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Stocks Fall as Oil’s Slide Continues: Live Markets Updates Stocks Fall as Oil’s Slide Continues: Live Markets Updates
(32 minutes later)
The unprecedented price plunge that hit the main U.S. oil benchmark on Monday spread to other parts of the oil market on Tuesday as traders realized that output remains far too high and storage is running out.The unprecedented price plunge that hit the main U.S. oil benchmark on Monday spread to other parts of the oil market on Tuesday as traders realized that output remains far too high and storage is running out.
The action on Monday was mostly in the futures contract for West Texas Intermediate crude to be delivered in May, which fell into deep negative territory. In other words, some traders were willing to pay buyers to take oil off their hands. The price of that contract actually rose on Tuesday, but wavered between positive and negative territory.The action on Monday was mostly in the futures contract for West Texas Intermediate crude to be delivered in May, which fell into deep negative territory. In other words, some traders were willing to pay buyers to take oil off their hands. The price of that contract actually rose on Tuesday, but wavered between positive and negative territory.
Other parts of the oil market were slammed on Tuesday. The West Texas Intermediate contract for June delivery was down about 22 percent, to about $15.93 a barrel, and Brent crude, the international benchmark, was down about 18 percent, to $20.90 a barrel.Other parts of the oil market were slammed on Tuesday. The West Texas Intermediate contract for June delivery was down about 22 percent, to about $15.93 a barrel, and Brent crude, the international benchmark, was down about 18 percent, to $20.90 a barrel.
These eye-popping price slides underscore the industry’s disarray as the coronavirus pandemic decimates the global economy. The volatile prices are “an illustration of how broken” the market is, said Paola Rodríguez-Masiu, an oil analyst at Rystad Energy, a consulting firm.These eye-popping price slides underscore the industry’s disarray as the coronavirus pandemic decimates the global economy. The volatile prices are “an illustration of how broken” the market is, said Paola Rodríguez-Masiu, an oil analyst at Rystad Energy, a consulting firm.
Demand for oil is disappearing, and despite a deal by Saudi Arabia, Russia and other nations to cut production, the world is running out of places to put all the oil being pumped out — about 100 million barrels a day. At the start of the year, oil sold for over $60 a barrel.Demand for oil is disappearing, and despite a deal by Saudi Arabia, Russia and other nations to cut production, the world is running out of places to put all the oil being pumped out — about 100 million barrels a day. At the start of the year, oil sold for over $60 a barrel.
Refineries are unwilling to turn oil into gasoline, diesel and other products because so few people are commuting or taking airplane flights, and international trade has slowed sharply. Oil is already being stored on barges and in any nook and cranny companies can find. One of the better parts of the oil business these days is owning storage tankers.Refineries are unwilling to turn oil into gasoline, diesel and other products because so few people are commuting or taking airplane flights, and international trade has slowed sharply. Oil is already being stored on barges and in any nook and cranny companies can find. One of the better parts of the oil business these days is owning storage tankers.
On Tuesday, President Trump said on Twitter that he was asking administration officials to “formulate a plan that will make funds available” to help the oil and gas industry. He has previously asked Congress for $3 billion to purchase oil for the Strategic Petroleum Reserve but lawmakers did not include it in last month’s $2.2 trillion stimulus package.On Tuesday, President Trump said on Twitter that he was asking administration officials to “formulate a plan that will make funds available” to help the oil and gas industry. He has previously asked Congress for $3 billion to purchase oil for the Strategic Petroleum Reserve but lawmakers did not include it in last month’s $2.2 trillion stimulus package.
Employees at Charter Communications, the internet, cable TV and phone giant known as Spectrum, have been getting sick while adhering to a company policy that has required thousands of them to work in offices and call centers rather than from home.
More than 230 Spectrum employees have tested positive for Covid-19 since the pandemic hit the United States, according to a person with knowledge of the company who was not authorized to speak publicly. They have fallen ill at a time when some rank-and-file workers and managers have questioned how many Spectrum employees must work in offices and call centers.
The New York attorney general’s office said on Monday that it has opened an inquiry into the company because of its handling of employees during the pandemic. Spectrum declined to comment on the inquiry.
The company has been deemed an essential service because it keeps its 29 million customers connected and allows people and businesses across the country to function remotely. Spectrum, based in Stamford, Conn., employs 95,000 people in 41 states. About 40,000 people work in call centers or offices; roughly 55,000 workers deal with customers face to face as field technicians or retail employees.
Stocks on Wall Street fell for a second day, as global markets retreated and oil prices continued their record slide.Stocks on Wall Street fell for a second day, as global markets retreated and oil prices continued their record slide.
The S&P 500 dropped about 1.7 percent in early trading Tuesday, adding to a nearly 2 percent drop on Monday. Major European markets were 1 percent to 3 percent lower after a similar decline in Asia.The S&P 500 dropped about 1.7 percent in early trading Tuesday, adding to a nearly 2 percent drop on Monday. Major European markets were 1 percent to 3 percent lower after a similar decline in Asia.
With few places left to store all the crude the world is producing, oil prices have collapsed. On Monday, the price of one oil benchmark dipped below zero for the first time, meaning some holders were ready to pay people to take a barrel off their hands.With few places left to store all the crude the world is producing, oil prices have collapsed. On Monday, the price of one oil benchmark dipped below zero for the first time, meaning some holders were ready to pay people to take a barrel off their hands.
While quirks in how oil is traded accounted for the negative price, it also reflected low global demand for fuel, signaling predictions that much of the world’s economy will remain frozen for some time.While quirks in how oil is traded accounted for the negative price, it also reflected low global demand for fuel, signaling predictions that much of the world’s economy will remain frozen for some time.
The most closely watched price for oil in the United States, for a futures contract stipulating delivery of West Texas Intermediate crude in June, was trading just under $16 a barrel, well away from negative territory but still down about 22 percent. Brent crude, the global benchmark, dropped about 18 percent, to $20.90 a barrel.The most closely watched price for oil in the United States, for a futures contract stipulating delivery of West Texas Intermediate crude in June, was trading just under $16 a barrel, well away from negative territory but still down about 22 percent. Brent crude, the global benchmark, dropped about 18 percent, to $20.90 a barrel.
Investors are also processing earnings updates from major companies in the United States.Investors are also processing earnings updates from major companies in the United States.
Coca-Cola, said on Tuesday that its global volume had fallen 25 percent this month, largely from a loss of demand at businesses. Its shares fell about 3 percent.Coca-Cola, said on Tuesday that its global volume had fallen 25 percent this month, largely from a loss of demand at businesses. Its shares fell about 3 percent.
IBM on Monday reported slightly lower revenue for the quarter compared with a year ago, in one of the first detailed looks at the pandemic’s impact on the tech sector. It dropped more than 5 percent.IBM on Monday reported slightly lower revenue for the quarter compared with a year ago, in one of the first detailed looks at the pandemic’s impact on the tech sector. It dropped more than 5 percent.
Darden Restaurants said on Monday that sales at its restaurants, which include Olive Garden and LongHorn Steakhouse, are down nearly 45 percent compared to last year. Darden said it would try to raise money through a $400 million public offering of its stock. Its shares were slightly lower in early trading.Darden Restaurants said on Monday that sales at its restaurants, which include Olive Garden and LongHorn Steakhouse, are down nearly 45 percent compared to last year. Darden said it would try to raise money through a $400 million public offering of its stock. Its shares were slightly lower in early trading.
Coca-Cola said on Tuesday that its global volume had fallen 25 percent this month, largely from a loss of demand at fast-food chains, movie theaters and sporting venues as businesses shuttered amid the coronavirus pandemic.Coca-Cola said on Tuesday that its global volume had fallen 25 percent this month, largely from a loss of demand at fast-food chains, movie theaters and sporting venues as businesses shuttered amid the coronavirus pandemic.
While the company saw customers stockpile its products in March and a sharp rise in e-commerce sales, it said it was taking a significant hit in “away-from-home” channels, which represent about half of its revenue.While the company saw customers stockpile its products in March and a sharp rise in e-commerce sales, it said it was taking a significant hit in “away-from-home” channels, which represent about half of its revenue.
“We’ve been through challenging times before as a company, and we believe we’re well positioned to manage through and emerge stronger,” said James Quincey, the chief executive of Coca-Cola.“We’ve been through challenging times before as a company, and we believe we’re well positioned to manage through and emerge stronger,” said James Quincey, the chief executive of Coca-Cola.
The company reported better-than-expected revenue and profit for the first quarter.The company reported better-than-expected revenue and profit for the first quarter.
Nursing homes that were already struggling before the coronavirus outbreak may soon be unable to pay their rent and other bills without government help.Nursing homes that were already struggling before the coronavirus outbreak may soon be unable to pay their rent and other bills without government help.
Many have had to spend more money on protective equipment for staff and technology to connect residents with relatives who are no longer allowed to visit. Revenues have shrunk because they are admitting fewer new residents in hopes of reducing the risk of infection.Many have had to spend more money on protective equipment for staff and technology to connect residents with relatives who are no longer allowed to visit. Revenues have shrunk because they are admitting fewer new residents in hopes of reducing the risk of infection.
And even before the pandemic, many were struggling to stay afloat and provide quality care.And even before the pandemic, many were struggling to stay afloat and provide quality care.
For-profit nursing homes often rent their properties under long-term leases from real estate investment trusts, investment firms or private equity shops.For-profit nursing homes often rent their properties under long-term leases from real estate investment trusts, investment firms or private equity shops.
The ownership structure has proved lucrative to investors in major health care real estate investment trusts, which typically own a mix of nursing homes, elder care facilities and medical buildings. But those long-term leases can be problematic during an economic slowdown, because many include clauses to increase their rent every year, according to regulatory filings.The ownership structure has proved lucrative to investors in major health care real estate investment trusts, which typically own a mix of nursing homes, elder care facilities and medical buildings. But those long-term leases can be problematic during an economic slowdown, because many include clauses to increase their rent every year, according to regulatory filings.
“There wasn’t a lot of wiggle room in these lease deals,” said David Stevenson, a professor of health policy at the Vanderbilt University School of Medicine who has studied the nursing home industry.“There wasn’t a lot of wiggle room in these lease deals,” said David Stevenson, a professor of health policy at the Vanderbilt University School of Medicine who has studied the nursing home industry.
On top of that, the coronavirus means added cost. Presbyterian Homes and Services, a Minnesota-based nonprofit operator of 16 nursing homes, estimates that the average 72-bed nursing home is spending an additional $2,265 a day on personal protective gear and an additional $1,500 a day on extra nursing staff.On top of that, the coronavirus means added cost. Presbyterian Homes and Services, a Minnesota-based nonprofit operator of 16 nursing homes, estimates that the average 72-bed nursing home is spending an additional $2,265 a day on personal protective gear and an additional $1,500 a day on extra nursing staff.
The coronavirus outbreak caused the economy of the Chinese province where it first emerged to shrink by nearly 40 percent in the first three months of 2020 compared with a year ago, the local statistics bureau said on Tuesday — a grim forewarning of the economic toll that the pandemic is likely to exact on other hard-hit places around the world.The coronavirus outbreak caused the economy of the Chinese province where it first emerged to shrink by nearly 40 percent in the first three months of 2020 compared with a year ago, the local statistics bureau said on Tuesday — a grim forewarning of the economic toll that the pandemic is likely to exact on other hard-hit places around the world.
The contraction in Hubei Province — whose capital, Wuhan, is where the first infections were reported — was far more severe than it was for China as a whole. Chinese officials said last week that the nation’s economy shrank 6.8 percent in the first quarter, ending an extraordinary, nearly half-century-long run of growth for the giant country.The contraction in Hubei Province — whose capital, Wuhan, is where the first infections were reported — was far more severe than it was for China as a whole. Chinese officials said last week that the nation’s economy shrank 6.8 percent in the first quarter, ending an extraordinary, nearly half-century-long run of growth for the giant country.
China’s government cut Wuhan off from the wider world in late January, in a drastic step to contain the virus. The lockdown began to ease in late March. Officials allowed outbound travel from Wuhan to resume earlier this month.China’s government cut Wuhan off from the wider world in late January, in a drastic step to contain the virus. The lockdown began to ease in late March. Officials allowed outbound travel from Wuhan to resume earlier this month.
But between January and March, the controls caused Hubei’s economy to seize up across the board, the local government’s statistics show. Retail sales sank by 45 percent. Industrial output dropped by nearly half. Farm output declined by a quarter. International trade shrank by a fifth.But between January and March, the controls caused Hubei’s economy to seize up across the board, the local government’s statistics show. Retail sales sank by 45 percent. Industrial output dropped by nearly half. Farm output declined by a quarter. International trade shrank by a fifth.
Sales growth at the Chinese tech giant Huawei slowed sharply in the first quarter, the company said on Tuesday, citing “tough challenges” facing it and its suppliers as they try to maintain production amid the pandemic.
The Chinese smartphone and telecom equipment maker said that revenue in the first three months of 2020 increased by 1.4 percent compared with the same period last year, a comedown from the 19.1 percent annual growth it reported for 2019.
Huawei has been the target of a multifaceted clampdown by the Trump administration, which views it as a national security threat. Last year, the U.S. government filed criminal charges against Huawei and limited American companies’ ability to do business with it.
Huawei on Tuesday did not describe in any detail how the coronavirus was affecting production or sales. But executives have acknowledged recently that the company’s fortunes are being hit by its inability to offer Google apps on its latest-model smartphones, one result of the U.S. government restrictions.
Announcing its latest business results on Tuesday, Huawei did not say how many handsets it sold in the first quarter, a figure it has given in previous earnings announcements.
Huawei is not publicly listed, but it reports selected financial information as a gesture toward openness.
How many people just had to see “Tiger King”? We’ll probably find out on Tuesday when Netflix reports its first-quarter earnings after the market closes. With stay-at-home orders in place around the world, stockholders are expecting to see a surge in demand.How many people just had to see “Tiger King”? We’ll probably find out on Tuesday when Netflix reports its first-quarter earnings after the market closes. With stay-at-home orders in place around the world, stockholders are expecting to see a surge in demand.
Here’s what to look for:Here’s what to look for:
As many as 8.7 million new customers signed up during the first three months of the year, according to Bernstein Research. Before the pandemic, Netflix expected about 7 million.As many as 8.7 million new customers signed up during the first three months of the year, according to Bernstein Research. Before the pandemic, Netflix expected about 7 million.
Most of those are coming from overseas. Netflix has more ground to gain across Europe, Asia and Latin America where people are still discovering the service. For the United States and Canada, expect around 1.4 million new accounts.Most of those are coming from overseas. Netflix has more ground to gain across Europe, Asia and Latin America where people are still discovering the service. For the United States and Canada, expect around 1.4 million new accounts.
Netflix should bring in $5.7 billion in revenue and $739 million in profit, according to a survey of analysts by S&P Capital IQ. But with Hollywood shut down, the company has not been able to fill its pipeline with new content. The streaming service has plenty of films and shows in the can, but the slowdown will affect its lineup later in the year.Netflix should bring in $5.7 billion in revenue and $739 million in profit, according to a survey of analysts by S&P Capital IQ. But with Hollywood shut down, the company has not been able to fill its pipeline with new content. The streaming service has plenty of films and shows in the can, but the slowdown will affect its lineup later in the year.
Netflix announced last month it would continue to pay its production staff out of a $100 million fund it created to shore up the Hollywood economy.Netflix announced last month it would continue to pay its production staff out of a $100 million fund it created to shore up the Hollywood economy.
The slowdown might be a short-term blessing. Netflix normally burns through a ton of cash to fund its content slate. Because the company pays for all of its productions up front — before they are available to watch — it does not account for those costs until later, sometimes a year or more after it has spent the money. That allows Netflix to claim a profit despite spending more than comes in. It’s completely legal, and every media company does it. Netflix just does it on a much bigger scale.The slowdown might be a short-term blessing. Netflix normally burns through a ton of cash to fund its content slate. Because the company pays for all of its productions up front — before they are available to watch — it does not account for those costs until later, sometimes a year or more after it has spent the money. That allows Netflix to claim a profit despite spending more than comes in. It’s completely legal, and every media company does it. Netflix just does it on a much bigger scale.
For those who wonder how much that costs, investors estimate Netflix spent $497 million more than came in during the first three months of the year. Of course, that number is likely to be much smaller during the current crisis.
Virgin Australia announced on Tuesday that it had entered voluntary administration after the Australian government refused a bailout for the company of 1.4 billion Australian dollars.Virgin Australia announced on Tuesday that it had entered voluntary administration after the Australian government refused a bailout for the company of 1.4 billion Australian dollars.
The airline, which is among the largest domestic and international carriers in Australia, said it hoped to recapitalize the business to emerge in a stronger position after the coronavirus crisis, but in the meantime would continue to operate scheduled flights transporting essential workers, moving freight and returning Australians home.The airline, which is among the largest domestic and international carriers in Australia, said it hoped to recapitalize the business to emerge in a stronger position after the coronavirus crisis, but in the meantime would continue to operate scheduled flights transporting essential workers, moving freight and returning Australians home.
“Our intention is to undertake a process to restructure and refinance the business and bring it out of administration as soon as possible,” Vaughan Strawbridge, the company’s administrator, said in a statement. “We have commenced a process of seeking interest from parties for participation in the recapitalization of the business and its future, and there have been several expressions of interest so far,” he said.“Our intention is to undertake a process to restructure and refinance the business and bring it out of administration as soon as possible,” Vaughan Strawbridge, the company’s administrator, said in a statement. “We have commenced a process of seeking interest from parties for participation in the recapitalization of the business and its future, and there have been several expressions of interest so far,” he said.
The company, which employs more than 10,000 people and flies to 41 destinations, became a significant player in the market following the closure of Ansett Australia in 2002, and its collapse would leave Qantas Airways with an effective monopoly over international travel to and from Australia, experts have said.The company, which employs more than 10,000 people and flies to 41 destinations, became a significant player in the market following the closure of Ansett Australia in 2002, and its collapse would leave Qantas Airways with an effective monopoly over international travel to and from Australia, experts have said.
“Australia needs a second airline,” said Paul Scurrah, Virgin Australia’s chief executive. “We are determined to keep flying.”“Australia needs a second airline,” said Paul Scurrah, Virgin Australia’s chief executive. “We are determined to keep flying.”
Reporting was contributed by Raymond Zhong, Matthew Goldstein, Robert Gebeloff, Jessica Silver-Greenberg, Edmund Lee, Livia Albeck-Ripka, Stanley Reed, Clifford Krauss, Vindu Goel and Mohammed Hadi. Huawei’s sales growth slowed sharply in the first quarter, the company said on Tuesday, citing “tough challenges” facing it and its suppliers as they try to maintain production amid the pandemic. The Chinese smartphone and telecom equipment maker said that revenue in the first three months of 2020 increased by 1.4 percent compared with the same period last year, a comedown from the 19.1 percent annual growth it reported for 2019.
Reporting was contributed by Raymond Zhong, Rachel Abrams, Matthew Goldstein, Robert Gebeloff, Jessica Silver-Greenberg, Edmund Lee, Livia Albeck-Ripka, Stanley Reed, Clifford Krauss, Vindu Goel and Mohammed Hadi.