European Markets Fall Despite Wall Street’s Jump: Live Updates

Global market rally fizzles as investor worries grow.

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 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.

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.

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.

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 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.

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.

Taken together, the developments set off a surge in global stock prices and Wall Street had its best day in about six weeks.

The S&P 500 rose more than 3 percent Monday, while stock benchmarks in Europe were 4 percent to 6 percent higher.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

“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.

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.”

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.

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.

“While these are unprecedented and difficult times, these programs are making a positive impact on people,” the Treasury secretary will say.

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.

Catch up: Here’s what else is happening.

  • 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 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.