The daily business briefing: March 27, 2020

1. Dow posts biggest 3-day gains in decades

The Dow Jones Industrial Average and the S&P 500 surged on Thursday in their third straight day of big gains. The Dow rose by 1351.6 points or 6.4 percent, capping the index's biggest three-day increase since 1931 and leaving it up by 21 percent over its Monday low. Thursday's surge came despite record weekly jobless claims, in a sign of investor optimism about the $2.2 trillion coronavirus economic rescue package approved by the Senate late Wednesday. The S&P 500 was up by about 17 percent since Monday but still 22 percent below its Feb. 19 record high. The buying "doesn't guarantee that the bottom is in, but it is indicative of a bottoming process," said Randy Frederick, vice president of trading and derivatives at Charles Schwab. Futures for the three main U.S. indexes were down by about 2 percent early Friday.

Reuters CNBC

2. Record 3.3 million file for jobless benefits

Nearly 3.3 million Americans filed new applications for jobless benefits last week as businesses nationwide shut down or limited their operations to help slow the spread of the COVID-19 coronavirus, the Department of Labor reported Thursday. The Thursday figure smashed the old record for weekly initial jobless claims of 695,000, which was set in 1982. Two weeks ago, only 282,000 Americans filed for their first week of unemployment benefits. In an interview Thursday morning shortly before the release of the Labor Department's report, Federal Reserve Chair Jerome Powell said the United States "may well be in a recession" already but argued that "there's nothing fundamentally wrong with our economy," so there could be a "good rebound" when the COVID-19 coronavirus' spread is under control.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

CNN The Associated Press

3. Mortgage rates fall after Fed offers lenders stability

Mortgage rates fell sharply in the last week after the Federal Reserve announced policies to support the lending market through the coronavirus crisis. The 30-year fixed-rate mortgage fell to 3.50 percent in the week ending March 26, down 15 basis points from the previous week, when rates rose to their highest level since January due to uncertainty fueled by the crisis. Three weeks ago, the average 30-year fixed-rate mortgage dropped to 3.29 percent, its lowest level in the 50 years Freddie Mac has tracked it. The volatility has come as the coronavirus emergency disrupted financial markets. The Fed helped provide a sense of clarity this week by committing to unlimited bond-buying, a policy that includes purchases of mortgage-based securities. That helped stabilize rates.

MarketWatch

4. Cruise lines left out of coronavirus relief bill

The $2.2 trillion coronavirus relief bill passed by the Senate provides support for many businesses, but leaves out the cruise industry, which has been devastated. Unlike other tourism businesses, many major cruise operators have headquarters overseas, which has allowed them to avoid federal taxes and regulations. That cost them a share of the $500 billion in aid for large employers under the stimulus package, because it includes language limiting aid to companies certified as "created or organized in the United States or under the laws of the United States," and with "significant operations in" the U.S. The Cruise Lines International Association said it would continue working with lawmakers to protect the 421,000 people in the U.S. "whose jobs are supported by the cruise industry."

The Washington Post

5. GM suspends U.S. production indefinitely

General Motors said Thursday it was suspending U.S. production indefinitely to help prevent the spread of the coronavirus. "When we can safely resume production, we will," a GM spokesman, David Barnas, said. The automaker also told about 69,000 salaried employees around the world that it would temporarily cut their salaries by 20 percent to reduce costs during the crisis. The reductions will start April 1, and the workers will get the money back in a lump sum by March 2021. About 6,500 U.S. employees who can't work from home, meaning they are essentially laid off, will receive 75 percent of their normal pay and retain seniority and health-care benefits. GM's board members and executives also will take pay cuts. Ford and Fiat Chrysler have closed their U.S. plants until April 14.

The New York Times CNBC