Stocks Surge as Biden Leads Super Tuesday Results – The New York Times

Shares on Wall Street rose on Wednesday, bouncing back from a steep drop the day before, as investors responded to Joseph R. Biden Jr.’s strong showing in the Democratic Party’s primaries.

Though the spreading coronavirus and its impact on global economic growth has dominated financial headlines for the past two weeks, Wall Street has also worried about Mr. Biden’s top rival, Senator Bernie Sanders. Mr. Sanders plans to take on banks and tax stock and bond trades, and aims to eliminate most private health insurance as part of a single-payer health care plan.

Health care stocks led the gains on Wednesday, rising more than 5 percent. Shares of insurers like UnitedHealth Group and Anthem Health rose more than 10 percent.

“The strong result by Joe Biden in the Democratic primaries last night are a significant positive development for the market,” Marko Kolanovic, a strategist at JPMorgan Chase, wrote in a note to clients. “It likely removes the possibility of a far left candidate — a risk that was rattling markets last week.”

The S&P 500 closed up more than 4 percent on Wednesday, recovering its losses from the day before.

For investors, who have come to see President Trump as a boon to stock markets ever since his administration slashed corporate taxes, Mr. Biden’s policies would offer less of a swing away from pro-business policies than those of Mr. Sanders.

Compared with Mr. Sanders, Mr. Biden’s “proposed tax rises are relatively modest, he supports light touch regulation and he would pursue a much softer line on tariffs,” Michael Pearce, an economist at Capital Economics wrote to clients. “The prospect of a Biden-Trump showdown would be a clear positive for the markets, and probably a small plus for the economy too.”

Shares were also bolstered by the news that U.S. lawmakers reached a deal on Wednesday for an $8.3 billion emergency aid package to combat the spread of coronavirus. It includes nearly $7.8 billion for agencies dealing with the virus and about $500 million for telehealth services. Also on Wednesday, the International Monetary Fund said it would provide $50 billion in emergency funding, including no interest loans, to help poorer countries respond to the epidemic.

Financial markets have been on a roller coaster as investors grapple with the potential economic damage caused by fractured supply chains, travel bans and the disruption of daily life.

There is little clarity about how long it will take governments and health officials to contain the virus, leading to a gloomy prognosis for global economic growth.

On Tuesday, the Federal Reserve validated those concerns by announcing an emergency cut in interest rates. The Fed’s move spooked investors rather than calm them, and stocks fell nearly 3 percent on Tuesday.

United Airlines signaled on Wednesday that fear over the coronavirus epidemic was eroding ticket sales not only on international routes but on domestic travel as well.

The carrier said that it planned to cut international service by about 20 percent and domestic service by about 10 percent in April and that it was weighing similar cuts in May.

In a letter to employees, Oscar Munoz, the airline’s chief executive, and J. Scott Kirby, who will take over that job in May, also announced a hiring freeze through June and said workers in the United States would be able to apply for voluntary unpaid leaves of absence or reduced schedules.

“We sincerely hope that these latest measures are enough, but the dynamic nature of this outbreak requires us to be nimble and flexible moving forward in how we respond,” the executives said.

The cuts to international service will be applied unevenly. Trans-Pacific flights, demand for which has fallen starkly as the virus seized Asia, will be halved in April, while trans-Atlantic service will be cut by about 10 percent. Latin American service will be reduced by 5 percent.

Overreaction to the spreading coronavirus could slow the economy, representatives of the airline, hotel, retail and travel industry warned in a news conference at the U.S. Chamber of Commerce in Washington on Wednesday.

Many industries are facing the prospect of falling revenues as more Americans curtail their exposure to stores, airports and other public spaces.

“Our message is very simple,” said Thomas Donohue, the chief executive of the chamber. “Be safe. If you don’t feel well, stay home. Otherwise, let’s go to work.”

Chip Rogers, the president of the American Hotel & Lodging Association, urged Americans not to put off their spring break travel plans out of fear. “There is no place in the United States right now that is not safe to travel,” he said.

Roger Dow, the president of the U.S. Travel Association, went so far as to say that the government should stimulate travel. “The smartest thing someone can do is book their travel now, because this thing isn’t going to last,” he said.

The head of the International Monetary Fund warned on Wednesday that the economic fallout of the coronavirus would be more “dire” than previously thought and said that uncertainty would remain until policymakers could more clearly assess the duration of the outbreak.

The I.M.F. said in late February that it was reducing its 2020 global growth forecast by 0.1 percentage points to 3.2 percent, with a more substantial slowdown in China weighing on the global economy.

“We have unfortunately seen a shift towards a more adverse scenario for the global economy,” Kristalina Georgieva, the managing director of the I.M.F., said at a briefing on Wednesday.

As conferences around the world are canceled over virus concerns, including annual developer summits hosted by Facebook and Google, the popular South by Southwest festival will continue as planned.

Organizers of the conference, held in Austin, Texas, said their plans had not changed, even as companies like TikTok and Twitter pulled out of their scheduled appearances. By Wednesday, more than 42,000 people had signed a petition to call off the gathering, which is scheduled for March 13 to 22.

Health officials have said that at least one person in Travis County, where the city is incorporated, is being tested for coronavirus. But Dr. Mark Escott, the interim health authority for Austin Public Health, said there was no evidence that closing the festival would make the community safer.

Conference organizers have promised to screen workers before the event and make more hand-washing and sanitizing stations available, Dr. Escott said. They have also discussed limiting the number of people allowed into venues, he added.

Many local restaurants, retailers and other small businesses operate so leanly that some owners fear the U.S. coronavirus outbreak may be catastrophic for them.

Some members of Congress are considering policies to assist small businesses and their employees, including federal loans to cover outbreak-related losses and reimbursement for workers who need to take sick leave.

“Small businesses are on the front line of this crisis,” said Amanda Ballantyne, executive director of Main Street Alliance, a public policy group for small businesses.

Some places are already feeling the effects. Patrick Day, who runs two board game stores in King County, Wash., the site of the largest U.S. outbreak of the disease, said his business had very little slack to absorb staffing shortages or the reduced foot traffic he was beginning to see.

Other places are seeing the impact on their supply chains. Larry Birnbaum, who owns the Lightbulb Store in Hackensack, N.J., which manufactures and distributes LED products, said 95 percent of his stock comes from China, and nothing has arrived in the last month.

On average, Mr. Birnbaum said, he orders $100,000 in LED light bulbs from China every month. He was told by the factory that it wouldn’t be able to ship his latest order until “maybe” the end of April or beginning of May.

“Maybe is a scary word,” Mr. Birnbaum said. “I’ve been in the lighting business for 47 years. I’ve never seen anything like this.”

• Ford Motor told its employees on Tuesday to stop all domestic air travel in the United States, and to use videoconferences as much as possible for critical meetings.

• The Bank of Canada cut rates on Wednesday by 50 basis points, to 1.25 percent, after the Fed’s move on Tuesday. Hong Kong’s monetary authority also cut rates on Wednesday, as did central banks in the United Arab Emirates, Qatar and Bahrain.

• The London Book Fair, one of the publishing industry’s biggest international events of the year, was canceled on Wednesday because of concerns related to the coronavirus in Europe.

• General Electric said the coronavirus outbreak would probably cost it as much as $300 million in operating profit in the first quarter. It described the virus’s impact as an “evolving variable.”

• The Hannover Messe, a major industrial technology fair in Germany scheduled for April, was postponed because of coronavirus concerns; it will now take place in July.

• Amazon learned that an employee in one of its office buildings in the South Lake Union neighborhood of Seattle had tested positive for the virus, the company said in an email to its staff late Tuesday.

Reporting was contributed by Geneva Abdul, Neal E. Boudette, Niraj Chokshi, Julie Creswell, Tiffany Hsu, Sophia June, Jeanna Smialek, Alan Rappeport, Ana Swanson, Karen Weise and Daisuke Wakabayashi.