Treasury is expected to request additional funds for the small business loans program.
The Treasury Department is preparing to formally request at least another $200 billion to help supplement a new program designed to help small businesses secure loans from banks, in response to an overwhelming demand for assistance through the program.
The formal request could come as early as Tuesday, according to an official familiar with the plans, who asked for anonymity to disclose details of the announcement.
Senators Mitch McConnell of Kentucky, the majority leader, and Chuck Schumer of New York, the minority leader, were negotiating the possibility of approving the additional funding during a procedural session on Thursday, without the full chamber present.
“It is quickly becoming clear that Congress will need to provide more funding or this crucial program may run dry,” Mr. McConnell said in a statement Tuesday. “That cannot happen. Nearly 10 million Americans filed for unemployment in just the last two weeks. This is already a record-shattering tragedy, and every day counts.”
“Congress needs to act with speed and total focus to provide more money for this uncontroversial bipartisan program,” he added.
Senator Marco Rubio, Republican of Florida and one of the architects of the new loan program, said in a post on Twitter that “at least another $200-$250 billion” would be needed.
Larry Kudlow, the top White House economic adviser, said Tuesday morning that the program had funded 178,000 loans at a value of $50 billion so far.
Congress initially allocated $349 billion to the effort, known as the paycheck protection program, which was created as part of the $2 trillion economic stabilization package signed into law last month.
The Treasury Department did not immediately respond to a request for comment, but Steven Mnuchin, the Treasury secretary, signaled on Tuesday morning that he was ready to ask Congress for additional funds if needed.
“The president has made clear if we run out of money, he’s going to go back to Congress,” Mr. Mnuchin said on the Fox Business Network.
Investors take heart in signs of progress, driving up stocks.
U.S. stocks rose on Tuesday and global markets extended Wall Street’s rally from the day before amid continued signs that the coronavirus outbreak may be peaking in a number of hard-hit places.
The S&P 500 rose about 3 percent in early trading before shedding some of those gains.
Tuesday’s gains added to a fairly strong, if disjointed, rebound that has lifted stocks from their lowest point March. Initially fueled by Washington’s $2 trillion effort to counter the economic effect of the pandemic, the rally has now taken on a more hopeful tone — reflecting glimmers of progress in the fight against the pandemic’s spread in the United States and Europe.
In total, through Monday, the S&P 500 was up 19 percent from its March 23 low. (It’s still more than 20 percent below its all-time high, reached on Feb. 19.)
In New York, the epicenter of the global outbreak, Gov. Andrew M. Cuomo offered some signs that the city was beginning to make progress in controlling the crisis. China reported its first day since January with no deaths.
Still, the global economy still faces daunting challenges before it can get back on track, and many companies continue to announce furloughs of employees and sustained shutdown of operations in the wake of an uncertain path forward. For example, the homebuilder D.R. Horton said Tuesday that it had withdrawn its previous financial forecasts for 2020.
Major European markets were trading 2 to 4 percent higher after Asian markets picked up steam later in their trading day.
There were signs of improved investor confidence in other markets. U.S. Treasury bond prices fell, signaling sharper appetite for riskier investments. Oil prices rose too on hopes that Russia and Saudi Arabia could reach a price war truce.
On Monday, investor optimism drove U.S. stocks sharply higher. The S&P 500 rose 7 percent, its biggest gain since March 24, when it climbed more than 9 percent.
Still, there was a strong defensive tilt to trading. The utilities sector — typically an area dominated by risk-averse investors — was one of the best performing in the S&P 500, with a gain of almost 8 percent.
That suggests investors still see plenty of reason to be cautious.
The Carnival Corporation, which serves nearly 11.5 million travelers a year, or roughly 50 percent of the global cruise market, is at the center of the crisis. Over the last couple of months, the company has had highly publicized outbreaks on several of its ships, including the Diamond Princess and the Zaandam, which has been trying to unload sick passengers in Florida.
Since the beginning of the year, the company’s share price has plummeted more than 80 percent, though it rose to $10.21 a share on Monday after Saudi Arabia’s state investment fund said it had acquired an 8 percent stake in the company. And last week, Carnival, which has already drawn on bank credit lines, began an attempt to raise $6 billion by selling stock, bonds and other securities. It was selling some of those bonds with a suggested 12.5 percent interest payment to investors, a strikingly high figure.
Carnival’s chief executive, Arnold Donald, said in an interview that the sale would generate enough cash for the company to survive without revenue for the rest of the year and into 2021.
“If you run out of cash, you lose the company, and we can’t live with that,” Mr. Donald said. “So we want to make sure we’re prepared for an extreme case.”
The two major cruise lines besides Carnival — Royal Caribbean and Norwegian Cruises — are also looking for cash. Norwegian has tapped an existing $1.55 billion credit line. In March, Royal Caribbean secured a $2.2 billion loan, using its ships as collateral, an unusual step for a cruise line.
Stuck at home during the coronavirus pandemic, with movie theaters closed and no restaurants to dine in, Americans have been spending more of their lives online.
A New York Times analysis of internet usage reveals that our viewing and browsing habits have shifted, sometimes starkly, as the virus spread and pushed us to our devices for work, play and connecting.
The new data suggests we are hungry for news (especially local news) and seeking out new ways to connect (most of all through video) at a time when we are not allowed to see each other in person.
We are, of course, also seeking out streaming entertainment, but we are turning away from our phones and remembering the joys of using an old-fashioned computer instead of a tiny smartphone screen. The changes in behavior give an indication of some of the more subtle ways the current crisis is changing the way we live.
Japan on Tuesday said it would move forward with a nearly trillion dollar stimulus package aimed at taking pressure off the country’s economy as it tries to slow the accelerating spread of the coronavirus.
Direct spending will come to 39.5 trillion yen ($362 billion), as the country makes cash payments to families and small businesses and invests in its ability to battle the virus. The balance will come from other measures such as tax breaks and interest free loans.
With the pace of infections in Japan growing, Prime Minister Shinzo Abe declared a state of emergency for seven prefectures on Tuesday afternoon, warning that the country must reduce social contacts by eighty percent or risk an explosive spread of the virus.
Speaking at a news conference following the declaration, Mr. Abe warned that “as we take measures under the state of emergency, it is impossible to avoid a substantial impact on economic activity.”
“Japan’s economy is currently facing its greatest crisis since the end of the war,” he added.
Mr. Abe said the government would hand out 300,000 yen ($2,700) to households, with modest additional payments for each child. Small corporations that have seen a large decrease in revenue will be eligible to receive 2 million yen ($18,300), and businesses run by individuals can receive half that amount.
Renewable energy is still growing, despite the drop in oil prices.
Industry executives and analysts expect the renewable energy business to continue growing in 2020 and next year even as the coronavirus outbreak has delayed some projects and as oil, gas and coal companies struggle financially or seek bankruptcy protection.
In many parts of the world, including California and Texas, wind turbines and solar panels now produce electricity more cheaply than natural gas and coal. That has made them attractive to electric utilities and investors alike. It also helps that while oil prices have been more than halved since the pandemic forced most state governments to order people to stay home, natural gas and coal prices have not dropped nearly as much.
Even the decline in electricity use in recent weeks as businesses halted operations could help renewables, according to analysts at Raymond James & Associates. That’s because utilities, as revenue suffers, will try to get more electricity from wind and solar farms, which cost little to operate, and less from power plants fueled by fossil fuels.
“Renewables are on a growth trajectory today that I think isn’t going to be set back long term,” said Dan Reicher, the founding executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford University and a former assistant energy secretary in the Clinton administration. “This will be a bump in the road.”
Will the pandemic lead to a deal apocalypse?
Plenty of deals agreed before the outbreak are now at risk, writes Steven Davidoff Solomon of the U.C. Berkeley School of Law in today’s DealBook newsletter. It’s more common, he says, for one side of an agreed deal — the buyer — to try the pull the plug during downturns.
Last week, when the auto supplier Delphi Technologies maxed out its corporate credit line, BorgWarner said it was grounds to terminate its $3 billion deal signed in January but not yet closed. Other acquirers could look to trigger the “material adverse change” clauses as the value of targets plunges during market turmoil. Regulators may also give buyers an out: privacy concerns loom over Google-Fitbit while antitrust issues threaten Mellanox-Nvidia and Cypress-Infineon. If the economic logic of these and other deals doesn’t survive the crisis, buyers may not be sorry to see them undone.
Everyone wants to know when we are going to be able to leave our homes and reopen the United States. That’s the wrong way to frame it.
The better question is: “How will we know when to reopen the country?”
Any date that is currently being thrown around is just a guess. It’s pulled out of the air.
To this point, Americans have been reacting, often too late, and rarely with data. Since the virus appears to be everywhere, we have to shut everything down. That’s unlikely to be the way we’ll exit, though.
Some cities or states will recover sooner than others. It’s helpful to have criteria by which cities or states could determine they’re ready.
A recent report by Scott Gottlieb, Caitlin Rivers, Mark B. McClellan, Lauren Silvis and Crystal Watson staked out some goal posts that involve the ability of hospitals to treat patients; the ability to test everyone who has symptoms; monitoring of confirmed cases; and a sustained reduction in cases.
Catch up: Here’s what else is happening.
The restaurant company Darden, which owns Olive Garden and LongHorn Steakhouse, said on Tuesday that same-store sales have declined 39.1 percent so far in the fourth quarter. It also announced it was furloughing some employees and slashing executive pay by 50 percent.
Exxon Mobil said Tuesday it would reduce its 2020 capital spending by 30 percent, to $23 billion from $33 billion, as the company responds to the steep drop in oil prices. The oil giant said it would also lower cash operating expenses by 15 percent.
WhatsApp, the Facebook-owned messaging app, announced a new limit on message forwarding on Tuesday in an attempt to slow the dissemination of misinformation. Users will be allowed to send a frequently-forwarded message to only one chat at a time, instead of five.
Reporting was contributed by Alan Rappeport, Emily Cochrane, Jim Tankersley, David Yaffe-Bellany, Ella Koeze, Nathaniel Popper, Ben Dooley, Ivan Penn, Aaron E. Carroll, Geneva Abdul, Carlos Tejada, Daniel Victor, Jason Karaian, Kevin Granville and Austin Ramzy.