top prior-

ities, according to an agenda.

The Technology and Re-

search Task Force is part of a

broad push by technology com-

panies large and small across

Silicon Valley to figure out

ways to solve the myriad prob-

lems related to the rapidly

spreading virus. Tech compa-

nies are racing to figure out ev-

erything from how fast the vi-

rus is spreading to predicting

PleaseturntopageB5

BYKIRSTENGRIND

ANDROLFEWINKLER

Tech

Behemoths

Take On

Pandemic

plunge has eroded hundreds of

billions of dollars in market

value from producers around

the world and fueled specula-

tion about bankruptcies and

mergers. Skepticism about en-

ergy companies’ ability to pay

a heavy debt burden is also

driving concerns that oil’s fall

will hurt lenders and exacer-

bate the economic slowdown

resulting from the coronavirus.

While consumers are enjoy-

ing the lowest fuel prices in

years, analysts say it is too

early to count on a demand

boost from the energy crash.

Companies are already reduc-

ing spending, and the trans-

portation restrictions resulting

from the coronavirus will

likely dull the typical increase

in travel one would expect

with fuel costs dropping. Re-

search firm Capital Economics

projects the drop in drilling in-

vestment to more than offset

the boost in gasoline con-

sumption in calculating sec-

ond-quarter U.S. economic

growth.

For Americans who lived

through the oil-price spikes of

1973 following the Arab oil

embargo, 1979 after the Ira-

nian revolution and 1990

during the Gulf crisis, the con-

cept of slumping crude being a

negative economic signal

seems perplexing. Many re-

member gasoline shortages

PleaseturntopageB9

For Rebecca Babin, the oil
crash arrived slowly, then all
at once.
The senior energy trader at
CIBC Private Wealth Manage-
ment watched crude prices fall
10% March 6 after Saudi Ara-
bia couldn’t persuade Russia
to join a plan for deeper sup-
ply cuts. The next day’s escala-
tion in the feud sent the 42-
year-old scrambling to alert
her team, adjust their models
and prepare for the opening of
trading Sunday evening.
When trading began, U.S.
crude oil tumbled from $41 a
barrel to around $30 in a mat-
ter of minutes, going on to
post its biggest one-day drop
since the first Gulf War in

1991. Ms. Babin said she woke
      up every two hours Sunday
      night to stay abreast of the
      turmoil, which now has inves-
      tors who rode out oil’s spike to
      $145 in 2008 preparing for
      one of the world’s key com-
      modities to trade at a fraction
      of that price moving forward.
      “There were elements of it
      that were unlike anything I’ve
      experienced,” she said. “This is
      clearly a change to how the
      commodity is going to trade
      for the foreseeable future.”
      Oil went on to swing wildly
      in the low $30s in another tur-
      bulent week in global markets,
      ending the week at $31.73. Its

BYAMRITHRAMKUMAR

Oil Crash Ignites

Talk of Defaults,

Consolidation

Source: FactSet

Note: Futures price based on front-month contract.

U.S.crude-oilfuturesprice

FRIDAY

$7

t48%

year to date

Saudi Arabia

escalates clash

with Russia,

saying it will

lower its

prices

$60

30

35

40

45

50

55

a barrel

Jan. Feb. March

July

2019

Aug. Sept. Oct. Nov. Dec.

China reports

first death from

new coronavirus

Attack

on Saudi

facilities

1986 ’90 2000 ’10 ’20

t48%

Biggestdropsince1986

THIS YEAR

ChangeinU.S.crudeprice,throughMarch13ofeachyear

25

–50

–25

0

%

record low of 0.501% Monday.

While the rise in rates itself

isn’t large enough to present a

problem to companies and

other borrowers, the spectacle

of bond yields rising during a

flight-to-safety event unnerved

some investors, particularly

given the sharpness of the

bond rally that preceded the

selloff.

One measure of the sharp-

ness of that rally is evident in

PleaseturntopageB2

til concerns about Treasury

market liquidity, margin calls

to investors with wrong-way

bets and the unwind of lever-

aged trades can be dismissed

with greater conviction.

“Originally when the market

was going down, Treasurys

were working just fine,” said

Jack Janasiewicz, portfolio

manager at Natixis Investment

Managers Solutions. “Then that

started to break down. That’s

when you just say, you know

what, I’m OK with cash.”

The 10-year Treasury yield

hit 0.946% Friday, up from its

ven assets has attracted the at-

tention of traders, bankers and

regulators alike. The Federal

Reserve conducted some of its

most extraordinary interven-

tions in years starting with a

plan to temporarily pour $1.5

trillion into markets. Traders

said there were signs that balky

areas of the bond markets such

as those for mortgage securi-

ties were trading more health-

ily Friday.

Yet many investors say they

expect volatility will remain the

norm and that a full return to

stocks won’t be in the cards un-

Many traders and portfolio

analysts are cautious, thanks to

signs of underlying distress.

Gold, normally a strong per-

former in times of stress, suf-

fered its worst week since 2011,

dropping 9.3% and wiping out

all its 2020 gains. Silver, a

more volatile precious metal,

tumbled 16% and is down 19%

for the year. And perhaps most

troublingly, U.S. government

bonds took a hammering, with

the 10-year Treasury yield ris-

ing four straight days in its

largest such gain since 2009.

The retreat of these safe-ha-

since 2008—a sign of normal

market functioning.

Then late Sunday afternoon,

the Federal Reserve cut its

benchmark interest rate to near

zero and said it would buy

$700 billion in Treasury and

mortgage-backed securities,

among other actions.

Stock futures slid Sunday

evening at the open of trading

after the Fed announcement.

Dow Jones Industrial Average

futures fell 1,040 points, or

4.6%, while S&P 500 futures fell

5% to again hit a limit designed

to stall further drops.

Investors wading back into
tumultuous markets this week
face an unusual challenge:
playing unruly stock indexes
while cracks are visible in the
world’s largest market for in-
terest rates.
The Dow industrials dropped
10% last week, even after post-
ing their largest gain since
2008 on Friday with a 9.4% ad-
vance. Friday’s gains came
alongside increases in the price
of oil, which suffered its steep-
est weekly percentage loss

BYKARENLANGLEY

Businesses, Markets Set for More Turmoil

backed loans to airlines, people

familiar with the matter said.

Treasury Secretary Steven

Mnuchin has said he is espe-

cially interested in assistance

for the airline industry be-

cause of the importance of

maintaining a domestic-travel

network. Such aid could be

provided by deferring tax pay-

ments or through other means,

such as loan guarantees.

“The airlines industry in

PleaseturntopageB2

had then seemed like draconian

cuts to costs and flying capac-

ity, but by the end of the week

said they were no longer suffi-

cient. And with financial out-

looks rapidly deteriorating, air-

lines on both sides of the

Atlantic are being forced to take

more drastic action to slash

costs. Major U.S. airlines are in

talks with the government

about financial support, and

one possibility being discussed

is low-interest government-

the next 30 days, in addition to

the two million affected by the

newly imposed ban on flights

from continental Europe, ac-

cording to analysts at Cirium.

On Saturday, President

Trump said officials are consid-

ering restrictions on travel

within the U.S. Asked whether

Americans should avoid domes-

tic travel, he said, “If you don’t

have to travel, I wouldn’t do it.”

As this past week started,

airlines had announced what

customer anxiety about con-

tracting the virus while flying,

have caused airlines to cut the

number of flights by up to 70%

in some cases, prepare for the

worst-case scenario and talk

to employees about the com-

pany’s future.

New restrictions on travel to

the U.S. from the U.K. and Ire-

land set to begin Monday night

could remove the equivalent of

another one million aircraft

seats from the market during

Airlines around the globe
are fighting for survival as
they confront an array of lim-
its on air travel.
In the span of a week, what
started as a nascent crisis has
snowballed as worries about
the spreading new coronavirus
prompted countries, including
the U.S., to restrict travel.
Those limitations, along with

last week said a worker in a

Kentucky store tested positive.

Products are moving

through the supply chain and

making their way to stores,

Walmart said this weekend;

store managers, however, may

limit sales quantities on items

in unusually high demand. Wal-

mart said its hourly employees

will continue to work day and

evening shifts.

Target, which has about 1,800

stores, has placed quantity limits

on some items and paused its

next-day delivery and express-

shipping services, which were

overwhelmed by demand. The

company has shifted staff to help

fulfill online orders that custom-

ers pick up at stores or in store

parking lots, a spokesman said.

Target and other large re-

tailers invested heavily to offer

more ways to buy online for de-

livery or pickup. The capacity

of those services are now being

tested as shoppers flock to

PleaseturntopageB2

U.S. clothing and mall retail-
ers fromAbercrombie & Fitch
toNikeInc. are closing thou-
sands of stores across the
country for two weeks, unprec-
edented moves to stem the
spread of the coronavirus.
On Sunday, the companies
said they would continue pay-
ing their store workers and tak-
ing online orders. The list in-
cluded sportswear makers like
Lululemon AthleticaInc. and
Under ArmourInc. as well as
the owners of popular chains
likeUrban Outfitters.
Grocers and other chains
that sell foods, medicines and
household essentials have
promised to stay open and re-
stock as people race to fill pan-
tries and refrigerators.Wal-
martInc. and grocersKroger
Co. andPublixsaid they will
limit overnight hours for clean-
ings and restocking shelves.

BYSUZANNEKAPNER
ANDSARAHNASSAUER

Retailers Temporarily Close Stores in the U.S.

Apple said stores outside Greater China are closed until March 27. A West Des Moines, Iowa, store.

FRITZ NORDENGREN/ZUMA PRESS

BYALISONSIDER
ANDBENJAMINKATZ

Airlines Face Increasingly Dire Situation

 Heard on the Street: Fed can

likely handle market hit.... B10