Markets Fall Again as Poor Earnings Reports Continue: Live Updates


Here’s what you need to know:

The downdraft on Wall Street continued on Friday amid new concerns about the economic recovery in the United States, rising tension between Washington and Beijing, corporate earnings updates that continued to paint, at best, an uncertain outlook for the economy.

The S&P 500 fell more than half a percent Friday, erasing what was left of its gains for the week. Tech stocks again struggled with the Nasdaq composite falling by about 1 percent.

Stock investors have mostly shaken off concerns about the pandemic, and warnings from policymakers that the economic crisis could last much longer than the stock market reflects. The S&P 500 is still on track to gain more than 3 percent in July, which would be its fourth consecutive month of gains.

But nervousness among investors has been evident in the price of gold, which on Friday rose above $1,900 an ounce in intraday trading for the first time since 2011. The precious metal, which is considered a safe haven by investors, has surged about 20 percent since the end of March and is approaching old records set nearly a decade ago.

Investors have plenty of reasons to seek out safer investments, with coronavirus cases surging in the United States and the latest release of economic data signaling that conditions are getting worse. Sentiment in the markets shifted on Thursday after the government reported the first increase in new state unemployment insurance claims in the United States in nearly four months, providing evidence that the American economy is backsliding.

Investors have also been troubled by continuing problems between the world’s two largest economies. China on Friday ordered the United States to shut its consulate Chengdu, in retaliation for the Trump administration’s order to close Beijing’s consulate in Houston.

“We think gold will continue to be supported by rising geopolitical tensions,” analysts from the swiss bank UBS wrote in a research note published on Friday. The rally in gold prices is also a product of falling interest rates and the weaker dollar. Cutbacks by large mining companies could also play a role in pushing prices higher.

The stark division in attitudes toward the coronavirus is not just evident in whether people wear masks or what they say on Twitter. A majority of Republicans say they would feel comfortable doing activities that large majorities of Democrats and political independents say they would not, report Ben Casselman and Jim Tankersley.

And there is evidence of the behavior beyond the survey:

Given high levels of partisanship in American society, researchers sometimes worry that surveys won’t capture whether people’s actions conform to their stated views. For example, a staunch Republican, in order to signal support for President Trump, might report feeling comfortable going to an indoor restaurant while staying away in practice.

But partisan differences show up in real-world data, not just in surveys. Cellphone mobility data analyzed by the Federal Reserve Bank of Dallas shows that people in Republican-dominated parts of the country are leaving home more often and traveling around more than those in predominantly Democratic areas.

The partisan pattern holds up even controlling for the fact that Covid-19 cases were initially more prevalent in Democratic strongholds like New York and Seattle. The mobility data shows that people are being more cautious in areas that were harder hit by the virus or that have had recent flare-ups. But even in such cases, Republican-leaning areas show more activity, on average, than Democratic-leaning ones.

Credit…Karsten Moran for The New York Times

Neiman Marcus, the storied department store chain that filed for bankruptcy in May, said on Friday that it planned to close its sprawling Hudson Yards location by this fall, little more than a year after it opened. It also plans to close stores in Fort Lauderdale, Fla.; Palm Beach, Fla.; and Bellevue, Wash., leaving it with roughly 40 namesake locations around the country.

A representative for Neiman Marcus said that the company made the decision after analyzing changes to the retail environment caused by the coronavirus outbreak.

“A physical location in Hudson Yards is no longer an ideal space for us given the preponderance of restaurants and future office space in that mall,” the representative wrote in an emailed statement. “Instead, we are purposefully focusing on the unique relationships we already have with our loyal luxury customers at Bergdorf Goodman, and we will continue to serve our Neiman Marcus customers through our digital selling channel and our other tristate area Neiman Marcus stores.”

The Hudson Yards store, which opened in March 2019, was the first Neiman Marcus outpost in Manhattan and was a bold bet on physical retail. With three floors and 188,000 square feet, it was an anchor of the broader Hudson Yards development and included in-house aestheticians, craft cocktails and fitting rooms with interactive touch screens. No date was set for its closing.

“It is unfortunate that Neiman’s was unable to achieve the success that other retailers have found at Hudson Yards and we look forward to welcoming the designer brands who drove Neiman’s sales to their own stores in the retail center,” Jon Weinstein, a spokesman for Related Companies, which owns and manages Hudson Yards, said in a statement.

Credit…Eduardo Munoz Alvarez/Getty Images

Tens of thousands of nonprofit groups in the United States are likely to close without some kind of rescue package, the research group Candid concluded from an analysis of tax filings.

The nonprofit sector is the nation’s third-largest private employer, with 1.3 million nonprofits employing roughly 12.5 million people, about 10 percent of the total who are working in the private sector. A Johns Hopkins University study estimated that 1.6 million nonprofit jobs were lost between February and May.

Hoping to prevent devastating new cutbacks, large nonprofits like the American Heart Association and the American Red Cross are asking for federal grants and loans.

Last week, a group of 3,800 nonprofits sent a letter asking congressional leaders to increase the tax deduction for charitable contributions. They also asked lawmakers to expand the Paycheck Protection Program and other lending programs to include larger nonprofits, including some Y.M.C.A. chapters, which are left out if they have more than 500 employees.

In the first wave of infections, the 2,600 national outposts of the Y transformed into civic centers, caring for the children of emergency medical technicians, doctors and other essential workers when day care centers closed down, as well as feeding the poor when schools that offered meal programs shut their door.

Now those branches find themselves in financial jeopardy just as they are needed most. Before the pandemic, affiliates were typically operating on margins of 3 percent or less, and now revenues are down 30 to 50 percent nationwide. Most have furloughed 70 to 95 percent of their workers, and without help, hundreds of branches may be forced to close.

Credit…Christopher Smith for The New York Times

Smithfield Foods, one of the nation’s largest meat packing companies, has been under scrutiny for refusing to publicly disclose the number of positive coronavirus cases among its employees and for its decision to export large amounts of meat to China while publicly warning about a looming meat shortage in the United States. Now, the company is pushing back.

“Think this has been easy?” Kenneth Sullivan, Smithfield’s chief executive, wrote in a letter to two leading Democrats in the Senate, Elizabeth Warren and Cory Booker, who have asked the company for information about their response to coronavirus outbreaks in many of its plants. “It has not. I would gladly let you live in my shoes.”

In a letter to the senators, co-signed by thousands of Smithfield employees, Mr. Sullivan complained of “Monday morning quarterbacks everywhere” and “revisionist historians” who have held the company to unfair and impractical standards regarding masks and social distancing measures.

“Processing plants were no more designed to operate in a pandemic than hospitals were designed to produce pork,’’ Mr. Sullivan wrote. “In other words, for better or worse, our plants are what they are. Four walls, engineered design, efficient use of space, etc. Spread out? Okay. Where?”

Smithfield’s response to the senators’ requests for information is far more combative than those submitted by other meat packing executives at Tyson, JBS and Cargill.

Mr. Sullivan was the first meat packing executive to warn publicly in April that the virus was threatening the U.S. meat supply, prompting the Trump administration to issue an executive order to keep them operating.

It was later revealed by The New York Times that Smithfield and other meatpackers exported record amounts of pork to China in April while they were warning of shortages, prompting Ms. Warren and Mr. Booker to demand more detailed information about the companies’ exports.

The companies have said many of those exports were packaged before the pandemic. In its letter to the senators, Smithfield, which is owned by a Chinese company, did not disclose how much it exported to China. Mr. Sullivan said he was “increasingly concerned about the xenophobic zeal that perpetuates falsehoods and unfairly stigmatizes our 42,000 U.S. employees who can do nothing about our corporate structure.”

In a statement, Ms. Warren chided the companies, saying they failed to provide substantive answers to her questions. “The Covid-19 pandemic has made it painfully clear that these giant meatpackers can use their power to exploit their workers for profit,” she said.

Credit…Richard Carson/Reuters

HOUSTON — Schlumberger, the world’s largest oil services company, said on Friday that it would cut 21,000 jobs, or about a fifth of its work force, as the energy industry suffers a deep and prolonged downturn.

The company reported that it lost $3.43 billion in the second quarter, as revenue dropped by 35 percent. That compares with a $492 million profit in the same quarter in 2019.

“This has probably been the most challenging quarter in past decades,” said Olivier Le Peuch, the chief executive of Schlumberger, which is based in Houston. He did not offer guidance for the rest of the year, another sign that industry executives are concerned that the coronavirus will remain a threat for months to come.

The pandemic has pummeled demand for gasoline and other fuels, forcing companies to slow drilling and other oil field activities. Oil prices are down by a third this year, even after a partial recovery from the drastic slump in March and April.

Schlumberger’s problems include a sharp decline in drilling across the United States and a major landslide in Ecuador that shut down a critical pipeline and, as a result, production by the company’s clients.

Schlumberger said it would pay more than $1 billion in severance to the workers it was dismissing. It also wrote down assets, most of them in Latin America, by $977 million. And the company said it would further cut spending this year by $300 million.

Shares of the company were down more than 1.5 percent around noon Friday.

“Going forward, the benefits from its large cuts in operating expenses, capital spending and dividends should boost its cash flow generation and position it to participate in the eventual recovery in drilling and other oil field services activity,” said Peter Speer, a senior vice president at the financial services firm Moody’s. “However, the pace of recovery remains uncertain.”

The weekly number of workers filing new claims for state unemployment benefits rose for the first time in three months.

The government reported on Thursday that more than 1.4 million workers filed new claims last week, up from about 1.3 million in the two preceding weeks.

“Increasingly I fear that we’re going to see net payrolls in July will show an actual decline” when the next monthly jobs report is released, said Gregory Daco, the chief United States economist at Oxford Economics.

Mr. Daco said the rush to reopen in many states had been counterproductive, contributing to the increasing virus caseloads, particularly in the South and West, that are compelling businesses to close again.

During the worst of the last recession, weekly unemployment insurance applications never exceeded 700,000. Since mid-March, new state claims have yet to fall below a million.

With more than 30 million people claiming unemployment insurance for the week ending July 4, roughly one in every five workers is collecting benefits.

Getting a precise nationwide count of the number of people collecting unemployment benefits has been hampered since the start of the coronavirus pandemic. Data from overwhelmed and understaffed state offices has been inconsistent and strewn with errors. And there may be some double-counting as the agencies struggle to clear out the flood of new and backlogged claims.

Credit…Hiroko Masuike/The New York Times

Despite the pandemic, 16 states are proceeding with summer “back-to-school” tax holidays, temporarily exempting clothing, shoes, notebooks and other school supplies, sometimes including computers, from state, and often local, sales taxes.

What states are holding sales tax holidays this year?

States holding sales tax promotions in 2020, according to the Federation of Tax Administrators, are Alabama, Arkansas, Connecticut, Florida, Iowa, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Virginia.

Alaska, Delaware, Montana, New Hampshire and Oregon don’t charge statewide sales taxes in the first place. And other states may exempt clothing and food from sales tax, at least up to certain limits, year round.

How much can I save during a sales tax holiday?

State sales taxes range from about 4 to 7 percent but can be as high as 9 percent when additional local option sales taxes are included. Most sales tax holidays include state and local taxes, but some exclude local taxes or make them optional, reducing the savings.

Your savings may also be limited by a dollar cap on purchases, whether it is based on the cost of an individual item or on the total receipt.

Are computers eligible?

Fewer than half the states with tax holidays include computers on their tax-exempt menus, and all set limits on the exempt amount, according to a list compiled by the Federation of Tax Administrators. (The ones that do are Alabama, Florida, Massachusetts, Missouri, New Mexico, South Carolina and Tennessee.)

I’m not comfortable shopping in stores because of the pandemic. Can I get the tax break by shopping online?

Generally, online purchases are eligible for the tax break, tax experts say.

British retail sales have returned to levels last seen before the pandemic and government-imposed lockdown, according to official statistics published Friday. The volume of sales jumped nearly 14 percent in June from the previous month.

It’s a welcome sign for an economy on track for its worst recession in three centuries, although the types of spending has changed substantially. About a third of all spending was online in June, compared with 20 percent in February. Average weekly online sales jumped from 1.5 billion pounds ($1.9 billion) in February to a record £2.5 billion in June.

Spending in food stores, which has been strong through the pandemic, is still historically high. Spending on clothes and shopping in town centers were still down by a third. In June, sales for household goods, such as furniture and hardware recovered their lockdown losses as these stores reopened.

Samuel Tombs, an economist at Pantheon Macroeconomics, cautioned that the jump in retail spending didn’t mean a wider recovery was taking hold. This “is not a sign that households’ overall spending also is recovering fully and rapidly,” Mr. Tombs wrote in a note.

Retail spending usually accounts for less than a third of household expenditures, he said, and it was bolstered in June because consumer services — such as eating out, going to a hairdresser, leisure travel — remained largely unavailable.

He said recent payments data suggests spending on non-urgent items, such as household goods and clothes, peaked in early July. “Real-time data suggest that this pent-up demand already has been satiated,” he added.

Credit…Neal Boenzi/The New York Times

Pennies and dimes are hard to find in many parts of America after pandemic lockdowns disrupted their flow and kept households from exchanging their coin jars for dollar bills.

The United States Mint wants you to know that you can be part of the solution.

“We ask that the American public start spending their coins,” the Mint, which is part of the Treasury, implored in a release on Thursday. “The coin supply problem can be solved with each of us doing our part.”

Other options include depositing coins or exchanging them for cash.

The coin shortage has forced regional Federal Reserve banks, which distributes coins, to institute a rationing system. On June 30, the Fed established a coin task force to deal with the unfolding crisis, complete with “industry leaders in the coin supply chain.”

The shortage has become a problem for many small businesses across America and has been the topic of local news coverage and of discussion on a corner of Reddit devoted to prepping strategies.

Even big retailers are feeling the penny pinch — Walmart, CVS, Kroger and other chains have begun asking customers to pay with plastic when possible or to use exact change.

While digital payments have become prevalent, coins have remained crucial to some parts of the economy: parking meters, vending machines, amusement parks and even campground showers. For the millions of households without bank accounts, cash is an essential part of daily life.

“For millions of Americans, cash is the only form of payment and cash transactions rely on coins to make change,” the Mint said.

“As important as it is to get more coins circulating, safety is paramount,” it added. “Please be sure to follow all safety and health guidelines.”

  • 🍟 McDonald’s announced on Friday that it would require customers to wear face coverings inside all of its U.S. restaurants, effective Aug. 1. The fast food chain joins Kroger, Target, Walmart and dozens of other large restaurant and retail chains that have established mask mandates as coronavirus cases surge across the country and politicians and public health experts clamor for widespread use of face coverings to stem the spread of the disease.

  • ✈️ The Federal Aviation Administration on Friday told airlines to inspect several parked Boeing 737 airplane models for corrosion that could lead to engine failure before taking them out of storage. There about 2,000 of the models registered in the United States, though it was not immediately clear how many are currently in storage. The troubled 737 Max is not among the planes affected by the issue.

  • 👔 Brooks Brothers, the retailer that was founded in 1818 and filed for bankruptcy this month, said on Thursday that it had reached an agreement to be purchased by SPARC Group, which is backed by the mall operator Simon Property Group and the licensing firm Authentic Brands Group, for $305 million. The group would commit to acquiring at least 125 of the chain’s retail locations. Brooks Brothers is seeking an Aug. 5 deadline for competing bids and an Aug. 11 hearing to approve the sale.

  • 🧙‍♂️ Disney on Thursday gave a worrisome update on its movie business — the largest in Hollywood, by far, and still mostly shut down because of the pandemic — by delaying the theatrical release of its live-action “Mulan” indefinitely and pushing back three upcoming “Star Wars” movies and four scheduled “Avatar” sequels by one year each. The next “Star Wars” movie will not arrive until 2023, making for a far less promising 2022 for Disney’s movie and consumer products divisions. Disney’s next megamovie will now not arrive until at least November, when “Black Widow” is set to roll into theaters.

  • 📽 AMC Theatres delayed the opening of its more than 1,000 theaters in the United States until mid-to-late August. The move was not a surprise, given that it arrived on the heels of the Warner Bros. announcement earlier this week that its big-budgeted thriller “Tenet” would not be released on its rescheduled date of Aug. 12. With the coronavirus showing no signs of abatement, the studios and their movie theater partners have been playing a game of chicken, postponing the return to moviegoing until the virus numbers show a decline.



Sahred From Source link Business

Leave a Reply

Your email address will not be published. Required fields are marked *