FILE PHOTO: The Federal Reserve seal is seen during Chairman Jerome Powell news conference following the two-day meeting of the Federal Open Market Committee (FOMC) meeting on interest rate policy in Washington, U.S., January 29, 2020. REUTERS/Yuri Gripas/File Photo
WASHINGTON (Reuters) - The U.S. Federal Reserve cut interest rates on Tuesday in an emergency move designed to shield the world’s largest economy from the impact of the coronavirus.
In a statement, the central bank said it was cutting rates by a half percentage point to a target range of 1.00% to 1.25%.
“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate,” the Fed said a statement.
The decision was unanimous among policymakers.
The Fed’s decision to cut interest rates before its next scheduled policy meeting on March 17-18 reflects the urgency with which the Fed feels it needs to act in order to prevent the possibility of a global recession.
Reporting by Lindsay Dunsmuir; Editing by Dan Burns and Andrea Ricci
U.S. stocks reversed earlier losses and jumped after the Federal Reserve delivered an emergency rate cut Tuesday morning.
Earlier, stocks had been lower after Group of Seven policymakers released a statement with few specific details about their efforts to address the coronavirus outbreak, disappointing investors seeking a concrete, coordinated global response.
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10:11 a.m. ET: Stocks jump after Federal Reserve announces emergency 50 basis point rate cut amid coronavirus outbreak
The Federal Reserve unexpectedly delivered an emergency rate cut Tuesday morning, bringing the target band for benchmark interest rates down to between 1.00% and 1.25%, from the band of 1.50-1.75% previously.
The move was an apparent response to the mounting coronavirus outbreak. In a statement, the Fed said, “The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity.”
The vote for the rate cut was unanimous, the Fed said.
Stocks immediately reversed earlier losses. The Dow rose more than 200 points just after the statement was posted at 10 a.m. ET, after earlier being down by more than 350 points. U.S. Treasury yields added to gains on the long end of the curve, with the U.S. 10-year yield up more than 5.1 basis points to 1.137%, and the 30-year yield up 7.2 basis points to 1.171% as of 10:11 a.m. ET.
Fed Chair Jerome Powell is set to hold a press conference at 11 a.m. ET.
The coronavirus panic is growing with each passing day, and raising the stakes for central banks and governments to prevent a global recession. The Group of Seven’s tepid statement on Tuesday morning — which came just as stock futures rallied on hopes of coordinated action — underscored what Bleakley’s Peter Boockvar says are officials who appear to have run out of policy ammunition:
If you had any wonder what drove yesterday’s incredible rally, just look at all the travel and tourism stocks which were essentially flat to down implying that it was all about hopes for the Fed and other central banks. Between the Treasury market over the past week and stocks yesterday, markets have so intimidated the Fed into acting that they now have no choice but to act. As for the ECB, while they have good intentions too, they found a way yesterday to say with a straight face that in response to the “fast developing situation” of the coronavirus spread, “We stand ready to take appropriate and targeted measures, as necessary and commensurate with the underlying risks.”
With the Federal Reserve and ECB indicating they’re poised to cut, Boockvar thinks central banks are...”shooting blanks”:
The risk again with all of this is that the help to financial markets ends up being fleeting as investors focus instead on the economic situation and not a slightly lower cost of capital and I'll argue that is a much worse potential situation here for central bankers and the markets than instead disappointing the markets by being honest and saying rate cuts won't help fight the economic impact of the virus. Don't forget about the last two rate cutting cycles where the fundamentals dominated no matter how many times the Fed tried to fight it. Bottom line, shooting blanks is the real risk.
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9:36 a.m. ET: Stocks open lower after disappointing G7 statement
U.S. stocks fell just after market open Tuesday on the heels of a massive rally Monday. Stock futures had pared gains in early trading after a statement from G7 finance ministers stopped short of promising concrete fiscal or monetary policy actions to address the coronavirus outbreak.
In the S&P 500, the Financials and Energy sectors lagged. Shares of JPMorgan Chase, Exxon Mobil and Intel were the biggest losers in the Dow just after market open.
Here were the main moves in market, as of 9:36 a.m. ET:
S&P 500 (^GSPC): -0.48% or -14.89 points to 3,075.34
Nasdaq (^IXIC): -0.45% or -43.93 points to 8,904.49
Crude oil (CL=F): +2.29% or +1.07 to $47.82 a barrel
Gold (GC=F): +0.65% or +$10.30 to $1,605.10 per ounce
10-year Treasury (^TNX): yielding 1.134%, or +4.4 bps
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9:12 a.m. ET: New York City high school closes Tuesday amid suspected coronavirus case
New York City-based SAR Academy and SAR High School said in a statement that school would be closed Tuesday as a precautionary measure, due to a suspected coronavirus case.
The Center for Disease Control and Prevention reported 91 cases of COVID-19 in the U.S. as of Monday.
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8:41 a.m. ET: G7 response ‘raises the risk that central banks will disappoint markets’ expectations in the months ahead,’ analyst says
The G7 statement after finance ministers’ conference call this morning extinguished investor hopes for swift monetary and fiscal policy action. It could suggest further disappointments are down the line, according to Jennifer McKeown, head of global economic service at Capital Economics.
Here’s what she had to say about the statement:
The G7 statement falls short of hopes of a coordinated policy response and raises the risk that central banks will disappoint markets’ expectations in the months ahead. The statement that G7 countries are committed to “use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks” and that central banks will “continue to fulfil their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system” adds little to what we had already heard from national central banks and governments. This is a disappointment compared to previous hopes of an immediate and coordinated fiscal package and interest rate cuts, although such hopes had already been dampened by information leaked from “G7 officials” early this morning.
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7:47 a.m. ET: Stocks futures pare gains after G7 policymakers release statement
Following a conference call Tuesday morning, G7 finance ministers and central bank policymakers said Tuesday they were “ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy” amid the coronavirus outbreak, according to a statement.
Stock futures immediately pared gains after the statement, which provided no specific actions the officials were set to take in the face of the mounting outbreak. Contracts on the S&P 500, which had been higher earlier in the overnight session, turned slightly negative as of 7:47 a.m. ET.
Target delivered fourth-quarter adjusted earnings per share (EPS) of $1.69, or three cents ahead of consensus, according to Bloomberg data. Same-store sales grew 1.5% in the quarter, matching expectations. Revenue of $23.40 billion was slightly short of expectations for $23.44 billion.
Target said it expected full-year adjusted EPS of between $6.70 and $7.00, below expectations for $6.94.
In light of the mixed report, the company touted its digital sales growth, which increased 29% in 2019. This was the sixth straight year that digital sales grew by more than 25%, and came along with overall comparable sales growth of 3.4% for the year.
"With eleven consecutive quarters of positive comparable sales growth, driven by healthy performance in both our stores and digital channels, Target's results demonstrate that we've built a sustainable business model that drives strong topline growth and consistent bottom line performance," Brian Cornell, chairman and CEO of Target, said in a statement.
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7:18 a.m. ET: Stock futures rise, adding to Monday’s record gains
Hopes for a coordinated global response to the coronavirus helped buoy risk assets, sending the Dow more than 100 points higher in early trading. G7 policymakers are expected to release a statement sometime after their conference call Tuesday morning eastern.
The call comes shortly after Bank of England Governor Mark Carney – who will attend the call – said Tuesday that finance chiefs were creating a “powerful and timely” response to support the world economy in the face of the coronavirus outbreak, which would likely include both fiscal and monetary policy measures. And on Monday, France’s Finance Minister Bruno Le Maire asserted G7 leaders would seek “concerted action” in the matter.
The U.S. Federal Reserve on Friday had also issued a release on the coronavirus last Friday, saying the central bank would “use [its] tools and act as appropriate to support the economy” as the outbreak spreads. Fed Chair Jerome Powell is also set to attend the call, along with U.S. Treasury Secretary Steven Mnuchin.
Here were the main moves during the pre-market session, as of 7:18 a.m. ET:
S&P 500 futures (ES=F): 3,077.75, up 12.75 points or 0.42%
Dow futures (YM=F): 26,651.00, up 183 points or 0.68%
Nasdaq futures (NQ=F): 8,855.25, up 64 points or 0.73%
Crude oil (CL=F): $48.14 per barrel, up $1.39 or 1.39%
Gold (GC=F): $1,604.40 per ounce, up $9.60 or 0.60%
NEW YORK, March 2, 2020 -- A trader works at New York Stock Exchange in New York, the United States, on March 2, 2020. U.S. stocks finished sharply higher on Monday following last week's rout. (Photo by Wang Ying/Xinhua via Getty) (Xinhua/Wang Ying via Getty Images)
U.S. stocks futures pared gains, and contracts on the S&P 500 at least briefly turned negative, after Group of Seven policymakers released a statement with few specific details about their efforts to address the coronavirus outbreak.
Earlier, investors had anticipated that the rare conference call Tuesday morning between the G7 officials would produce a coordinated global response to the outbreak comprising both fiscal and monetary policy actions. Over the past few days, several officials had hinted at a comprehensive response to support the world economy.
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9:12 a.m. ET: New York City high school closes Tuesday amid suspected coronavirus case
New York City-based SAR Academy and SAR High School said in a statement that school would be closed Tuesday as a precautionary measure, due to a suspected coronavirus case.
The Center for Disease Control and Prevention reported 91 cases of COVID-19 in the U.S. as of Monday.
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8:41 a.m. ET: G7 response ‘raises the risk that central banks will disappoint markets’ expectations in the months ahead,’ analyst says
The G7 statement after finance ministers’ conference call this morning extinguished investor hopes for swift monetary and fiscal policy action. It could suggest further disappointments are down the line, according to Jennifer McKeown, head of global economic service at Capital Economics.
Here’s what she had to say about the statement:
The G7 statement falls short of hopes of a coordinated policy response and raises the risk that central banks will disappoint markets’ expectations in the months ahead. The statement that G7 countries are committed to “use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks” and that central banks will “continue to fulfil their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system” adds little to what we had already heard from national central banks and governments. This is a disappointment compared to previous hopes of an immediate and coordinated fiscal package and interest rate cuts, although such hopes had already been dampened by information leaked from “G7 officials” early this morning.
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7:47 a.m. ET: Stocks futures pare gains after G7 policymakers release statement
Following a conference call Tuesday morning, G7 finance ministers and central bank policymakers said Tuesday they were “ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy” amid the coronavirus outbreak, according to a statement.
Stock futures immediately pared gains after the statement, which provided no specific actions the officials were set to take in the face of the mounting outbreak. Contracts on the S&P 500, which had been higher earlier in the overnight session, turned slightly negative as of 7:47 a.m. ET.
Target delivered fourth-quarter adjusted earnings per share (EPS) of $1.69, or three cents ahead of consensus, according to Bloomberg data. Same-store sales grew 1.5% in the quarter, matching expectations. Revenue of $23.40 billion was slightly short of expectations for $23.44 billion.
Target said it expected full-year adjusted EPS of between $6.70 and $7.00, below expectations for $6.94.
In light of the mixed report, the company touted its digital sales growth, which increased 29% in 2019. This was the sixth straight year that digital sales grew by more than 25%, and came along with overall comparable sales growth of 3.4% for the year.
"With eleven consecutive quarters of positive comparable sales growth, driven by healthy performance in both our stores and digital channels, Target's results demonstrate that we've built a sustainable business model that drives strong topline growth and consistent bottom line performance," Brian Cornell, chairman and CEO of Target, said in a statement.
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7:18 a.m. ET: Stock futures rise, adding to Monday’s record gains
Hopes for a coordinated global response to the coronavirus helped buoy risk assets, sending the Dow more than 100 points higher in early trading. G7 policymakers are expected to release a statement sometime after their conference call Tuesday morning eastern.
The call comes shortly after Bank of England Governor Mark Carney – who will attend the call – said Tuesday that finance chiefs were creating a “powerful and timely” response to support the world economy in the face of the coronavirus outbreak, which would likely include both fiscal and monetary policy measures. And on Monday, France’s Finance Minister Bruno Le Maire asserted G7 leaders would seek “concerted action” in the matter.
The U.S. Federal Reserve on Friday had also issued a release on the coronavirus last Friday, saying the central bank would “use [its] tools and act as appropriate to support the economy” as the outbreak spreads. Fed Chair Jerome Powell is also set to attend the call, along with U.S. Treasury Secretary Steven Mnuchin.
Here were the main moves during the pre-market session, as of 7:18 a.m. ET:
S&P 500 futures (ES=F): 3,077.75, up 12.75 points or 0.42%
Dow futures (YM=F): 26,651.00, up 183 points or 0.68%
Nasdaq futures (NQ=F): 8,855.25, up 64 points or 0.73%
Crude oil (CL=F): $48.14 per barrel, up $1.39 or 1.39%
Gold (GC=F): $1,604.40 per ounce, up $9.60 or 0.60%
NEW YORK, March 2, 2020 -- A trader works at New York Stock Exchange in New York, the United States, on March 2, 2020. U.S. stocks finished sharply higher on Monday following last week's rout. (Photo by Wang Ying/Xinhua via Getty) (Xinhua/Wang Ying via Getty Images)
Target on Tuesday outpaced fourth-quarter earnings expectations, but revenue fell short because of weak sales of toys, electronics and home goods over the holidays.
Shares were up fractionally in premarket trading.
Here's what Target reported compared with what analysts were expecting, based on a survey of analysts by Refinitiv:
Earnings per share, adjusted: $1.69 vs. $1.65 expected
Revenue: $23.40 billion vs. $23.50 billion expected
Same-store sales growth: 1.5% vs. 1.5% expected
In the fourth quarter ended Feb. 1, net income grew to $834 million, or $1.63 per share, from $799 million, or $1.52 per share, a year earlier.
Excluding items, Target earned $1.69 per share, which was higher than the $1.66 per share analysts were expecting, according to Refinitiv.
Target said revenue grew to $23.40 billion, from $22.98 billion last year, and lower than the $23.50 billion analysts expected.
Sales at stores open at least a year rose 1.5%, in line with expectations. Target has had 11 consecutive quarters of growth at stores opened at least a year.
The discount retailer has invested in its stores and expanded its e-commerce business, as many other retailers have struggled and shuttered brick-and-mortar locations. It has launched thriving apparel brands and recently added a new activewear line, All in Motion, and new luggage line, Open Story.
Target said same-day services were a major driver in the fiscal fourth quarter. The retailer offers same-day pickup in store and by drive-up and has same-day delivery of packages through Shipt. The company said those same-day services accounted for more than 80% of its comparable digital sales growth during the period.
"The strategic investments we've made over the past several years to elevate the shopping experience, curate our multi-category assortment at scale, and deliver ease and convenience through our fulfillment capabilities are deepening our relationship with our guest," CEO Brian Cornell said in a news release.
Target surprised Wall Street in January when it disclosed slower-than-expected holiday sales, but it saw continued strength in apparel, beauty and food and beverage. A company spokesperson said strong sales in those categories meant there were fewer bargains leftover for after-holiday shoppers. That meant higher profits, but fewer sales.
In the first quarter of fiscal 2020, Target has called for $1.55 to $1.75 earnings per share and for same-store sales to grow in the low single digits.
Analysts surveyed by Refinitiv estimated Target would earn $1.66 per share on revenue of $18.19 billion and same-store sales would grow by 2.7% in the quarter.
In fiscal 2020, Target has said earnings per share will range from $6.70 to $7, compared with analysts' estimates of $6.87. It said same-store sales will grow by the low single digits, while analysts said they'll be up by 3.2%
Target's shares have gained nearly 50% over the past 12 months, bringing its market value to $55.3 billion.
U.S. stock index futures were higher Tuesday morning, as investors sought to assess the potential economic fallout as a result of the fast-spreading coronavirus.
As of 5:15 a.m. ET, the Dow Jones industrial average indicated a positive open of more than 50 points. Futures on the S&P 500 and Nasdaq 100 were both slightly higher.
The premarket moves follow a roaring comeback rally in the previous session that saw the Dow post its biggest percentage gain since March 2009. The index also recorded its largest-ever point surge on Monday.
A Reuters report said the Group of Seven industrial powers is expected to issue a statement Tuesday or Wednesday on countering the impact of the coronavirus outbreak. That did not include any specific call for new government expenditure or coordinated interest rate cuts by central banks, Reuters reported citing a G-7 official with direct knowledge of the deliberations.
Earlier, CNBC’s Steve Liesman had reported that Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will lead a G-7 call on Tuesday at 7 a.m. ET. That will be a “coordinating call” for the financial and economic response to the coronavirus, a source familiar told CNBC. A group statement will be sent after the call.
The Reuters report came as markets had gotten a boost earlier this week amid investor expectations of big central bank stimulus over the coming days to boost the economy and markets.
The Reserve Bank of Australia announced on Tuesday a cut in its cash rate by 25 basis points to 0.5%, a new record low.
In a statement announcing the decision, the Australian central bank’s governor acknowledged that the coronavirus outbreak overseas is having a “significant effect” on the country’s economy and said the move to ease monetary policy was done to “provide additional support to employment and economic activity.”
Monday saw U.S. stocks snap a losing streak that had gone on for over a week. Some investors are skeptical that the rally has legs without a significant central bank response. Even if that comes to fruition, investors have their doubts the market has seen the end of its tumultuous trading of the last six days.
Jeff Mills, the chief investment officer at Bryn Mawr Trust, said on “ Power Lunch” that he was not advising clients to buy back into the market and that Monday’s rally was just a “technical snapback.”
“I think the spectrum of outcomes is so wide here that one trading day is not going to resolve all of our issues, so we’re telling our clients just to sit tight for now,” Mills said.
The U.S. stock market saw a historic bounce back on Monday, with the Dow gaining nearly 1,300 points. The Dow finished up 5.1% on the day, while the S&P 500 gained 4.6%.
Some expect central banks around the world to announce a coordinated policy response to fight the coronavirus. Goldman Sachs chief economist Jan Hatzius said on “ Closing Bell” that he expects most central banks for G-10 countries to cut rates, with only the Bank of Japan abstaining.
Futures traders are expecting aggressive action from the Federal Reserve in particular, with the CME Fed Watch tool showing that the market has priced in 75 basis points of cuts through April.
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Elon Musk speaks onstage during the E3 conference in Los Angeles on June 13, 2019.
Charley Gallay | Getty Images
Elon Musk jumped to the defense of fellow tech billionaire Jack Dorsey late Monday, as the latter faces pressure from an activist investor to step down as the CEO of Twitter.
"Just want to say that I support @Jack as Twitter CEO," Musk, the chief of Tesla and SpaceX, said in a tweet. He added that he thinks Dorsey has a good heart, using the heart emoji.
Musk's comments arrive after Paul Singer, the billionaire founder of hedge fund Elliott Management, built a stake in the microblogging platform in a bid to push for changes — including the removal of its boss.
CNBC has learned Elliott has a more than $1 billion stake in Twitter and has nominated four new board members. The company is known to often buy shares in large companies to have a say on issues like governance and strategy.
For example, Singer's activist fund recently bought into SoftBank, the Japanese tech investing juggernaut, seeking to have it repurchase up to $20 billion in stock and improve its governance practices. That was after the failed initial public offering of WeWork and amid general worries over SoftBank's bets on heavily lossmaking tech companies.
In Twitter's case, Singer is concerned by Dorsey splitting his time between running both Twitter and his financial technology firm Square. Dorsey's desire to move temporarily to Africa — which has already divided opinion among analysts — is another issue at hand in Elliott's aim to oust him.
Twitter shares rose nearly 8% on Monday as investors reacted to news of Elliott's stake in the company. The rally added more than $2 billion to Twitter's market capitalization, lifting it to $28 billion.
In its most recent quarterly earnings, Twitter reported its biggest-ever quarterly growth in users, but missed analysts' profit expectations.
As the novel coronavirus raged in Hubei province earlier this year, the Chinese government imposed strict measures designed to limit the spread of the virus throughout the country.
However, as the coronavirus spreads throughout the world, China is finding new problems arising from new epicenters outside its borders.
Local media reported Monday that all seven new cases confirmed in Zhejiang province had been imported from Italy, where there are now 2,036 cases and 52 deaths.
A coastal area in China’s east, Zhejiang had grown to become one of China’s wealthiest provinces. Some 30 million people live in the province and Xi Jinping, China’s president, was the province’s party secretary from 2002 until 2007.
The province, and in particular the port and industrial city of Wenzhou, has links with northern Italy. In 2016, China Daily reported that most of the 321,000 Chinese living in Italy were from Zhejiang, and one in five owns a business, with prominent figures such as Zhou Xiaoyan, owner of the communications company Milan Huaxia Group.
According to more recent accounts in Chinese media, there were about 200,000 Chinese citizens from Wenzhou and another county, Qingtian, living in Italy. Most worked in the restaurant industry, Zhejiang Daily reported.
The seven imported cases announced Tuesday were found in Qingtian, a county in the city of Lishui. Their discovery came two days after a 31-year-old woman from Lishui had tested positive for the outbreak on Sunday, two days after she had arrived from Italy.
All eight cases had worked at the same restaurant in Bergamo, Lombardy, Qingtian county announced in a statement. Italian authorities have identified a number of cases of novel coronavirus linked to the city, which lies in the greater Milan area.
None of the eight had been to Hubei, the statement said.
The shifting lines of transmission show how quickly the nature of the outbreak has changed. As the coronavirus had first spread across China and Zhejiang was placed on lockdown on Feb. 2, state media reported that Chinese citizens living in Italy had donated 10,000 masks, 300 protective suits and 240 goggles to Wenzhou.
But on Feb. 27, Qingtian county asked those living abroad to suspend China-bound trips unless there were exceptional circumstances, advising those who had to come that they would be placed under medical observation for 14 days.
Last Sunday, 2,600 surgical masks donated by Wenzhou Eyewear Industry Association were flown to Italy. A poster for the aid action reads “Wenzhou for Italy” in Chinese, Italian and English.
As the total number of new cases has declined, nine Chinese provinces have lowered their emergency response level as they push to return to economic activity after an extended lull due to coronavirus. Zhejiang, which has reported 155 cases and one death from the outbreak, lowered its level from the highest to second highest on Monday.
Taylor reported from Hong Kong and Yuan reported from Beijing. Liu Yang in Beijing also contributed to this report.
