The Dow soars as coronavirus slows: April 6, 2020

By CNN Business

Updated 10:49 a.m. ET, April 7, 2020
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12:28 p.m. ET, April 6, 2020

Mobile app downloads soar for troubled Luckin Coffee

From CNN Business' Paul R. La Monica

China's Luckin Coffee (LK) has been hit hard by questions about its accounting practices. Shares plummeted more than 75% last Thursday after Luckin said in a Securities and Exchange Commission filing that sales may have been inflated by fabricated transactions and that the scheme was orchestrated by its chief operating officer -- who has since been put on suspension.

But are Chinese consumers rallying behind the nation's homegrown rival to Starbucks (SBUX)? Mobile data analytics company Apptopia said Monday that downloads of the Luckin app on Apple's (AAPL) iOS hit a daily record on Sunday. The app was installed 307,000 times. The previous best day was 107,000 installs in October 2018.

Adam Blacker, vice president of insights and global alliances for Apptopia, said in an email to CNN Business that he could not find any specific reason to explain the sudden surge. There is no evidence of new Luckin discounts or other promotions for example.

But according to a story on Quartz Monday, there is strong support for Luckin among Chinese consumers on Chinese social media site Weibo. That isn't helping Luckin's stock in the United States though. Shares fell another 16% Friday and were down 14% Monday to their lowest level since going public last May.

3:20 p.m. ET, April 6, 2020

Janet Yellen: America's deficit could soar to $2 trillion

From CNN Business' Anneken Tappe

The true economic cost of the coronavirus outbreak is not yet known. But economists expect it to be ugly.

Countries could be looking at "enormous deficits" from the expansionary policies during this crisis, said said former Federal Reserve President Janet Yellen in an interview with CNBC. America's economic relief package to combat the corornavirus fallout, for example, is worth $2 trillion.

The US annual budget deficit, which has already topped $1 trillion, could soar well above $2 trillion, Yellen said.

Unemployment, meanwhile, "may go to depression levels," Yellen said. Labor market reports lag behind what's actually happening in the economy. But if we had real-time unemployment data, it would likely show a rate of up to 13%, Yellen said.

That said, the Covid-19 crisis is very different from the Great Depression or the recession that followed the Great Financial Crisis, in part because it will be much shorter-lived. Or so Yellen predicts.

“My hope is unemployment will come down to normal levels pretty quickly," Yellen said.

Read more about rising national debt levels here.

11:53 a.m. ET, April 6, 2020

So much for stockpiling? Shares of food companies fall

From CNN Business' Paul R. La Monica

The market is enjoying an explosive rally Monday. Energy stocks were among the few losers as crude oil prices fell. But food companies took a hit too.

It appears that investors are encouraged by some of the headlines suggesting the death rates from the Covid-19 pandemic in the United States and Europe are starting to slow. That seems to be leading to hopes that some of the stricter shelter in place and quarantine regulations will be relaxed.

If that happens, consumers may not find it as necessary to stock up on food. Shares of Campbell Soup (CPB), supermarket king Kroger (KR) and cereal giant Kellogg (K) were among just 17 of the S&P 500 stocks trading lower midday Monday. SPAM owner Hormel (HRL), Kellogg rival General Mills (GIS) and jelly maker Smucker (SJM) were flat.

11:18 a.m. ET, April 6, 2020

Janet Yellen: It's time to stop bank dividends. They need the cash for the crisis

From CNN Business' Matt Egan

Janet Yellen thinks America's banks should slam the brakes on dividends to make sure they have enough cash to deal with the coronavirus crisis.

The former Federal Reserve chairwoman told CNBC Monday that US regulators should ask banks to suspend both dividends and stock buybacks.

Big banks, including JPMorgan Chase (JPM) and Wells Fargo (WFC) have already halted buybacks to preserve resources for the health crisis.

"We need a banking system that's able to meet the credit needs of the economy," Yellen said. "And we don't know how severe or how long-lasting this pandemic will be."

Bank CEOs have suggested they will be able to ride out this storm while preserving their coveted dividend payments to shareholders.

"Banks tend to be very reluctant to stop dividends and stock buybacks because they worry it will make them look as though they're vulnerable," Yellen said.

The good news is that Yellen believes America's banks entered this period in a far stronger position than the last recession.

Still, banks won't be immune to the millions of job losses, record-breaking declines in GDP that loom and near-zero interest rates.

"Eventually, there will be a toll on the banking system," Yellen said.

3:14 p.m. ET, April 6, 2020

Jamie Dimon predicts a 'major recession' is on its way

From CNN Business' Paul R. La Monica

JPMorgan Chase (JPM) CEO Jamie Dimon used his annual shareholder letter to detail just how bad he thinks the US economy can get from the coronavirus pandemic.

Dimon expects a "bad recession," he wrote in the letter released Monday, saying that in the most adverse scenario, gross domestic product could plunge at a 35% annual rate in the second quarter and that a downturn would last through the rest of the year. The unemployment rate would spike as high as 14% in this environment.

But Dimon added that "this scenario is quite severe and, we hope, unlikely." And even if the worst case situation bears out, JPMorgan Chase still plans to lend an additional $150 billion to its customers.

Read the full story here.

10:26 a.m. ET, April 6, 2020

Wayfair's sales have doubled during coronavirus crisis

From CNN Business' Jordan Valinsky

Wayfair (W) said its first quarter sales are forecast to "meet or exceed" expectations as people are forced to stay home amid the coronavirus pandemic.

The online home retailer revealed in a release that sales doubled at the end of March and it continues to be strong for the first few days of April.

Wayfair's stock soared 40% in early trading. The company releases its first quarter earnings report on May 5.

10:11 a.m. ET, April 6, 2020

Dow rallies more than 1,000 points

From CNN Business' Anneken Tappe

It's 10 am and the Dow is up more than 1,000 points.

These kinds of wild swings have dominated the market for the past month.

Monday's upbeat sentiment follows some encouraging coronavirus data that showed a slowdown in infections.

The Dow was last up 1,070 points, or 5.1%. The broader S&P 500 was up 4.9%. Basic materials and financials shares are leading gains.

10:11 a.m. ET, April 6, 2020

Regulators really want community banks to lend. So they're dialing back the rules

From CNN Business' Matt Egan

Federal regulators are easing rules on America's community banks in hopes they'll lend to businesses and households hurt by the coronavirus crisis.

Bank agencies announced Monday they will temporarily lower the community bank leverage ratio to 8%. That rule change -- required by the $2 trillion stimulus package that was enacted last month -- means banks no longer need to keep as much loss absorbing-capital on hand.

Under the new rules, which only apply to small banks, the leverage ratio will be 8% starting this quarter and remain there for the rest of 2020.

In 2021, the ratio will rise to 8.5% and then 9% after that.

"This transition will allow community banking organizations to focus on supporting lending to creditworthy households and businesses given the recent strains on the U.S. economy caused by the coronavirus," the regulators said in a statement.

3:49 p.m. ET, April 6, 2020

Stocks rally at the open

From CNN Business' Anneken Tappe

US stocks rallied at Monday’s open following some encouraging data that showed a slowdown in coronavirus infections in multiple countries.

This is a shortened week, as exchanges are closed for Good Friday.