Administration, Congress Consider Coronavirus Stimulus As Dow Enters Bear Market

The Trump administration and Congress look to shore up the U.S. economy in the face of the coronavirus pandemic. But details have been slow to emerge, and nervous investors continue to dump stocks.

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An 11-year bull market that survived hurricanes, a trade war and political upheaval was finally brought to an end today by the coronavirus. The Dow Jones Industrial Average fell more than 1,400 points.

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It closed more than 20% below its all-time high. That is bear market territory. And this comes on the day the World Health Organization formally declared COVID-19, the disease caused by the coronavirus, a pandemic. NPR's Scott Horsley joins us now to take stock of this moment.

Hey, Scott.

SCOTT HORSLEY, BYLINE: Good afternoon, Ailsa.

CHANG: All right, so the stock market was already doing kind of terribly before the WHO's announcement. But then the sell-off became worse after that. Can you just walk us through what happened?

HORSLEY: Sure. This virus has already sickened more than 140,000 people on six continents, including more than a thousand here in the U.S. And it has certainly sent shivers through the stock market. The WHO's declaration today was something of a formality. We've all been watching the numbers grow in the last few weeks as the virus has spread beyond China, where the pandemic began. But today's announcement did seem to add to investors' nervousness. The Dow, which was already down about a thousand points, fell further this afternoon. The broader S&P 500 Index and the NASDAQ also briefly slipped into bear market territory, although they clawed their way back a bit. They're still down more than 19% percent from their recent highs.

CHANG: Now, President Trump is expected to speak about the coronavirus from the Oval Office tonight. What is the administration doing about this financial fallout right now?

HORSLEY: The president met with some bankers and hedge fund managers this afternoon to discuss what they can do to help. The White House is also trying to craft an economic stimulus package. The president's floated the idea of a payroll tax cut. He's also talked about targeted help for airlines and cruise ship companies, which has seen their business dry up. Treasury Secretary Steven Mnuchin has been a key point person on that effort. And at a hearing today on Capitol Hill, Mnuchin tried to offer some reassurance.

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STEVEN MNUCHIN: This will not go on for years. I am highly confident, listening to the medical professionals, that the medical approaches will develop quickly.

HORSLEY: New cases of coronavirus in China have dropped off dramatically in recent weeks but not before the virus killed more than 3,000 people there. Here in this country, we are still seeing a growing number of cases. And Dr. Anthony Fauci, who's a member of the president's coronavirus task force, told lawmakers today things will get worse than they are right now.

CHANG: Well, how are lawmakers responding to the White House's proposals?

HORSLEY: The payroll tax cut, which is kind of the centerpiece of the stimulus package, got a pretty chilly reception from House Democrats. And a lot of Republicans aren't too happy about it, either. Cutting payroll taxes doesn't do anything to help someone who's not working - for example, because of a quarantine.

CHANG: Right.

HORSLEY: And it could give a windfall to wealthy workers who would just simply put the money in savings, and that wouldn't do anything to help the economy. Chye-Ching Huang, who's with the Center on Budget and Policy Priorities, says a better idea if the government wants to shore up the economy would just be to send out checks to people whether they're working or not. That's something that was done back in 2008 in the early days of the financial crisis.

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CHYE-CHING HUANG: The people who are going to be facing the most immediate hardship are the very people who would do the best job of using any resources they get in ways that would help the broader economy.

HORSLEY: One idea that does seem to have support both from the White House and members of Congress is to help workers who don't have sick leave, so they don't feel as if they have to go to work sick and possibly spread the virus...

CHANG: Right.

HORSLEY: ...If they want to collect a paycheck.

CHANG: OK. Well, just putting the stock market aside, are there signs that the coronavirus is doing real damage to the U.S. economy at this point?

HORSLEY: You know, it's not really showing up yet in the official economic statistics. Just last Friday, for example, we had a stellar jobs report. Numbers on consumer confidence have held up pretty well. But all that could certainly change in the coming weeks. There was a survey published today from purchasing managers that found nearly 3 out of 4 companies in the U.S. are experiencing supply disruptions because of the coronavirus epidemic. In many cases, that's late deliveries or lack of information out of China. And interestingly, a lot of the companies who answered the survey say they expect that problem to get worse in the months to come because of the lag in supply chains. That's the supply side. Then on the demand side, we're certainly hearing from airlines and other travel companies about a drop in demand. Major festivals are being canceled or postponed. All that means reduced spending. And remember. Consumer spending is such a big part of the U.S. economy. Any drop in Americans' willingness to spend money and go out and buy and shop can have an outsized ripple effect on the broader economy.

CHANG: Absolutely. That is NPR's Scott Horsley.

Thank you, Scott.

HORSLEY: You're welcome.

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