Stocks on Wall Street erased their losses for the year, a remarkable milestone for a market that was reeling just a few months ago as investors feared the damage caused by the coronavirus pandemic.
The S&P 500 rose more than 1 percent on Monday, adding to a weekslong rebound that has been fueled by hopes for a quick economic recovery, significant intervention by the Federal Reserve and a disregard for the serious risks that businesses and consumers still face.
A familiar list of companies has been leading the recent gains. Airlines have been lifted by signs that domestic travel is starting to pick up, and they rallied again on Monday along with Boeing. With oil prices rebounding, crude briefly crossed above $40 a barrel on Monday for the first time in months. Energy companies have also surged.
Stocks have been on an upward trajectory for weeks as investors have responded to signs around the world that the virus was abating. New York, the center of the coronavirus outbreak in the United States, on Monday began to lift some restrictions on construction, manufacturing and retail operations.
Progress like that, and early evidence that it means people are returning to work, helped fuel a nearly 5 percent gain in the S&P 500 last week — its biggest weekly run since early April. But the market’s rebound really began in March, after the Federal Reserve signaled its willingness to funnel unlimited amounts of liquidity into financial markets. Since then, stocks have risen more than 44 percent.
Investors have plenty of reasons to be wary, of course: A second wave of the coronavirus outbreak that forces governments to clamp down on public activity again, a premature end to government spending or a slower-than-expected return of business could all dampen enthusiasm for stocks.
According to data compiled by The New York Times, new infections are still increasing in more than a third of states. Public officials are also wary of a surge in new cases as thousands of protesters across the country demonstrate against police brutality after the death of George Floyd.
The U.S. economy entered a recession in February.
The United States officially entered a recession in February 2020, the committee that calls downturns announced on Monday, marking the beginning of the first economic downturn since the 2007 to 2009 slump.
The National Bureau of Economic Research said that the economy hit its peak in February and had since fallen into a downturn, as pandemic-related shutdowns tanked activity and brought an end to a record-long expansion — one that had lasted 128 months.
Analysts often refer to recessions as two consecutive quarters of contraction. The National Bureau of Economic Research, a nonprofit group that tracks economic cycles in the United States, formally determines when recessions begin and end based on a range of factors, most importantly gross domestic product and employment. Most economists expect that this recession will be both deep and short, with growth rebounding as state economies reopen and the world figures out how to function amid the coronavirus pandemic.
“The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions,” the bureau said in a statement.
Globally, “this is almost certainly the deepest recession” since at least the Second World War, Jan Hatzius, Goldman Sachs chief economist, wrote in a note on Monday. But it is also probably the shortest: He noted that the bureau’s database showed no other recession that had lasted less than six months in records dating back to the mid-1800s.
Most economists believe the recovery has already begun. On Friday, after weeks of data depicting enormous economic destruction, the Labor Department reported that the unemployment rate fell and employers added 2.5 million jobs in May. But tens of millions are still out of work, and the unemployment rate, which fell to 13.3 percent from 14.7 percent in April, remains worse than in any previous postwar recession.
Stock in Chesapeake Energy, the troubled oil and gas company, made moves on Monday that were astonishing even in a period in which the stock market has been rocked with volatility.
The company’s shares soared 182 percent during regular trading but then plunged more than 30 percent in after-hours trading. The free fall was most likely caused in part by a Bloomberg News report that Chesapeake was preparing to file for bankruptcy.
The company has a heavy debt load that it will struggle to repay at a time when oil prices, even after a recent rally, are well below levels reached in recent years. Chesapeake warned in a securities filing last month that it may reorganize under bankruptcy protection. At its after-hours trading price, Chesapeake has a stock market value just above $400 million.
Typically, shareholders get wiped out in bankruptcy, but in some cases, like that of Pacific Gas & Electric, the California utility, the shares retain much of their value. But this is unlikely to be the outcome for Chesapeake, judging by the price of its bonds, which are trading below 10 percent of their full value.
Bondholders come before shareholders when claiming assets of a bankrupt company, so the fact that the bonds are trading at very low prices is a strong signal that shareholders will get nothing.
Chesapeake was a pioneer of hydraulic fracturing, the drilling method that enabled drillers to get at vast reserves of oil and gas in the United States. Its former chief executive, Aubrey McClendon, died in a car crash in 2016.
3M sues a third-party sellers on Amazon over masks.
The industrial conglomerate 3M filed a trademark infringement lawsuit in federal court in California on Monday, alleging price-gouging and bait-and-switch sales of 3M respirators from third-party Amazon sellers.
The complaint claims that three third-party sellers — all believed to be owned and operated by a California resident named Mao Yu — began in late February to sell what were advertised to be 3M-branded N95 masks on Amazon. The sellers charged for roughly 18 times 3M’s $1.27 list price for the respirators. Buyers spent more than $350,000 for such masks, and sometimes received fewer masks than promised or masks that were damaged or tampered with, according to the suit, which was filed in the United States District Court for the Central District of California.
“By selling and delivering to customers counterfeit, damaged, deficient, or otherwise altered respirators and engaging in price-gouging, Defendants caused irreparable damage to 3M’s reputation,” the suit states.
The defendants in the case could not be reached for comment.
3M, based in a suburb of Saint Paul, Minn., has filed 12 other such suits as part of an effort to combat fraud, price-gouging and counterfeiting tied its respirators and other high-demand health products as a result of the coronavirus outbreak.
The numbers are ambiguous, but the jobs report wasn’t rigged.
When the Labor Department reported on Friday that employers had added jobs in May and that the unemployment rate had unexpectedly fallen, economists were surprised.
Others had a different reaction: suspicion.
For many, those suspicions seemed confirmed by a note, deep within the report, saying some workers had been improperly counted as employed rather than unemployed. If those workers had been classified correctly, the unemployment rate would have been about 16.4 percent in May, rather than the official rate of 13.3 percent (although it still would have been lower than in April).
But economists across the political spectrum say it would be all but impossible to manipulate the jobs numbers undetected. And while there is no question that the speed and severity of the economic collapse has made gathering and interpreting economic data unusually difficult, they say the Bureau of Labor Statistics — the Labor Department office that produces the jobs report — has done an admirable job both ensuring that the numbers are reliable and publicly identifying potential issues.
The nation’s largest airlines are preparing for a limited rebound next month as more Americans book vacations in places like Florida and the mountains and national parks in the West.
That resurgence would offer some hope to the travel industry, which racked up billions of dollars in losses as tourists and businesspeople canceled trips in the last three months because of the coronavirus epidemic.
After cratering in April, the number of travelers and airline and airport employees filtering through the Transportation Security Administration’s airport checkpoints has steadily climbed in recent weeks. The low point was April 14, when the agency screened fewer than 90,000 people, just 4 percent of those screened the same date last year. On Sunday, the agency screened more than 440,000 people, about 17 percent of last year’s number and the best day since March.
Investors appear to have noticed those numbers, and airline stock prices have surged. American Airlines is up nearly 90 percent since Monday morning last week, United Airlines is more than 70 percent higher, and Delta Air Lines is up more than 45 percent.
As coronavirus cases took off in New York in March, Gov. Andrew M. Cuomo imposed a lockdown of nonessential businesses to slow the spread of the coronavirus, calling it “the most drastic action we can take.”
Now researchers say more targeted approaches might have protected public health with less economic pain.
A study of New York City found that the economic cost could have been reduced by a third or more by strategically choosing neighborhoods to close, calibrating the risk of infection for local residents and workers with the impact on local jobs.
“The blunt instrument of a uniform policy causes more economic and related health harm than is necessary to accomplish the same goal of not increasing infections,” said John Birge, a mathematician at the University of Chicago who was an author of the study.
Other researchers are taking on the problem by assessing the relative level of risk posed by different businesses.
Businesses in New York City, where an initial phase of reopening began on Monday, have been mostly shut down for 11 weeks.
With daily deaths abating in New York and many other parts of the country, and cities and states easing lockdowns, researchers are beginning to assess alternative strategies to manage the spread of the virus.
As some of the wealthiest health care companies in the United States received billions of dollars in taxpayer funds to help them cope with lost revenue from the pandemic, they laid off or cut the pay of tens of thousands of doctors, nurses and lower-paid workers, while continuing to pay their top executives millions.
The New York Times analyzed tax and securities filings by 60 of the country’s largest hospital chains, which together have received more than $15 billion in emergency funds through the economic stimulus package in the federal CARES Act.
The hospitals — including publicly traded juggernauts like HCA and Tenet Healthcare, elite nonprofits like the Mayo Clinic, and regional chains with thousands of beds — are collectively sitting on tens of billions of dollars of cash reserves that are supposed to help them weather an unanticipated storm. And together, they awarded the five highest-paid officials at each chain about $874 million in the most recent year for which they have disclosed their finances.
At least 36 of those hospital chains have laid off, furloughed or reduced the pay of employees as they try to save money during the pandemic.
More than a dozen workers at the wealthy hospitals said in interviews that their employers had put the heaviest financial burdens on front-line staff, including low-paid cafeteria workers, janitors and nursing assistants. They said pay cuts and furloughs made it even harder for medical workers to do their jobs, forcing them to treat more patients in less time.
‘Corporate America has failed black America.’
In the past week, it has seemed like every major company has publicly condemned racism. All-black squares cover corporate Instagram. Executives have made multimillion-dollar pledges to anti-discrimination efforts and programs to support black businesses.
Yet many of the same companies expressing solidarity have contributed to systemic inequality, targeted the black community with unhealthy products and services, and failed to hire, promote and fairly compensate black men and women, David Gelles writes.
“Corporate America has failed black America,” said Darren Walker, the president of the Ford Foundation and a member of the board of Pepsi, and who is black. “Even after a generation of Ivy League educations and extraordinary talented African-Americans going into corporate America, we seem to have hit a wall.”
With dozens of cities protesting the violent deaths of George Floyd, Ahmaud Arbery, Breonna Taylor and others, a national conversation about racism is underway. For black executives, who have spent their lives excelling at business while overcoming structural discrimination, the killings and ensuing protests have unleashed an outpouring of emotion. Many are speaking candidly about their private fears, as well as their disappointment with the corporate apparatus that made them stars.
Robert F. Smith, a private equity billionaire and the richest black man in America, said he had been overwhelmed by conflicting feelings. “I am saddened, I am angry, I am upset and I am determined,” he said. “I run through that wave of emotions every minute.”
Catch up: Here’s what else is happening.
Dunkin’ Donuts said on Monday that it planned to hire up to 25,000 new workers at its franchises to deal with an influx of customers as states start to reopen. Dunkin’, which has 8,500 restaurants in the United States, said about 90 percent of its locations were now open.
BP said Monday that it planned to eliminate 10,000 jobs — nearly 15 percent of the company’s total work force — with most cuts coming by the end of the year. The company’s chief executive, Bernard Looney, said in a companywide email that the cuts were needed to stem losses arising from the coronavirus pandemic as well as to create a leaner company to achieve his ambitions to sharply reduce BP’s carbon dioxide emissions.
Reporting was contributed by Niraj Chokshi, Eduardo Porter, Peter Eavis, Jeanna Smialek, Jessica Silver-Greenberg, Jesse Drucker, David Enrich, Patricia Cohen, Stanley Reed, Ben Casselman, Jason Karaian, Jack Ewing, David Gelles, Ann Carrns, Matt Phillips, Paul Sullivan, Carlos Tejada, Katie Robertson and Kevin Granville.