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Stock Markets Rise on Hopes for Economic Recovery: Live Updates Stocks Rise on Hopes for Economic Recovery: Live Business Updates
(about 7 hours later)
Wall Street’s focus was on economic recovery Tuesday, and stocks rallied along with crude oil prices.
The S&P 500 rose more than 1 percent, with shares of companies most likely to benefit from the lifting of restrictions on travel and commerce faring well. Shares of Delta Air Lines, United Airlines and other big carriers rose, as did Marriott International.
Oil prices have been climbing all month as the restarting of factories and resumption of travel raised expectations that demand would rise. On Tuesday, West Texas intermediate crude rose another 3 percent, and shares of companies in the energy industry, like Chevron and Halliburton, were also higher.
It’s been a turbulent period for stocks, with the S&P 500 alternating between gains to losses on a daily basis last week, as expectations for an eventual recovery from the coronavirus pandemic have squared off against the reality that the damage is still severe and likely to continue for some time.
News of progress on vaccine development — even if small scale and early stage — has been one factor fueling the gains.
Tuesday was no exception, after the biotech company Novavax said on Monday that it was starting trials of its vaccine on humans, with preliminary results expected in July. On Tuesday, the pharmaceutical giant Merck said it bought the rights to develop a potential drug that had “potent antiviral properties against multiple coronavirus strains,” and was also beginning work on vaccine candidates.
The reopening of businesses has been another. One largely symbolic opening on Tuesday was that of the New York Stock Exchange’s trading floor. A small number of traders returned to the floor, wearing masks and following social-distancing rules, the exchange said.
Shares in Europe and Asia were also higher as investors shrugged off negative news like rising tensions between the United States and China and the combustible political situation in Hong Kong. Instead, they focused on Japanese leaders gradually lifting emergency measures there, while European leaders have also moved to ease travel restrictions.
But any gains are susceptible to a sudden change in sentiment if the reopening plans result in new outbreaks or fresh concerns about the longevity of economic slowdown emerge.
Americans are feeling worse about the present but slightly better about the future than they did a month ago, according to a survey by the Conference Board.
After two months of decline as the coronavirus pandemic forced widespread lockdowns, the board’s index of consumer confidence rose slightly this month in a preliminary reading as “the gradual reopening of the economy helped improve consumers’ spirits,” the research group said Tuesday.
“While the decline in confidence appears to have stopped for the moment, the uneven path to recovery and potential second wave are likely to keep a cloud of uncertainty hanging over consumers’ heads,” said Lynn Franco, the board’s senior director of economic indicators.
The share of those surveyed saying business conditions are good decreased to 16.3 percent from 19.9 percent, while those saying conditions are bad increased to 52.1 percent from 45.3 percent. But 43.3 percent said they expected business conditions to improve over the next six months, up from 39.8 percent, while those expecting a decline decreased to 21.4 percent from 25.1 percent.
Hoping to take advantage of wreckage in the wake of the coronavirus pandemic, investors are preparing to snap up commercial real estate at rock-bottom prices.
Long before states and cities closed businesses and issued stay-at-home orders, many real estate funds were stockpiling cash and waiting for a buyer’s market. Some have raised billions of dollars in the last several weeks.
As a result, investment firms are sitting on roughly $300 billion of equity ready for deployment, said Douglas M. Weill, a founder of Hodes Weill & Associates, a global real estate capital advisory firm in New York. “It’s a staggering amount of dry powder,” he said.
Every commercial property owner has its specific problems, but mom-and-pop landlords that own a handful of apartment buildings, retail centers or other assets are in a much more compromised position, said Sanford D. Sigal, president and chief executive of NewMark Merrill, a shopping center owner and manager in Woodland Hills, Calif.
“Very few small owners are equipped for this type of market,” said Mr. Sigal, who expected to collect about 57 percent of his May rent from tenants across some 70 properties in California, Colorado and Illinois. “I’ve seen more deals in the past week that were worth looking at than I did in the entire prior year.”
Even as American employers let tens of millions of workers go, some companies are choosing a different path. By instituting across-the-board salary reductions, especially at senior levels, they have avoided layoffs.
The ranks of those forgoing job cuts and furloughs include major employers like HCA Healthcare, the hospital chain, and Aon, a London-based global professional services firm with a regional headquarters in Chicago.
Others that managed to avoid layoffs include smaller companies like KVH, a maker of mobile connectivity and navigation systems that employs 600 globally and is based in Middletown, R.I.
“We’d never done a pay cut before,” said Martin Kits van Heyningen, who started KVH in his parents’ basement more than three decades ago.
The trend is a reversal of traditional management theory, which held that salaries were sacred and it was better to cut positions and dismiss a limited number of workers than to lower pay for everyone during downturns.
There is often a genuine desire to protect employees, but long-term financial interests are a major consideration as well, said Donald Delves, a compensation expert with Willis Towers Watson. “Companies learned the hard way that once you lay off a bunch of people, it’s expensive and time-consuming to hire them back,” he said.
There’s recently been a surge of people who are picking up their online orders in-person at Walmart, Target, Home Depot and other stores big and small. With the best shopping ideas coming from big box retailers, Amazon is missing out, writes the On Tech columnist Shira Ovide.
I’ve been impressed by how old-school companies, from Best Buy to my local cheese shop, have quickly adapted to offering low-contact pickups like this. Some of this activity is a temporary coronavirus-related spike, but I bet some of these habits will stick.
Three years ago, Amazon agreed to pay $14 billion to buy the Whole Foods supermarket chain. This was the moment when Amazon acknowledged the importance of physical stores, and I couldn’t wait to see how the company reimagined in-person shopping experiences that had not changed much in my lifetime. And then, not much happened.
Yes, Whole Foods stores are offering home deliveries now. But it’s other retailers that are rethinking how their physical stores can work hand-in-hand with online shopping.
Four Uber and Lyft drivers, along with an advocacy group called the New York Taxi Workers Alliance, have filed a complaint in federal court against Gov. Andrew M. Cuomo and the state’s Department of Labor, saying the state illegally failed to pay benefits to drivers in a timely way.Four Uber and Lyft drivers, along with an advocacy group called the New York Taxi Workers Alliance, have filed a complaint in federal court against Gov. Andrew M. Cuomo and the state’s Department of Labor, saying the state illegally failed to pay benefits to drivers in a timely way.
The lawsuit says drivers must wait months to receive unemployment benefits, if they receive them at all, compared with the two to three weeks that the state has said is typical for other workers. The plaintiffs are seeking an injunction requiring the state to immediately pay their benefits and the benefits of other drivers to whom they are owed.The lawsuit says drivers must wait months to receive unemployment benefits, if they receive them at all, compared with the two to three weeks that the state has said is typical for other workers. The plaintiffs are seeking an injunction requiring the state to immediately pay their benefits and the benefits of other drivers to whom they are owed.
Some drivers are being directed to a federal pandemic relief program intended for contractors, even though the state considers them employees and conventional unemployment benefits would pay them far more. According to the lawsuit, a key problem is that the state has not forced Uber and Lyft to provide the data on workers’ earnings that employers must typically supply.Some drivers are being directed to a federal pandemic relief program intended for contractors, even though the state considers them employees and conventional unemployment benefits would pay them far more. According to the lawsuit, a key problem is that the state has not forced Uber and Lyft to provide the data on workers’ earnings that employers must typically supply.
An Uber spokesman said the company had provided the state with the earnings data it had requested, though he declined to elaborate on whether the data would be sufficient to calculate unemployment benefits promptly. Lyft said the company was working with the state to provide access to earnings data.An Uber spokesman said the company had provided the state with the earnings data it had requested, though he declined to elaborate on whether the data would be sufficient to calculate unemployment benefits promptly. Lyft said the company was working with the state to provide access to earnings data.
Jack Sterne, a spokesman for the Cuomo administration, said, “During this pandemic emergency, we have been moving heaven and earth to get every single unemployed New Yorker their benefits as quickly as possible — including Uber and Lyft drivers.” “During this pandemic emergency, we have been moving heaven and earth to get every single unemployed New Yorker their benefits as quickly as possible — including Uber and Lyft drivers,” said Jack Sterne, a spokesman for the Cuomo administration.
Wall Street’s focus was on economic recovery Tuesday, and stocks rallied along with crude oil prices. Powell’s Books, an enormous independent bookstore in Portland, Ore., was initially laid low by the pandemic. In the days after it decided to close its stores and suspend operations in mid-March, the company laid off some 450 of its roughly 500 employees.
The S&P 500 rose nearly 2 percent in early trading, with shares of companies most likely to benefit from the lifting of restrictions on travel and commerce faring well. Shares of Delta Air Lines, United Airlines and other big carriers rose, as did Marriott International. Since then, the company’s chief executive, Emily Powell, has been trying to hire back employees where she can, all while trying to reimagine how bookstores work in the age of social distancing.
Oil prices have been climbing all month as the restarting of factories and resumption of travel has raised expectations that demand will rise. On Tuesday, West Texas intermediate crude rose another 3 percent, and shares of companies in the energy industry like Chevron and Halliburton, were also higher. Ms. Powell discussed Powell’s, the book business and Amazon on a live Corner Office call with reporter David Gelles on Tuesday afternoon. It was part of a series of live Corner Office calls happening each Tuesday, and a replay is available now.
It’s been a turbulent period for stocks, with the S&P 500 alternating between gains to losses on a daily basis last week, as expectations for an eventual recovery from the coronavirus pandemic have squared off against the reality that the damage is still severe and likely to continue for some time. A condensed and edited version of their conversation will be available in the coming days, and next week David will chat with Joey Bergstein, chief executive of Seventh Generation, about the great toilet paper shortage, social responsibility during the crisis and more.
News of progress on vaccine development — even if small scale and early stage — has been one factor fueling the gains. Chinese leaders meeting since last week in Beijing have stressed their efforts to create jobs and get the country back to work. But surveys and interviews show many young workers are entering into the work force in the worst market in decades.
Tuesday was no exception, after the biotech company Novavax said on Monday that it was starting trials of its vaccine on humans, with preliminary results expected in July. On Tuesday, the pharmaceutical giant Merck said it bought the rights to develop a potential drug that has “potent antiviral properties against multiple coronavirus strains,” and was also beginning work on vaccine candidates. “When it was April and I still couldn’t start my job, I started to feel worried,” said Huang Bing, 24, who graduated last year from a prestigious Chinese drama school. Her new job, set to begin this past January, ended before it began.
The reopening of businesses has been another. One largely symbolic opening on Tuesday was that of the New York Stock Exchange’s trading floor. A small number of traders were returning to the floor on, wearing masks and following social-distancing rules, the exchange said. “I began worrying that I may not be able to work this year at all,” Ms. Huang said. “I can’t just keep waiting.”
Shares in Europe and Asia were also higher on Tuesday, as investors shrugged off negative news like rising tensions between the United States and China and the combustible political situation in Hong Kong. Instead, they focused on Japanese leaders gradually lifting emergency measures there, while European leaders have also moved to ease travel restrictions. Online, young people despair over finding a good job, with many settling for something that pays less. Many others are reluctant to relent. “The graduates do not fully understand the market,” said Martin Ma, a human resources officer for a Chinese software company. “Their expectations are quite high.”
But any gains are susceptible to a sudden change in sentiment if the reopenings result in new outbreaks or fresh concerns about the longevity of economic slowdown emerge. For the world, global growth will be hard to rekindle until China gets fully back to work. But the damage to the Communist Party could be long-lasting. It derives its political power from the promise of delivering a better life for the Chinese people, a promise that has become increasingly difficult to fulfill.
The stock trading floor of the New York Stock Exchange reopened on Tuesday, though at a reduced head count in order to allow space for social distancing measures to remain in force. The stock trading floor of the New York Stock Exchange reopened on Tuesday, though at a reduced head count to allow space for social distancing measures to remain in force. Gov. Andrew M. Cuomo rang the opening bell at 9:30 a.m. at the start of trading.
Floor brokers and trading floor officials will be allowed back, while designated market makers — the specialist traders who buy and sell in order to “make markets” in certain securities — will continue to operate remotely.Floor brokers and trading floor officials will be allowed back, while designated market makers — the specialist traders who buy and sell in order to “make markets” in certain securities — will continue to operate remotely.
Those who are returning must comply with a number of restrictions to regain access to the floor including avoiding public transportation, submitting to temperature checks upon entry and wearing a face mask. They will also be expected to maintain a six-foot social distance and avoid physical contact such as shaking hands. Those who are returning must comply with a number of restrictions to regain access to the floor including avoiding public transportation, submitting to temperature checks on entry and wearing a face mask. They will also be expected to maintain a six-foot social distance and avoid physical contact such as shaking hands.
The ability to trade electronically muted the market impact of the more than two-month shuttering of the trading floor, one of the most significant disruptions to the floor operations of the exchange since 1914, when it was closed for about four months as the United States entered World War I. The ability to trade electronically muted the market impact of the more than two-month shuttering of the trading floor, one of the most significant disruptions to the floor operations of the exchange since 1914, when it was closed for about four months as World War I began (not when the United States entered the war, as an earlier post said.).
The European Central Bank warned Tuesday that the pandemic could create huge aftershocks in the financial system, destabilizing banks as well as highly indebted corporations and governments. Back then, the exchange floor was the only way to trade shares listed on the exchange. But floor volume fell from around 70 percent of all New York Stock Exchange trading activity in the early 1990s to less than 20 percent by 2006, academic studies found.
Banks have so far withstood the crisis, largely because regulators forced them to reduce their reliance on borrowed money following the financial crisis and recession in 2008, the central bank said in its annual survey of the health of the eurozone financial system. But even that likely overstates the impact of the floor. Over the past decade, the New York Stock Exchange’s share of American stock trading has fallen to about 24 percent from 80 percent, with trading in U.S. stocks now shared by 12 public exchanges and many more nonpublic venues.
But it’s too early to sound the all-clear, the report said. Eurozone banks are plagued by low profitability and the stock market values them at only one-third the book value of their assets. Lenders such as BBVA in Spain or Société Générale in France reported big losses for the first quarter of 2020 while others like Deutsche Bank were just barely profitable. That means that the share of stock that actually is touched by the New York Stock Exchange’s flesh-and-blood traders is quite small — as little as 1 percent, according to one recent study.
The central bank praised governments for quickly deploying tax cuts and other measures to help businesses and consumers survive loss of income. But the central bank also warned that the economic stimulus will leave governments with much higher debt that could be a major burden in the future.
The central bank also singled out industries such as airlines and automobile manufacturers as a risk. Many face downgrades in their creditworthiness, which in turn will make it difficult for them to roll over their debts. Some could go bankrupt as a result, the central bank said.
“The coronavirus pandemic has affected virtually all aspects of economic activity,” the central bank said.
Italy’s $180 billion fashion industry is known for its glamorous brands, but it is built on a vast and tightly woven network of designers, manufacturers, distributors and retailers, large and small, that help make up the backbone of one of Europe’s largest economies.
For these companies, and for this style of doing business, the future has never looked more uncertain.
Production of fashion collections have been either delayed or scrapped by large global fashion retailers and luxury brands. With the July couture shows in Paris canceled, and a cloud of uncertainty hanging over the fashion weeks in September, many specialist workshops remain in limbo.
Italy’s fashion manufacturing sector is expected to contract by up to 40 percent this year, said Claudia D’Arpizio, a partner at the consulting firm Bain & Company.
“The big brands are enduring tough times but generally have some liquidity and a strong consumer profile,” Ms. D’Arpizio said. “However, they all have networks of small suppliers scattered all over Italy. Those are the businesses more likely to disappear.”
The Department of Health and Human Services has disbursed $72 billion in grants since April to hospitals and other health care providers through a program that was part of the CARES Act economic stimulus package. The money was intended to prevent them from capsizing during the coronavirus pandemic.
So far, the riches are flowing in large part to hospitals that had already built up deep financial reserves to help them withstand an economic storm. Smaller, poorer hospitals are receiving tiny amounts of federal aid by comparison.
This spring, Providence Health System, one of the country’s largest and richest hospital chains, received at least $509 million in government funds, one of many wealthy beneficiaries of a bailout. A Providence spokeswoman said the grants helped make up for losses from the coronavirus.
Twenty large recipients, including Providence, have received a total of more than $5 billion in recent weeks, according to an analysis of federal data by Good Jobs First, a research group. Those hospital chains were already sitting on more than $108 billion in cash, according to regulatory filings and the bond-rating firms S&P Global and Fitch.
By contrast, hospitals that serve low-income patients often have only enough cash on hand to finance a few weeks of their operations.
California was the first state to shut down to fight the spread of the virus and has avoided the staggeringly high infection and death rates in the Northeast. But the debilitating costs of that aggressive stance are mounting every day, write Tim Arango and Thomas Fuller.
California has an estimated unemployment rate above 20 percent, according to Gov. Gavin Newsom — far higher than the 14.7 percent national rate. In Los Angeles, with movie productions shut down, theme parks padlocked and hotels empty, things are even worse: The jobless rate has reached 24 percent, roughly equal to the peak unemployment of the Great Depression, in 1933.
“Economic free fall” is how Tom Steyer, the former presidential candidate, described it. He is leading the state’s economic recovery task force, a group of business leaders, labor activists, economists and former governors who have begun plotting a way out.
With a gross domestic product larger than 25 states combined, California’s pace of recovery has significant implications for the future of the United States. After 2008, California helped lead the nation in economic growth and job creation, powered by Silicon Valley, which remains relatively resilient.
But this time the pain is shared across a much broader area of the economy, including rotten strawberries in fields along the Pacific Coast, the empty wine-tasting rooms of Napa Valley and the deserted campuses of the nation’s largest public university system.
“I’d say this will be the most serious economic dislocation that America has faced,” said Jerry Brown, the governor of California until 2019, who left office with billions in the state’s rainy day fund. “The response should be a Rooseveltian intervention and effort to mobilize the economy the best way we can.”
Millions of adults have signed up for online classes in the last two months — a jolt that could signal a renaissance for big online learning networks that had struggled for years.
One network, Coursera, added 10 million new users from mid-March to mid-May, seven times the pace of new sign-ups in the previous year. Enrollments at edX and Udacity, two smaller education sites, have jumped by similar multiples.
“Crises lead to accelerations, and this is the best chance ever for online learning,” said Sebastian Thrun, a co-founder and chairman of Udacity.
Coursera, Udacity and edX sprang up nearly a decade ago as high-profile university experiments known as MOOCs, for massive open online courses. They were portrayed as tech-fueled insurgents destined to disrupt the antiquated ways of traditional higher education. But few people completed courses, grappling with the same challenges now facing students forced into distance learning because of the pandemic. Screen fatigue tends to set in, and attention strays.
The online ventures adapted through trial and error, gathering lessons that could provide a road map for school districts and universities pushed online. The instructional ingredients of success, the sites found, include short videos of six minutes or less, interspersed with interactive drills and tests; online forums where students share problems and suggestions; and online mentoring and tutoring.
For millions of college students, internships can be a steppingstone to full-time work, a vital source of income and even a graduation requirement.
But like so much else, summer internships have been upended by the pandemic, with a wide range of major companies, including tech firms like Yelp and entertainment behemoths like the Walt Disney Company, canceling programs and rescinding offers.
Students who had locked down internships as early as September are now jobless. Others who had hoped to experience an office setting for the first time are instead looking for work at fast-food restaurants. Many low-income undergraduates, already saddled with student loans, are concerned that a jobless summer could put them at a disadvantage in future application cycles, making it harder to find full-time work after graduation.
“I feel like I had such a strong plan,” said Lydia Burns, whose internship at a nonprofit organization in Washington was canceled. “I knew what I was going to do — I had been working for it all of college. Now I don’t know what I’m going to do.”
Some companies are continuing to pay interns to work from home, sending corporate laptops in the mail and holding get-to-know-you sessions over Zoom. But students fear that remote internships will not afford the networking opportunities that can make spending a summer in an office so valuable, especially for interns who have few professional contacts.
Latam, the largest airline in Latin America, said on Tuesday it had filed for bankruptcy protection, the latest carrier to fall victim to the pandemic. The company, based in Santiago, Chile, said it had secured $900 million in financing from major shareholders, including the Cueto and Amaro families and Qatar Airlines, and that it would work with creditors to reduce its debt while it continues operating. Avianca, Colombia’s flagship airline and one of the world’s oldest carriers, filed for bankruptcy protection earlier this month.Latam, the largest airline in Latin America, said on Tuesday it had filed for bankruptcy protection, the latest carrier to fall victim to the pandemic. The company, based in Santiago, Chile, said it had secured $900 million in financing from major shareholders, including the Cueto and Amaro families and Qatar Airlines, and that it would work with creditors to reduce its debt while it continues operating. Avianca, Colombia’s flagship airline and one of the world’s oldest carriers, filed for bankruptcy protection earlier this month.
Hertz, which started with a fleet of a dozen Ford Model T’s a century ago and became one of the world’s largest car rental companies, filed for bankruptcy protection late Friday after falling victim to its mountain of debt. Hertz said that it would use more than $1 billion in cash on hand to keep its business running while it proceeds with the bankruptcy process. The bankruptcy filing excludes operations in Australia, Europe and New Zealand as well as the company’s franchisee locations. Lufthansa will receive a bailout worth 9 billion euros, or $9.8 billion, to help the airline survive an “existential emergency” caused by the pandemic and a virtual shutdown of passenger air traffic, the German government said Monday. The agreement, reached after several weeks of negotiations, will give the government part ownership of the airline for the first time since it was privatized in 1997.
Reporting was contributed by Elizabeth Paton, Jack Ewing, Matt Phillips, Noam Scheiber, Jesse Drucker, Jessica Silver-Greenberg, Sarah Kliff, Tim Arango, Thomas Fuller, Niraj Chokshi, Mohammed Hadi, Julie Creswell, Neal E. Boudette, David Yaffe-Bellany and Kevin Granville. Reporting was contributed by Joe Gose, David Gelles, Nelson Schwartz, Alexandra Stevenson, Keith Bradsher, Elizabeth Paton, Jack Ewing, Jason Karaian, Matt Phillips, Noam Scheiber, Jesse Drucker, Jessica Silver-Greenberg, Kevin McKenna, Sarah Kliff, Tim Arango, Shira Ovide, Thomas Fuller, Niraj Chokshi, Mohammed Hadi, Julie Creswell, Neal E. Boudette, David Yaffe-Bellany and Kevin Granville.