Knowing what’s happening in the business world can help you become smarter about your own finances. Whether it’s the Fed adjusting interest rates, the price of oil becoming volatile, or key industries and sectors going through important changes, it can all affect your wallet and your portfolio.
Every week we’ll keep you informed about some of the most important business news. We’ll also update the most important stories as they change, and we may also write about them more extensively in separate Learn articles.
Here’s what we’re watching for the week of March 16, 2020.
- Market mayhem: U.S. markets continued their selloff throughout the week, despite aggressive action from the Federal Reserve to help pump money into the economy as the coronavirus pandemic causes global economies to contract. (The selloff has triggered market circuit breakers multiple times that have halted trading for part of the day.) The S&P 500 is down more than 25% below its record high reached in February, and the Dow is down 28% over the same time period, as of March 18, 2020, erasing all of its gains since President Trump took office. CNBC.
- The central bank gets busy: The Federal Reserve (the Fed) cut interest rates on March 15, 2020, in an attempt to calm markets as countries shut their borders and ban large gatherings of people in an attempt to halt the spread of Covid-19. The Fed cut its benchmark federal funds rate, which is a short-term rate that it charges banks to borrow and lend money to one another. The federal funds rate forms the basis of other interest rates, such as for credit cards and variable rate mortgages, and the interest on savings accounts. The rate is now between 0% and 0.25%, down from a range between 1% and 1.25% in early March. The Fed is also planning to purchase $700 billion worth of U.S. Treasuries and mortgage-backed securities. The Fed’s moves this week are its most dramatic since the financial crisis of 2008. Washington Post.
- Help on the way? U.S. lawmakers are considering a $1 trillion economic relief package, including $500 billion in direct payments to consumers, $300 billion in loans to small businesses, and $150 billion in loans for other parts of the economy. New York Times.
- Staying grounded: Major airlines across the globe are cutting flight capacity as numerous countries respond to Covid-19 by shutting their borders. U.S. airlines including American, United, and Delta announced they will cut their capacity between 30% and 75%. U.S. airlines have also asked the federal government for a $50 billion bailout to keep operating. CNBC.
- So long, Bill Gates: The founder of Microsoft announced on March 13, 2020 that he is stepping down from the board of directors of the company he created in 1975. The Microsoft Windows operating system powers 88% of personal computers around the world. Gates, who has amassed a fortune of nearly $100 billion, has shifted more towards philanthropy over the past 20 years. Microsoft helped usher in the computer age. Wired.