Wall Street was near a remarkable milestone on Tuesday, one that defies the human and economic toll of the coronavirus pandemic, the strengthening of relations between the United States and China, and a stablemate in Washington who is supportive of To support Americans.
The S&P 500 rose half a percent in early trading, a gain that just fell short of its February 19 high of 3386.15, reaching a level when many investors saw the coronavirus as a distant threat.
Shares went up shortly after reaching that mark, when the pandemic spread rapidly and efforts to contain it stimulated the sharpest economic downturn since the Great Depression.
But markets have dressed their way back, 50 percent rising from their lowest point in late March. It’s a rally driven by a handful of factors: the Federal Reserve’s commitment to do what it takes to back the economy, unusual spending levels by Washington and a rally in the shares of large technology companies.
Those companies – Call, Amazon, Alphabet, Microsoft and others – have increased demand for their services and products when people work and shop at home. Already cash rich, they are protected from the worst of a downturn.
There are other reasons for handball: Signs of recovery – even if of historical declines – have encouraged speculative purchases. Business earnings have come in better than many Wall Street analysts expected, and companies have reported that consumers will return when they reopen their doors.
This week, shares of companies in the travel industry went up after the U.S. Transportation Security Administration said the number of air travelers had gone up. Even though the number of people passing through airports in July was still about one-third of what it was a year earlier, shares of American Airlines, Delta Air Lines en United Airlines were grinning.
But the broad gains also outweigh a number of threats to the rosy outlook suggested by the record. Policymakers have warned that some of the damage caused by the pandemic, in particular the closure of small businesses and job losses, will not be undone so quickly. Even large retail chains are closing their doors and registering regularly for bankruptcy.
And after federal unemployment benefits and a moratorium on evictions expired last month, lawmakers have proved they can not reach an agreement on the further spending that many economists say is essential to protecting the economy from an even sharper downturn.
President Trump on Saturday signed executive measures to restore some of the late benefits to unemployed workers, although the exact details and legality of the guidelines were not clear.
Even with a hefty and costly furlough government program, the UK job market recorded its biggest drop in employment since 2009 last quarter. Between April and June, when the country was under strict restrictions to control the spread of the coronavirus, the number of people with a job fell by 220,000 from the previous quarter, official statistics showed on Tuesday.
The job losses affected those under 25 and over 65 disproportionately, according to the Office for National Statistics.
Although the unemployment rate stood at 3.9 percent, that explains the widespread impact of the pandemic. Unemployment only counts people who are actively looking for another job, so it does not include those who are furloughed or do not think they can find a job.
The Bureau of Statistics also said there was a record low number of hours worked in the quarter. The number of people working without minimum hours per week, on so-called zero-hour contracts, increased 17 percent compared to a year ago, to more than a million. And pay fell, the first decline in pay not adjusted for inflation since records began in 2001.
The National Statistics Office estimated that in June 7.5 million people were temporarily out of work, including furloughed employees.
There was a slight increase in job vacancies among small businesses in July, but this positive sign could be dwarfed by an increase in redundancies as the furlough program is won. One-third of UK companies said they expected to end jobs by the end of September, according to a survey by the Chartered Institute of Personnel and Development and the Adecco Group. Debenhams, a chain of more than 100 department stores, said on Tuesday it had cut 2,500 jobs.
State officials said Monday they did not know how President Trump’s plan to supplement $ 400 in unemployment benefits would work. The action of Mr. Trump asked most recipients to receive an additional $ 300 a week from federal disaster funds, which provide the states with $ 100.
Funds to cover part of the state “just don’t exist,” said Govin Newsom of California, a Democrat.
Goate Tate Reeves of Mississippi, a Republican, said he had not decided to participate in the program because of concerns about the cost. “This is not as easy of an answer as some might think,” he said.
Companies had a similar reaction to the idea of deferring payroll tax until the end of the year. Many businesses and employees may hesitate to opt for what the president called a tax holiday because it is not clear if Congress will eventually forgive the deferred taxes, or if the full amount will be required at a later date.
“We are awaiting guidance from the U.S. Treasury Department on deferring tax returns, and we will make decisions on implementation once that is delivered,” said Randy Hargrove, a spokesman for Walmart, the country’s largest private employer, with 1, 5 million workers.
One option that some employers may consider is to continue with the tax and later reimburse workers when it is eventually forgiven. That option would, of course, defeat the purpose of stimulating the economy now if it could use the aid.
With the historic economic turmoil caused by the coronavirus comes the potential for even worse inequality. Large companies have made a new effort, accelerated by the pandemic, to work with universities, the city and other groups to create new curricula and students in the coming decades, reports David Gelles:
A coalition of 28 big companies, including Mastercard, Marriott and Verizon, has promised 100,000 low-income and black, Latino and Asian workers to hire in New York City over the next 10 years, as part of a broader push by corporate America to expanding economic opportunities to marginalized communities.
The companies fund the establishment of a non-profit organization, the New York Jobs CEO Council, which they say will work with universities, the city government and other non-profit groups to advise a new generation of New Yorkers on high paying jobs at some of the largest companies in the country.
Details are too poor, but the initiative has garnered the support of many of the country’s most powerful CEOs, including Amazon’s Jeff Bezos, BlackRock’s Laurence D. Fink, Microsoft’s Satya Nadella and Google’s Sundar Pichai.
Those involved in the new group say it will work to develop programs designed to prepare low-income and minority students for jobs at companies.
“It may be that they help us create curriculum,” said Félix V. Matos Rodríguez, chancellor of City University of New York. “It could be that they are helping us create students.”
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SoftBank announced on Tuesday that it had swung back into the black, placing a $ 12 billion net profit for the three-month period ending in June. Just four months ago, the company had announced one of the largest annual losses of any company in the history of Japan. But asset sales and a hot stock market helped fuel a rebound for the beleaguered Japanese conglomerate, which runs the world’s largest tech fund.
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Hertz Global Holdings reported on Monday that its global revenue was up 67 percent in the second quarter of the year ahead, a decline that contributed to a loss of $ 847 million and the car rental company’s decision in May to file for bankruptcy. The company said companies improved ahead of the July holiday, but a rise in cases of coronavirus across the south and west has slowed demand since then.
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WarnerMedia began a major round of dismissals Monday that will have its ranks recaptured by 600 people, according to two people with knowledge of the dismissals who were not authorized to speak publicly. The majority of the job loss was at Warner Bros. Entertainment. More layoffs are expected, people said. The company has a worldwide workforce of 7,000. The new CEO of WarnerMedia, Jason Kilar, is redesigning WarnerMedia to put more emphasis on its new streaming service, HBO Max, which attracted 4.1 million subscribers in its first month.
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Simon Property Group, the largest shopping mall operator in the United States, said on Monday that 91 percent of renters across their U.S. properties were open and working as of August 7, but noted that it was still working to collect rent payments. The company said it collected about 51 percent of contractual hair from U.S. retailers in April and May, 69 percent in June and 73 percent in July, including “some level of hair growth.” Simon has rumored that he is a potential bidder for JC Penney, who filed for bankruptcy in May, and to negotiate with Amazon to transform some empty department store space into Amazon distribution hubs. It refused to “respond to rumors or market speculation” when asked about the deals on a call for a profit.
