This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2020/04/29/business/stock-market-coronavirus.html

The article has changed 32 times. There is an RSS feed of changes available.

Version 6 Version 7
Wall Street Rallies as the Fed Promises to Shore Up the Economy: Live Updates Wall Street Rallies as the Fed Promises to Shore Up the Economy: Live Updates
(32 minutes later)
Stocks rallied on Wednesday, boosted by indications that a drug being tested as a possible treatment for Covid-19 could be showing progress, and as investors pinned their hopes on the gradual reopening of the world’s major economies. Stocks rallied on Wednesday, bolstered by indications that a drug being tested as a possible treatment for Covid-19 could be showing progress, and as investors pinned their hopes on the gradual reopening of the world’s major economies.
The S&P 500 gained nearly 3 percent, while shares in Europe were also sharply higher.The S&P 500 gained nearly 3 percent, while shares in Europe were also sharply higher.
The rally came despite data that showed the U.S. economy shrank by the most since 2008 in the first quarter of the year. Earnings reports from Volkswagen, Samsung, Airbus, Boeing and other giant businesses were also grim.The rally came despite data that showed the U.S. economy shrank by the most since 2008 in the first quarter of the year. Earnings reports from Volkswagen, Samsung, Airbus, Boeing and other giant businesses were also grim.
But investors have been shaking off bad news on the economy for weeks as they focus on progress on efforts to contain the coronavirus pandemic. A steady climb has lifted the S&P 500 by nearly 30 percent since its March 23 low. With nearly half that gain coming in April, the month is on track to be the best for stocks since 1974, according to data from Howard Silverblatt, senior index analyst for S&P Dow Jones Indices. But investors have been shaking off bad news on the economy for weeks as they focus on progress on efforts to contain the coronavirus pandemic. A steady climb has lifted the S&P 500 by more than 31 percent since its March 23 low. With nearly half that gain coming in April, the month is on track to be the best for stocks since 1974, according to data from Howard Silverblatt, senior index analyst for S&P Dow Jones Indices.
The trading on Wednesday had all the hallmarks of a rally fueled by hopes of a return to normal, with shares of airlines and cruise operators — both industries that are dependent on the end of restrictions and the return of travelers — among the best performing stocks in the S&P 500. Oil producers also rallied as the price of crude oil surged. The trading on Wednesday had all the hallmarks of a rally fueled by hopes of a return to normal, with shares of airlines and cruise operators — both industries that are dependent on the end of restrictions and the return of travelers — among the best-performing stocks in the S&P 500. Oil producers also rallied as the price of crude oil surged.
A rally in the stocks of large technology companies, which have an outsize impact on the overall market, also helped. Alphabet rose nearly 9 percent the day after it reported quarterly results that were better than expected, and Facebook was more than 6 percent higher.A rally in the stocks of large technology companies, which have an outsize impact on the overall market, also helped. Alphabet rose nearly 9 percent the day after it reported quarterly results that were better than expected, and Facebook was more than 6 percent higher.
Before trading began Wednesday, the drugmaker Gilead Sciences said it was “aware of positive data” emerging from a trial of its antiviral drug being conducted by the National Institute of Allergy and Infectious Diseases. The drug, remdesivir, is being tested as a treatment for Covid-19, the illness caused by the coronavirus.Before trading began Wednesday, the drugmaker Gilead Sciences said it was “aware of positive data” emerging from a trial of its antiviral drug being conducted by the National Institute of Allergy and Infectious Diseases. The drug, remdesivir, is being tested as a treatment for Covid-19, the illness caused by the coronavirus.
Gilead didn’t elaborate, and another study published on Wednesday found that remdesivir offered no benefit to patients in China who are severely ill with Covid-19. But Dr. Anthony S. Fauci, the federal government’s leading infectious diseases scientist, on Wednesday hailed the positive trial results, holding out hope that the drug could help stem the rising death toll, and senior administration officials told The New York Times that the Food and Drug Administration plans to announce an emergency authorization for remdesivir’s use. Gilead did not elaborate, and another study published on Wednesday found that remdesivir offered no benefit to patients in China who are severely ill with Covid-19. But Dr. Anthony S. Fauci, the federal government’s leading infectious diseases scientist, hailed the positive trial results, holding out hope that the drug could help stem the rising death toll, and senior administration officials told The New York Times that the Food and Drug Administration planned to announce an emergency authorization for remdesivir’s use.
Oil prices surged, with gains picking up steam after a weekly report on crude oil stockpiles showed they increased by less than expected. Investors have been worried about a glut of crude as demand for energy plunges, along with storage capacity in the United States. On Wednesday, West Texas Intermediate crude, the U.S. benchmark, rose more than 24 percent to $15.37 a barrel. Brent crude, the international benchmark, was trading at a little under $23 a barrel, up about 11 percent.
The Federal Reserve said on Wednesday that it would take whatever steps it could to insulate the economy as coronavirus lockdowns take a severe toll on economic growth, making clear that the central bank will use all its tools to help hasten a recovery.The Federal Reserve said on Wednesday that it would take whatever steps it could to insulate the economy as coronavirus lockdowns take a severe toll on economic growth, making clear that the central bank will use all its tools to help hasten a recovery.
The Fed, which had already slashed interest rates to near zero at two emergency meetings, left its benchmark rate unchanged and signaled it had no plans to raise rates anytime soon.The Fed, which had already slashed interest rates to near zero at two emergency meetings, left its benchmark rate unchanged and signaled it had no plans to raise rates anytime soon.
Fed Chair Jerome H. Powell, speaking at a news conference immediately after its two-day policy meeting, said the economy is suffering from the “forceful” steps the country has taken to slow the spread of the virus and said it remains unclear how long the economic stress will continue, Jeanna Smialek reports. The Fed chair, Jerome H. Powell, speaking at a news conference immediately after its two-day policy meeting, said the economy was suffering from the “forceful” steps the country had taken to slow the spread of the virus and said it remained unclear how long the economic stress would continue, Jeanna Smialek reports.
“The depth and the duration of the economic downturn are unknown,” Mr. Powell said, adding that “the burdens are falling most heavily on those least able to carry them.”“The depth and the duration of the economic downturn are unknown,” Mr. Powell said, adding that “the burdens are falling most heavily on those least able to carry them.”
“Millions of workers are losing their jobs,” he said and “household spending has plummeted.”
The central bank has already taken a series of aggressive steps to try to backstop the economy, including buying enormous quantities of government and mortgage-backed debt. The Fed has also unveiled a spate of emergency programs that either buy debt or loan money into critical sectors.The central bank has already taken a series of aggressive steps to try to backstop the economy, including buying enormous quantities of government and mortgage-backed debt. The Fed has also unveiled a spate of emergency programs that either buy debt or loan money into critical sectors.
Congress handed the Treasury Department $454 billion to support the Fed’s facilities, which need to be protected against credit losses. Officials have used that backing to push the Fed’s emergency lending powers further than they went even in the depths of the 2008 financial crisis: They plan to buy municipal debt and to help both large and midsize companies gain access to credit. Facebook cautioned Wall Street on Wednesday that it could face intensifying difficulties in its advertising business as the spread of the coronavirus ripples through the global economy, although the falloff in spending has stabilized.
The efforts come as quarantines and stay-at-home orders send growth plummeting. The economy contracted at a 4.8 percent annualized rate in the first quarter, the worst reading since 2008, as spending on services dived. The social network reported rising revenue and profit for its first quarter, but it said in a statement that its business would be affected by “issues out of its control.” Facebook said it saw a significant reduction in advertising over the last three weeks of March, and it would not give forecasts about future financial results because of the coronavirus impact.
But the ad declines flattened in April, Facebook added. “After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April, where advertising revenue has been approximately flat compared to the same period a year ago,” the company said.
The company’s revenue in the first quarter rose 18 percent to $17.74 billion from a year earlier, while profit more than doubled to $4.09 billion, surpassing Wall Street estimates. A year earlier, Facebook had taken a $3 billion charge to pay for a privacy settlement with the Federal Trade Commission.
U.S. gross domestic product, the broadest measure of goods and services produced in the economy, fell at a 4.8 percent annual rate in the first quarter of the year, the Commerce Department said Wednesday. That is the first decline since 2014, and the worst quarterly contraction since the country was in a deep recession more than a decade ago.U.S. gross domestic product, the broadest measure of goods and services produced in the economy, fell at a 4.8 percent annual rate in the first quarter of the year, the Commerce Department said Wednesday. That is the first decline since 2014, and the worst quarterly contraction since the country was in a deep recession more than a decade ago.
Even so, most of the quarter came before the coronavirus pandemic forced widespread shutdowns and layoffs. Economists expect figures from the current quarter to show G.D.P. contracting at an annual rate of 30 percent or more.Even so, most of the quarter came before the coronavirus pandemic forced widespread shutdowns and layoffs. Economists expect figures from the current quarter to show G.D.P. contracting at an annual rate of 30 percent or more.
“They’re going to be the worst in our lifetime,” Dan North, chief economist for the credit insurance company Euler Hermes North America.“They’re going to be the worst in our lifetime,” Dan North, chief economist for the credit insurance company Euler Hermes North America.
Treasury Secretary Steven Mnuchin said this week that the economy should “really bounce back” this summer as states lift stay-home orders and trillions of dollars in federal emergency spending reaches businesses and households. Most independent economists are much less optimistic.Treasury Secretary Steven Mnuchin said this week that the economy should “really bounce back” this summer as states lift stay-home orders and trillions of dollars in federal emergency spending reaches businesses and households. Most independent economists are much less optimistic.
The estimates issued on Wednesday are preliminary and based on incomplete data, particularly for March. Some economists expect final figures, due later this spring, to show an even bigger decline.The estimates issued on Wednesday are preliminary and based on incomplete data, particularly for March. Some economists expect final figures, due later this spring, to show an even bigger decline.
The Small Business Administration said on Wednesday that it was blocking big lenders from submitting applications for the emergency small business lending program for nearly eight hours this evening so that small lenders are able to use its loan processing system. Microsoft reported strong growth in sales and profits for the quarter ended in March, saying that the coronavirus outbreak had “minimal net impact” on its financial performance.
In a memo to lenders, the agency said that the system would only be available to lenders with less than $1 billion in assets from 4 p.m. The results easily outpaced analyst expectations. Microsoft’s revenue rose 15 percent to $35 billion, compared with the analysts’ consensus forecast of $33.66 billion. Its operating earnings per share rose 23 percent to $1.40 a share in the quarter. That was well above the average estimate of Wall Street analysts of $1.26 a share, as compiled by Refinitiv, a research firm.
The S.B.A. and the Treasury Department are evaluating whether they will need to block off such windows of time in the future. Smaller lenders have been shut out of the system after the Payroll Protection Program restarted this week as a crush of applications caused it to freeze or time out. Microsoft’s fast-growing cloud business, analysts say, should help make the company a resilient standout in the current economic storm. It has a very business model, they note, than the company did when the financial crisis hit in 2008.
Treasury Secretary Steven Mnuchin said on Twitter that the decision was made to ensure small banks and community lenders could gain access to the S.B.A. portal. The company’s shift to cloud computing and its broad customer base “positions us well for what’s ahead,” Satya Nadella, Microsoft’s chief executive, said in a statement.
The decision was quickly met with disappointment by some banking groups. Hertz Global Holdings said in a regulatory filing Wednesday that it had missed a monthly payment on the lease it used to procure cars for its rental-car fleet.
“This I don’t agree — many small businesses went to banks over $1 billion to help provide for their family,” Richard Hunt, chief executive of the Consumer Bankers Association, said in a post on Twitter. “There was already a carve out for small banks and now this. Don’t play favorites with small businesses. All need a lifeline right now.” The company said its business had been battered by the global pandemic, and it had skipped Monday’s payment to preserve cash for its core operations.
Hertz did not disclose the amount of the missed payment, but said it was in a grace period that would end on May 4. The company did not immediately respond to messages seeking comment.
In its filing, the company said it was talking with two groups of lenders about temporarily reducing the lease payments. One group of lenders, the holders of its vehicle-financing subsidiary’s notes, had already agreed to such a reduction, the company said. But the other group, described as its senior credit facility lenders, had not.
If Hertz cannot reach a forbearance agreement with the second group by May 4, the company could be forced into bankruptcy.
As many people take shelter in their homes during the coronavirus pandemic, fewer consumers are making plans to buy new ones.As many people take shelter in their homes during the coronavirus pandemic, fewer consumers are making plans to buy new ones.
Whether they’re recently unemployed or too nervous to commit, many prospective home buyers and sellers are sitting on the sidelines, according to the National Association of Realtors. Contracts to buy existing homes fell nearly 21 percent in March from February, and dropped 16 percent from the year prior.Whether they’re recently unemployed or too nervous to commit, many prospective home buyers and sellers are sitting on the sidelines, according to the National Association of Realtors. Contracts to buy existing homes fell nearly 21 percent in March from February, and dropped 16 percent from the year prior.
“The first month of the impact from the pandemic is simply the shock — not knowing what to do and wanting to abide by stay at home directives,” said Lawrence Yun, chief economist at the realtor association.“The first month of the impact from the pandemic is simply the shock — not knowing what to do and wanting to abide by stay at home directives,” said Lawrence Yun, chief economist at the realtor association.
He suggested that home sales could rebound in the coming months, as people get more comfortable with social distancing. “Buyers and sellers will steadily realize that a home transaction is a far safer activity than, say, going to the grocery stores,” he said.He suggested that home sales could rebound in the coming months, as people get more comfortable with social distancing. “Buyers and sellers will steadily realize that a home transaction is a far safer activity than, say, going to the grocery stores,” he said.
The association said that prospective home buyers who are still in the market are using virtual tours, while others have taken advantage of online closings to finish up a sale.The association said that prospective home buyers who are still in the market are using virtual tours, while others have taken advantage of online closings to finish up a sale.
Despite the slowdown in activity, Mr. Yun said home prices remained relatively firm.Despite the slowdown in activity, Mr. Yun said home prices remained relatively firm.
President Trump’s declaration on Tuesday that meatpacking plants were “critical infrastructure” that should be kept open during the pandemic sent a powerful signal that protecting the nation’s food supply was a federal priority.President Trump’s declaration on Tuesday that meatpacking plants were “critical infrastructure” that should be kept open during the pandemic sent a powerful signal that protecting the nation’s food supply was a federal priority.
But exactly how the executive order would keep plants running, even in the midst of outbreaks that have sickened thousands of workers and turned the facilities into hot spots, was unclear.But exactly how the executive order would keep plants running, even in the midst of outbreaks that have sickened thousands of workers and turned the facilities into hot spots, was unclear.
“This is more symbolism than substance,” said Steve Vladeck, a law professor at the University of Texas. “He’s opening the door for the executive branch to take some far more specific actions vis-à-vis the meat plants, but the order itself doesn’t do anything.”“This is more symbolism than substance,” said Steve Vladeck, a law professor at the University of Texas. “He’s opening the door for the executive branch to take some far more specific actions vis-à-vis the meat plants, but the order itself doesn’t do anything.”
While the order does not explicitly mandate that plants stay open, it could allow the Department of Agriculture to potentially force meat companies to fulfill orders from retailers, effectively keeping them in some capacity. While the order does not explicitly mandate that plants stay open, it could allow the Department of Agriculture to potentially force meat companies to fulfill orders from retailers.
Boeing reported $16.9 billion of revenue in the first quarter of the year, a 26 percent decline from last year, as the aviation industry ground to a halt during the coronavirus pandemic. The company said Wednesday that it planned to cut its work force by about 10 percent, a reduction it hopes to achieve voluntarily, through buyouts and early retirement offers.
“I know this news is a blow during an already challenging time. I regret the impact this will have on many of you. I sincerely wish there were some other way,” said David L. Calhoun, Boeing’s chief executive, in a note to staff.
As of the start of the year, Boeing and its subsidiaries employed more than 143,000 employees.
With airlines delaying purchases, deliveries and maintenance, Boeing is slowing production rates, including for the troubled 737 Max jet, and is working to increase access to capital. It is planning even deeper cuts of 15 percent to the commercial airplanes and services businesses, which are the most exposed to the downturn in the industry.
“The pandemic is also delivering a body blow to our business — affecting airline customer demand, production continuity and supply chain stability,” Mr. Calhoun said.
Boeing does not expect air travel to recover to pre-pandemic levels for at least two to three years and said it would likely take several years more for the long-term trend in growth to recover.
The deluge of first-quarter reports this week is giving investors a detailed look at how the start of the coronavirus crisis affected businesses. Of course, second-quarter earnings this year may well be even more grim.The deluge of first-quarter reports this week is giving investors a detailed look at how the start of the coronavirus crisis affected businesses. Of course, second-quarter earnings this year may well be even more grim.
Tesla, the electric-car maker, reported net income of $16 million for the first quarter of 2020, a drop of 85 percent compared with the fourth quarter. The steep decline was a reflection of the impact of the coronavirus on its operations and sales in the United States and China. Revenue in the quarter totaled $6 billion, a 20 percent drop from the previous quarter. Tesla declined the offer guidance for the second quarter because of the uncertain economic and public health outlook.
Boeing reported $16.9 billion of revenue in the first quarter of the year, a 26 percent decline from last year, as the aviation industry ground to a halt during the coronavirus pandemic. The company said Wednesday that it planned to cut its work force by about 10 percent, a reduction it hopes to achieve voluntarily, through buyouts and early retirement offers.
General Electric said Wednesday that overall revenue fell 8 percent to $20.5 billion in the first quarter of the year. The coronavirus pandemic especially affected the aviation division, which saw a 13 percent decline. But the health care sector of the business, which doubled its production of ventilators and increased its manufacturing of other medical equipment used in the diagnosis and treatment of Covid-19, saw revenue increase by 7 percent, to $5.3 billion.General Electric said Wednesday that overall revenue fell 8 percent to $20.5 billion in the first quarter of the year. The coronavirus pandemic especially affected the aviation division, which saw a 13 percent decline. But the health care sector of the business, which doubled its production of ventilators and increased its manufacturing of other medical equipment used in the diagnosis and treatment of Covid-19, saw revenue increase by 7 percent, to $5.3 billion.
The restaurant giant Yum Brands said on Wednesday that same-store sales across its brands had dropped 7 percent in the first quarter. Sales at K.F.C. shrank 8 percent, while Pizza Hut sales dropped 11 percent. But sales at Taco Bell — which has been offering drive-through service throughout the pandemic — rose 1 percent.The restaurant giant Yum Brands said on Wednesday that same-store sales across its brands had dropped 7 percent in the first quarter. Sales at K.F.C. shrank 8 percent, while Pizza Hut sales dropped 11 percent. But sales at Taco Bell — which has been offering drive-through service throughout the pandemic — rose 1 percent.
Airbus, the European aircraft giant, reported on Wednesday a net loss of 481 million euros (about $522 million) in the first quarter of 2020, a reversal from a profit of 40 million euros in the same period a year ago. The company said that it delivered 122 commercial aircraft compared with 162 in the first quarter of 2019.Airbus, the European aircraft giant, reported on Wednesday a net loss of 481 million euros (about $522 million) in the first quarter of 2020, a reversal from a profit of 40 million euros in the same period a year ago. The company said that it delivered 122 commercial aircraft compared with 162 in the first quarter of 2019.
Volkswagen, the world’s largest carmaker, said that vehicle sales fell 25 percent in the first three months of the year, a vivid indication of the havoc that the coronavirus is causing throughout the auto industry. The company, based in Wolfsburg, Germany, said that it sold 1.9 million vehicles in the first quarter compared with 2.6 million in the first quarter of 2019. Profit also collapsed, falling more than 80 percent to 517 million euros, or $562 million.Volkswagen, the world’s largest carmaker, said that vehicle sales fell 25 percent in the first three months of the year, a vivid indication of the havoc that the coronavirus is causing throughout the auto industry. The company, based in Wolfsburg, Germany, said that it sold 1.9 million vehicles in the first quarter compared with 2.6 million in the first quarter of 2019. Profit also collapsed, falling more than 80 percent to 517 million euros, or $562 million.
FedEx said on Wednesday that it would not take federal funds earmarked to pay employees under the CARES Act, one day after UPS announced the same. Lawmakers had set aside $25 billion in grants for passenger airlines and $4 billion for cargo carriers to pay workers, though the Treasury Department later classified a portion of the funds for airlines as a loan.
Tyson Foods said on Wednesday that it was doubling bonuses, to a total of $120 million, for its 116,000 front-line workers and truck drivers in the United States. The company also said it was increasing short-term disability coverage for employees unable to work because of illness and putting additional health screening measures into place.Tyson Foods said on Wednesday that it was doubling bonuses, to a total of $120 million, for its 116,000 front-line workers and truck drivers in the United States. The company also said it was increasing short-term disability coverage for employees unable to work because of illness and putting additional health screening measures into place.
Lyft plans to lay off 17 percent of its employees, the company said in a regulatory filing, as the ride-hailing company struggles with a downturn caused by the coronavirus pandemic. The company told staff about the cuts in an email on Wednesday. Five percent of workers will be furloughed, and remaining employees will take a pay cut. Executive pay will be reduced 30 percent, pay for vice presidents will be reduced 20 percent, and pay for other workers will be reduced 10 percent.Lyft plans to lay off 17 percent of its employees, the company said in a regulatory filing, as the ride-hailing company struggles with a downturn caused by the coronavirus pandemic. The company told staff about the cuts in an email on Wednesday. Five percent of workers will be furloughed, and remaining employees will take a pay cut. Executive pay will be reduced 30 percent, pay for vice presidents will be reduced 20 percent, and pay for other workers will be reduced 10 percent.
Volkswagen said on Wednesday that it would not restart production at its plant in Chattanooga, Tenn., on May 3, a date it announced just a week earlier. The German automaker did not provide a new start date, and said in a statement that it would first “weigh the readiness of the supplier base, as well as market demand and the status of the Covid-19 outbreak.”Volkswagen said on Wednesday that it would not restart production at its plant in Chattanooga, Tenn., on May 3, a date it announced just a week earlier. The German automaker did not provide a new start date, and said in a statement that it would first “weigh the readiness of the supplier base, as well as market demand and the status of the Covid-19 outbreak.”
Fiesta Restaurant Group, the parent company of Pollo Tropical and Taco Cabana, said it was returning a $15 million loan from the Paycheck Protection Program. Several other large companies, including AutoNation, Shake Shack and the owner of Ruth’s Chris Steak Houses, have also disclosed that they were returning money they had received through the small-business loan program. Reporting was contributed by Steve Lohr, Taylor Lorenz, Ben Casselman, Jaclyn Peiser, Stanley Reed, Jack Ewing, Ben Dooley, Keith Bradsher, Alan Rappeport, Jeanna Smialek, David Yaffe-Bellany, Jason Karaian, Kate Conger, Mike Isaac, Tara Siegel-Bernard, Neal E. Boudette, Michael Corkery, Sapna Maheshwari, Gregory Schmidt, Mohammed Hadi, Katie Robertson, Carlos Tejada, Mike Ives and Kevin Granville.
Reporting was contributed by Taylor Lorenz, Ben Casselman, Jaclyn Peiser, Stanley Reed, Jack Ewing, Ben Dooley, Keith Bradsher, Alan Rappeport, Jeanna Smialek, David Yaffe-Bellany, Jason Karaian, Kate Conger, Mike Isaac, Tara Siegel-Bernard, Neal E. Boudette, Michael Corkery, Sapna Maheshwari, Gregory Schmidt, Mohammed Hadi, Katie Robertson, Carlos Tejada, Mike Ives and Kevin Granville.