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European Markets Fall Despite Wall Street’s Jump: Live Updates Stock Market Upswing Loses Steam in Europe: Live Updates
(about 2 hours later)
Monday’s global markets rally fizzed on Tuesday, as worries about the pace of the recovery from the coronavirus pandemic overcame enthusiasm over a potential new vaccine and other developments. European markets were lower on Tuesday, as a rally that started on Wall Street and continued in Asia appeared to lose traction. Worries about the pace of the recovery from the coronavirus pandemic overcame enthusiasm over a potential new vaccine and other developments.
European markets fell after opening higher, despite a strong performance in Asia after a big surge in U.S. stocks on Monday. Futures markets indicated Wall Street would open moderately lower later on Tuesday. Prices for U.S. Treasury bonds rose, which is often a sign of growing investor skepticism. Indexes in Europe initially rose, but then slipped into negative territory. Futures markets indicated Wall Street would open lower on Tuesday. Prices for U.S. Treasury bonds rose, which is often a sign of growing investor skepticism.
The slump followed a jump of more than 3 percent in major Wall Street indexes on Monday. A drug company, Moderna, said early testing of its coronavirus vaccine on a small group of people had promising results. Investors also focused on comments from Jerome H. Powell, chair of the U.S. Federal Reserve, who said the central bank could do more to help the American economy. The slump in Europe followed a jump of more than 3 percent in major Wall Street indexes on Monday, as a drug company, Moderna, said that early testing of its coronavirus vaccine on a small group of people had shown promising results. Investors also focused on comments from Jerome H. Powell, chair of the U.S. Federal Reserve, who said that the central bank could do more to help the American economy.
Investors glossed over Mr. Powell’s other comments about a potentially slow and painful recovery. Other negative news began to sink in on Tuesday, including more signs of rising tensions between the United States and China. Investors also were cheered on Monday after Germany backed the idea of collective European debt to help countries hit hardest by the outbreak, but on Tuesday the lack of details and the prospect of a long and slow recovery weighed on sentiment. But investors seemed to have glossed over Mr. Powell’s other comments about a potentially slow and painful recovery. Other negative news began to sink in on Tuesday, including more signs of rising tensions between the United States and China. Investors also were cheered on Monday after Germany backed the idea of collective European debt to help countries hit hardest by the outbreak, but on Tuesday, the lack of details and the prospect of a long and slow recovery weighed on sentiment.
In Japan, the Nikkei 225 index rose 1.5 percent. In Hong Kong, the Hang Seng index ended 1.9 percent higher. Mainland China’s Shanghai Composite index gained 0.8 percent. In Japan, the Nikkei 225 index rose 1.5 percent. In Hong Kong, the Hang Seng Index ended 1.9 percent higher. The Shanghai Composite index in China gained 0.8 percent.
In London, the FTSE 100 index was down 0.4 percent in early trading. The DAX index in Germany was down 0.3 percent. France’s CAC 40 was down 0.7 percent. The Federal Reserve chair, Jerome H. Powell, and Treasury Secretary Steven Mnuchin will testify before Congress on Tuesday morning in the first accountability hearing since Congress handed the Fed and Treasury hundreds of billions of dollars to help rescue the U.S. economy from coronavirus-induced shutdowns.
Many of the world’s economies have begun to loosen restrictions on commerce, the Federal Reserve chair on Sunday signaled that the central bank has more firepower to lend to recovery efforts, and a drugmaker reported positive developments in an early trial of a coronavirus vaccine. Lawmakers are expected to grill Mr. Mnuchin and Mr. Powell over their use of the $500 billion in CARES Act funding to help keep credit flowing through the economy.The money was intended to offer a bridge to companies and state and local governments so that they could get through the falloff in business activity brought about by the virus.
Taken together, the developments set off a surge in global stock prices and Wall Street had its best day in about six weeks. The efficacy of those programs remains an open question. Concerns have been growing that the Treasury’s desire to avoid taking any losses may hamstring the ability of the Fed to actually get money to companies that are in desperate need of financial help.
The S&P 500 rose more than 3 percent Monday, while stock benchmarks in Europe were 4 percent to 6 percent higher. Others are concerned that the Fed is not attaching enough restrictions — like requirements to hang onto employees — to the programs it is rolling out.
Before trading began in the United States, the drugmaker Moderna said its coronavirus vaccine showed promising early results in tests on humans. The early-stage tests were on just eight people, but the hope that a vaccine might be quickly developed was enough to give stock prices a lift. The Treasury secretary has also faced criticism over his handling of a small-business lending program which, while separate from the $500 billion pot of money, is nevertheless intended to help keep the economy humming amid quarantines.
Also bolstering markets was a pledge from Jerome H. Powell, the Fed chair, that there was “really no limit” to what the central bank could do with its emergency lending facilities. Mr. Mnuchin, in prepared testimony released ahead of the hearing, is expected to attempt to portray the economy as in a temporary period of pain, potentially striking a different tone from Mr. Powell, who has begun warning that the economy could be in for a rough road ahead if more support is not forthcoming.
The Fed chair also suggested that the worst economic readings were yet to come, even as states begin to gradually reopen. He said that he expected “a couple more months” of job losses and acknowledged that the unemployment rate, which hit 14.7 percent in April, could peak at 20 percent or even 25 percent. “Working closely with governors, we are beginning to open the economy,” Mr. Mnuchin said in the prepared remarks, adding that, “We expect economic conditions to improve in the third and fourth quarters.”
Still, investors were looking for silver linings as the world grapples with lockdowns and other restrictions. Japan released economic figures on Monday that showed its economy formally fell into recession, but Tokyo has begun easing some of its containment efforts. Some restrictions have also been lifted in parts of Europe and the United States. Mr. Powell has been vocal about the potential for a prolonged economic downturn, saying that businesses and households may need even more support beyond the $2 trillion Congress has already appropriated.
And trading on Monday had all the characteristics of a rally focused on the prospects for a return to normal. Shares of companies that stand to gain the most, like United Airlines, Expedia Group and Marriott International were among the best performers in the S&P 500. “We are committed to using our full range of tools to support the economy,” Mr. Powell said in his prepared remarks. “We recognize that these actions are only a part of a broader public-sector response.”
Walmart, the nation’s largest retailer, said sales in the first quarter soared more than 10 percent in the United States as customers flocked to its stores and online to buy food and health care products during the coronavirus pandemic.
Deemed an essential business, Walmart has been able to keep its stores and e-commerce network operating every day of the crisis, giving it an advantage over some competitors who have been forced to close.
Across the company, including its international business and Sam’s Club unit, operating income increased 5.6 percent to $5.2 billion from a year earlier, while revenue increased 8.6 percent to $134.6 billion.
E-commerce sales increased 74 percent, double the company’s typical online growth rate, as Walmart shipped more items from its stores to customers’ homes and expanded its curbside pickup business.
“Our omnichannel strategy, enabling customers to shop in seamless, flexible ways, is built for serving the needs of customers during this crisis and in the future,’’ Doug McMillon, its chief executive, said in a statement.
The company also said on Tuesday it had hired more than 235,000 new employees to handle the surging demand and paid more than $900 million in bonuses and higher wages.
The coronavirus has done what a chorus of pleas from 7-Eleven store owners in Japan could not: forced the company that controls the chain, Seven & I Holdings, to allow some of its locations to close for the night.The coronavirus has done what a chorus of pleas from 7-Eleven store owners in Japan could not: forced the company that controls the chain, Seven & I Holdings, to allow some of its locations to close for the night.
It is a relief for store owners who were already putting in grueling hours for meager returns before the virus struck and have since watched business dry up as Japan’s workers sheltered at home under a state of emergency.It is a relief for store owners who were already putting in grueling hours for meager returns before the virus struck and have since watched business dry up as Japan’s workers sheltered at home under a state of emergency.
As Japan moved last week to lift that declaration across much of the country, however, some franchisees were wondering if the change of heart would outlast the pandemic.As Japan moved last week to lift that declaration across much of the country, however, some franchisees were wondering if the change of heart would outlast the pandemic.
Allowing an owner to close shop for a few hours in the dead of night or during a national holiday might not seem like a big deal. But 7-Eleven, so omnipresent in Japan that it is considered part of the national infrastructure, believes that consistent service across all of the country’s 21,000 locations is crucial to the brand’s value. Like many franchises, it has strict expectations for everything from shops’ layout to how employees dress and greet customers.Allowing an owner to close shop for a few hours in the dead of night or during a national holiday might not seem like a big deal. But 7-Eleven, so omnipresent in Japan that it is considered part of the national infrastructure, believes that consistent service across all of the country’s 21,000 locations is crucial to the brand’s value. Like many franchises, it has strict expectations for everything from shops’ layout to how employees dress and greet customers.
In December, the company severed the contract of one owner, Mitoshi Matsumoto, after he decided to close his shop in the Osaka area on New Year’s Day, Japan’s most important holiday. 7-Eleven has said the decision was in response to the high number of complaints registered by customers against Mr. Matsumoto. The matter is now the subject of competing lawsuits.In December, the company severed the contract of one owner, Mitoshi Matsumoto, after he decided to close his shop in the Osaka area on New Year’s Day, Japan’s most important holiday. 7-Eleven has said the decision was in response to the high number of complaints registered by customers against Mr. Matsumoto. The matter is now the subject of competing lawsuits.
Even during the pandemic, 7-Eleven has seemed to bend its rules only reluctantly.Even during the pandemic, 7-Eleven has seemed to bend its rules only reluctantly.
For young adults entering the job market, or early in their working life, this is a particularly anxious time.For young adults entering the job market, or early in their working life, this is a particularly anxious time.
A large body of research — along with the experience of those who came of age in the last recession — shows that starting a career during an economic crisis can mean a lasting disadvantage. Wages, opportunities and confidence in the workplace may never fully recover.A large body of research — along with the experience of those who came of age in the last recession — shows that starting a career during an economic crisis can mean a lasting disadvantage. Wages, opportunities and confidence in the workplace may never fully recover.
Jesse Rothstein of the University of California, Berkeley, followed college graduates who entered the labor market after the 2008 financial crisis. By 2018, those who had landed jobs in 2010 and 2011 had a lower employment rate than people at the same age who graduated before the recession hit, and those working earned less.Jesse Rothstein of the University of California, Berkeley, followed college graduates who entered the labor market after the 2008 financial crisis. By 2018, those who had landed jobs in 2010 and 2011 had a lower employment rate than people at the same age who graduated before the recession hit, and those working earned less.
College students who graduated into a recession 40 years ago experienced similar problems. And young people without a college degree are at an even greater disadvantage.College students who graduated into a recession 40 years ago experienced similar problems. And young people without a college degree are at an even greater disadvantage.
Starting work in a downturn means getting jobs that are a worse fit. Once the economy recovers, it means competing with people who have more experience. What’s more, said Lisa B. Kahn, an economics professor at the University of Rochester, such workers seem more risk-averse.Starting work in a downturn means getting jobs that are a worse fit. Once the economy recovers, it means competing with people who have more experience. What’s more, said Lisa B. Kahn, an economics professor at the University of Rochester, such workers seem more risk-averse.
“People that graduate into a recession don’t change jobs as often as people that graduate into booms,” she noted. And those job changes are one of the best ways to get a raise.“People that graduate into a recession don’t change jobs as often as people that graduate into booms,” she noted. And those job changes are one of the best ways to get a raise.
As the coronavirus spread around the globe, countries like Pakistan, Kyrgyzstan, Sri Lanka and several African nations asked Beijing to restructure, delay repayments or forgive tens of billions of dollars of loans coming due this year.As the coronavirus spread around the globe, countries like Pakistan, Kyrgyzstan, Sri Lanka and several African nations asked Beijing to restructure, delay repayments or forgive tens of billions of dollars of loans coming due this year.
With each request, China’s drive to become the developing world’s biggest banker is backfiring. Over the last two decades, it unleashed a global lending spree to expand its influence and become a political and economic superpower. Borrowers put up ports, mines and other crown jewels as collateral.With each request, China’s drive to become the developing world’s biggest banker is backfiring. Over the last two decades, it unleashed a global lending spree to expand its influence and become a political and economic superpower. Borrowers put up ports, mines and other crown jewels as collateral.
Now, as the world economy reels, countries are increasingly telling Beijing they can’t pay the money back.Now, as the world economy reels, countries are increasingly telling Beijing they can’t pay the money back.
China faces difficult choices. If it restructures or forgives these loans, that could strain its financial system and infuriate the Chinese people, who are suffering under their own slowdown. But if China demands repayment when many countries are already angry with Beijing over its handling of the pandemic, its quest for global clout could be at risk.China faces difficult choices. If it restructures or forgives these loans, that could strain its financial system and infuriate the Chinese people, who are suffering under their own slowdown. But if China demands repayment when many countries are already angry with Beijing over its handling of the pandemic, its quest for global clout could be at risk.
Jerome H. Powell, the chair of the Federal Reserve, will tell members of Congress that the central bank stands ready to do what it can to help the American economy make it through the sharp downturn underway. An Amazon warehouse in northeastern Pennsylvania has become the retailer’s biggest coronavirus hot spot. More employees at the warehouse have been infected than at any of Amazon’s roughly 500 other facilities in the United States.
“The scope and speed of this downturn are without modern precedent and are significantly worse than any recession since World War II,” Mr. Powell said in prepared testimony that he is scheduled to deliver to the Senate Banking Committee on Tuesday. Local lawmakers believe that more than 100 workers have contracted the disease, but the exact number is unknown. At first, Amazon made each new case public. But when the total reached about 60, the announcements stopped giving specific numbers.
He added that the Fed was “committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response.” The disclosures also stopped at other Amazon warehouses. The best estimate is that 800 of the company’s 400,000 blue-collar workers have had the disease. But that number, crowdsourced by Jana Jumpp, an Amazon worker, almost certainly understates the spread of the illness at Amazon.
Mr. Powell will testify alongside Treasury Secretary Steven Mnuchin. The pair will explain to senators what they are doing with a $500 billion congressional appropriation in the CARES Act that was primarily meant to back up Fed emergency lending programs, which can keep credit flowing to businesses and local governments in times of crisis. At the 600,000-square-foot warehouse in Pennsylvania, products shipped from China and elsewhere are removed from trucks and broken down into smaller packages that are trucked to Amazon’s other facilities for shipment to shoppers. Safety measures began arriving at the warehouse in mid-March, but they were introduced without rigor.
Mr. Mnuchin will testify that he expects economic conditions to improve in the third and fourth quarters of this year as the economy begins to reopen, according to prepared remarks. He will also defend his work on the economic relief effort, pointing to the Paycheck Protection Program, economic impact payments and payroll support for the airline industry. Amazon defended its protective measures, but workers and community leaders began worrying early on that the company wasn’t doing enough.
“While these are unprecedented and difficult times, these programs are making a positive impact on people,” the Treasury secretary will say. Thai Airways, Thailand’s flagship carrier, announced on Tuesday that it would go through a reorganization in bankruptcy court. The airline, which is majority owned by the government, stopped all flights in April in response to travel restrictions to limit the spread of the virus. The government is stepping in to help the airline restructure so that it doesn’t go bankrupt and cost the jobs of 22,000 people, Prime Minister Prayuth Chan-ocha told reporters. The airline said it would “resume operations once the Covid-19 situation subsides.”
Mr. Mnuchin will also testify that Treasury has committed up to $195 billion in credit support and that the remaining $259 billion is being held in reserve to “create or expand programs as needed” as they monitor different sectors of the economy. A prolonged global recession is the top near-term worry among leaders in risk management, according to a report published on Tuesday by the World Economic Forum. The report relied on surveys of 350 risk professionals, who also listed high unemployment, another outbreak and protectionism among their fears in the next 18 months.
A prolonged global recession is the top near-term worry among leaders in risk management, according to a report published Tuesday by the World Economic Forum. The report relied on surveys of 350 risk professionals, who also listed high unemployment, another outbreak and protectionism among their fears in the next 18 months. The authors of the report call on world leaders act together now to stem rising economic distress and social discontent caused by the pandemic.
Uber said on Monday that it laid off 3,000 employees, closed 45 of its global offices and reorganized several of its secondary businesses as the coronavirus caused an 80 percent downturn in its ride-hailing business. Uber has also cut back its food delivery service, Uber Eats, in several countries where it was not successful and sold its bike and scooter arm, Jump. The company has laid off about 25 percent of its work force over the last month. Reporting was contributed by Michael Corkery, Alexandra Stevenson, Eduardo Porter, David Yaffe-Bellany, Hisako Ueno, Ben Dooley, Carlos Tejada, Maria Abi-Habib, Keith Bradsher, Jeanna Smialek, Kate Conger, Mohammed Hadi and Gregory Schmidt.
Reporting was contributed by Eduardo Porter, David Yaffe-Bellany, Hisako Ueno, Ben Dooley, Carlos Tejada, Maria Abi-Habib, Keith Bradsher, Jeanna Smialek, Kate Conger, Mohammed Hadi and Gregory Schmidt.