Wall Street wavers as global markets climb.
Stocks on Tuesday mostly shrugged off increasingly chaotic scenes throughout the United States, as protesters and police faced off across the country and President Trump threatened to use the military to quell widespread unrest sparked by the death of George Floyd, a black man in Minneapolis, at the hands of police last week.
The S&P 500 opened up less than half a percent before drifting between gains and losses. Energy, financial and industrial shares led the gains early, suggesting that investors were focusing on tentative signs of economic stabilization instead of the potential impact of the protests.
Over the past week, thousands have been arrested, including nearly 500 people in the Twin Cities, more than 2,000 in Los Angeles, and more than 1,200 in New York City. And mayors of multiple cities have cited damage in the millions of dollars, adding another challenge to an economy that is already in deep distress because of the Covid-19 outbreak.
But so far, investors have added the unrest to the list of other issues that they’re willing to overlook. Despite a pandemic that has claimed more than 100,000 American lives, and the worst economic downturn since the Great Depression of the 1930s, the stock market has roared higher since late march, largely on the back of the creation of trillions of new dollars by the Federal Reserve, which have been pumped into the financial system.
“Right now we’re dealing with a market that seems to lack self awareness,” said Yousef Abbasi, global market strategist at INTL FCStone, a financial services and brokerage firm. “There are several underappreciated risks: U.S.-China relations, political risks, Covid second wave.”
Since March 23, when the Federal Reserve signaled its willingness to do whatever it takes to stabilize financial markets that were in disarray because of the Covid-19 crisis, the S&P has soared more than 37 percent. It is now less than 10 percent below its pre-pandemic high.
Macy’s takes another hit as it looked to reopen its stores.
In the end, the damage to the store may have been limited. But images of looters smashing windows and running through Macy’s flagship location in Herald Square was another symbolic hit to the already badly battered retailer.
The Macy’s in Herald Square looms larger perhaps than any other store in New York, not only for the company, which draws a significant amount of its brand identity and revenue from the building, which it has occupied since 1902, but also for the broader retail industry.
“Macy’s Herald Square transcends that one company,” said Stuart Appelbaum, the president of the Retail, Wholesale and Department Store Union, which represents the store’s workers. “For a lot of people, it represents all of retail itself.”
Macy’s, which employs about 123,000 people nationwide, has seen its sales plummet as a result of the coronavirus pandemic and has been racing to reopen stores as quickly as it can. The retailer reported preliminary first-quarter net sales of roughly $3 billion last month, a 45 percent drop from last year, and an operating loss of as much as $1.1 billion. The company has delayed its formal first-quarter earnings to July 1 because of the disruptions from the pandemic.
The union had recently negotiated a plan with the company to reopen the store with precautions to prevent the virus from spreading, including a requirement that all customers wear masks before being allowed to shop inside. But Mr. Appelbaum said there had been no date set and it was too early to say whether any of the damage would cause additional delays.
Airlines and airports around the world are doing everything they can to instill confidence that it is safe to fly again, despite the coronavirus pandemic.
Airlines are requiring face masks for passengers and staff, imposing new aircraft cleaning procedures, using social distancing to board flights, blocking middle seats on planes and, in one case, even prohibiting passengers from lining up to use plane bathrooms.
As to the airports, they are screening passengers’ temperatures through high- and low-tech means; using biometric screening to speed check-in, security and customs and immigration processes; and using autonomous robots to clean terminal floors.
But none of it is consistent. And it’s unclear whether the measures are enough.
“So much is uncertain right now,” said Henry Harteveldt, founder of Atmosphere Research Group, a San Francisco travel analysis firm. “Do airports and airlines need to invest in something long-term that will be permanent, like airport security, or are these short-term, tactical responses?”
Dr. Joshua Schiffer, an infectious disease physician at the Fred Hutchinson Cancer Research Center in Seattle, said, “It’s next to impossible to have complete confidence you won’t get infected” on flights. But he added that he hoped that airlines would provide travelers “publicly available information on what the projected risk would be to a certain destination, so you could choose your airline based on the quality of this information.”
The past week was a good one for Elon Musk, and not just because of SpaceX’s successful crewed spacecraft launch, explains today’s DealBook newsletter.
Mr. Musk, who also runs Tesla, received stock options worth $1.5 billion from the electric carmaker as part of a pay package that could ultimately be worth some $55 billion. The agreement with Tesla, which was signed in 2018, gives Mr. Musk 12 batches of options, each worth 1 percent of the company’s outstanding shares, if the company hits various milestones for market value, revenue and earnings.
When Tesla’s market capitalization rose above $100 billion for six months, it unlocked the first set of options, Tesla said in a recent filing. Other batches are released for each additional $50 billion in market value. Tesla is now worth about $165 billion, meaning Mr. Musk is on track to get another tranche by year-end. Next week, Tesla shareholders will vote on reapproving the agreement.
The package is the “epitome of pay for performance,” aligning the incentives for founders and shareholders, writes Steven Davidoff Solomon of the U.C. Berkeley School of Law for DealBook. But in the era of stakeholder capitalism, he asks, what about labor, community and others? “It’s not about whether Musk deserves the pay but who else shares the rewards along the way.”
The Congressional Budget Office projected on Monday that the coronavirus pandemic could cost the United States economy $16 trillion over the next 10 years. When adjusting for inflation, the pandemic is projected to cause a $7.9 trillion, or 3 percent, loss in “real” G.D.P. through 2030.
The projections reflect the steep long-term toll that the pandemic is likely to take on the economy, which could experience dampened consumer spending and business investment in the years ahead. Much of the diminished output is projected to be the result of weaker inflation, as prices for energy and transportation increase more slowly than they otherwise would have as Americans pull back on travel.
Phillip L. Swagel, the director of the budget office, acknowledged that “an unusually high degree of uncertainty surrounds these economic projections” because of what remains unknown about the pandemic’s trajectory, as well as the impact of social distancing and the legislation enacted by the federal government.
“If future federal policies differ from those underlying C.B.O.’s economic projections — for example, if lawmakers enact additional pandemic-related legislation — then economic outcomes will necessarily differ from those presented here,” Mr. Swagel wrote in a letter to Senators Chuck Schumer of New York, the minority leader, and Bernie Sanders, the Vermont independent. The two senators had asked the budget office on Wednesday to examine the impact of the pandemic and the shuttering of local economies to combat the spread of the virus as lawmakers look to negotiate another round of economic aid.
In a joint statement following the release of the report, Mr. Schumer and Mr. Sanders said the estimate undercut Republican arguments that Congress should wait to approve another relief package, as well as President Trump’s call to include a tax cut in the next measure.
“In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency to make sure that everyone in America has the income they need to feed their families and put a roof over their heads,” the two senators said. “The American people cannot afford to wait another month for the Senate to pass legislation. They need our help now.”
A huge number of books are slated to be released this fall.
As publishers scramble to limit the economic fallout of declining sales driven by the epidemic, hundreds of books that were scheduled to come out this spring and early summer have been postponed, in some cases until next year.
The result may be an avalanche of high-profile books this fall, in the middle of a presidential election, when consumers may be even more distracted.
Delayed titles include literary fiction by Elena Ferrante and David Mitchell, a book about manhood and parenting by the actor and comedian Michael Ian Black, “God-Level Knowledge Darts” from the comedy duo Desus and Mero, and nonfiction by prominent public intellectuals like Ayaan Hirsi Ali and Pankaj Mishra.
“We’re a little afraid of the fall season being a gridlock of big books,” said Jonathan Burnham, the publisher of the HarperCollins imprint Harper, which has moved a handful of books, including “Battlegrounds,” from Lt. Gen. H.R. McMaster, the former national security adviser.
It may not be a bad problem to have. A flood of eagerly anticipated content is certainly preferable to the canceled shows, concerts and other events that have disrupted the broader cultural world.
The reshuffling has caused logistical logjams, as books by prominent authors move into an increasingly crowded window for media attention, reviews and bookstore display space. Some publishers, particularly smaller houses, worry that printing plants will be overwhelmed, which could make it difficult to keep books in stock.
“Most of us expected that, by fall, things would be, if not exactly back to normal, pretty close to it,” said Bill Clegg, a literary agent whose own novel, “The End of the Day,” was delayed until late September. “Now, two and a half months later, that idea has a distant, once-upon-a-time quality to it.”
The new head of a powerful banking regulator is not letting his first full week on the job pass quietly, warning that measures meant to contain the spread of the coronavirus — including mandates for the use of masks in public — could endanger the financial system.
Brian P. Brooks took over on Friday as the acting head of the Office of the Comptroller of the Currency, the federal agency that oversees the country’s largest banks. Mr. Brooks, a former banker, sent letters to the country’s mayors and governors about the negative effects of restrictions on public activity. Among them, he said: Face masks could lead to more bank robberies.
Mr. Brooks’s letter was unusual in its tone and scope; banking regulators tend to keep their communications fairly abstract. But Mr. Brooks pointed to what he said were specific risks associated with “continued state and local lockdown orders.”
“Certain aspects of these orders potentially threaten the stability and orderly functioning of the financial system,” he wrote.
The Centers for Disease Control and Prevention recommends that everyone wear a cloth face covering when they leave their home, to stop the spread of the coronavirus.
Catch up: Here’s what else is happening.
Target is temporarily closing or shortening the hours of about 200 stores, a spokesman, Joshua Thomas, confirmed on Sunday morning “out of an abundance of caution” to ensure “the safety of our teams.” The Target store on Lake Street in Minneapolis, the location nearest to where George Floyd died, was badly damaged and looted last week. Walmart and CVS also shuttered a number of stores. Amazon said it would scale back deliveries in some cities. Adidas is temporarily closing all of its U.S. stores, The Wall Street Journal reported.
Reporting was contributed by Matt Phillips, Alexandra Alter, Jane L. Levere, Emily Flitter, Sapna Maheshwari and Michael Corkery.