Actions soar after President Trump addressed tensions in China.
Stocks rebounded late Friday after President Trump gave a long-awaited press conference on China without setting new tariffs or sanctions against the country.
Investors spent most of Friday preparing to unveil new measures to punish China after Beijing decided to strengthen its authority over Hong Kong, a semi-autonomous Chinese city that enjoys special trade and financial relations with the United States.
Trump said he would ask his administration to revoke the special privileges granted to Hong Kong, including trade and law enforcement, and that he would punish some Chinese officials. These two measures have been discussed by other government officials and legislators in recent days.
“My announcement today will affect the whole range of agreements we have with Hong Kong,” he said, “including measures to revoke preferential treatment for Hong Kong as a customs and travel territory separate from the rest.” from China “.
The S&P 500 posted a small gain for the day, the last trading session in May, leaving the benchmark index up over 4.5% for the month. Tech companies, which are particularly sensitive to tensions with China because the country is a major manufacturing center and a market, have rallied.
Combined with a remarkable 12.7% gain in April, it was the best two-month jump for the markets in 11 years, an increase that reflects investors focusing on the return of economic activity in the regions. blocked to fight coronavirus, as well as the thousands of billions of dollars in monetary and fiscal stimulus that have burst into financial markets and consumer bank accounts in recent weeks.
“The market somehow intuitively decided that the worst Covid risk was behind us,” said Steve Sosnick, chief strategist for Interactive Brokers in Greenwich, Connecticut.
This may turn out to be incorrect. There can be no assurance that current reopening efforts will proceed smoothly. Experts say infections may start to increase again as people resume normal activities. A second wave of infections in the fall is still possible.
The Fed chairman said that the central bank had crossed the “red lines” to support growth.
Jerome H. Powell, President of the Federal Reserve, said that central bankers see the need to use their tools “in all their magnitude, ”the coronavirus closures having dampened economies around the world and caused a spike in American unemployment.
“We felt called to do what we could,” said Powell on Friday at a university in Princeton. online seminar. “We have crossed a lot of red lines that have not been crossed before, and I am very comfortable with it – this is the situation in which you do this, and you will find out afterwards. “
The Fed has taken various measures to support the economy, including bringing interest rates down to near zero, rolling out unlimited bond purchases and introducing various emergency lending measures to keep credit available business and state governments.
The central bank’s efforts came at a time when economic needs were dire. Economists are preparing for a sharp drop in output in the second quarter, which runs from April to June, and most expect only a gradual recovery over the rest of the year. It could take months or years before production returns to its pre-crisis level and the unemployment rate reaches the lows of 50 years that prevailed before the arrival of the coronavirus in the United States. United.
More than 40 million people, the equivalent of one in four American workers, have filed for unemployment since mid-March, based on data released this week. Next Friday, a report should show that the unemployment rate rose to 19.5% in May, according to a median estimate from a Bloomberg survey of economists.
Government checks caused a sharp increase in revenue in April, but spending fell again.
Government injections into Americans’ bank accounts have increased revenues The Commerce Department reported on Friday, but the economic stoppage from the coronavirus has always led to a sharp drop in consumer spending.
Personal income increased overall by $ 1.97 trillion, a gain of 10.5% in March and 11.7% from the previous April. The drop in wages was offset by almost $ 3 trillion in government transfer payments. Of this amount, $ 360 billion was unemployment benefits and $ 2.6 trillion was “other” – reflecting checks up to $ 1,200 per person that the federal government sent to most households.
That extra money did not translate, at least immediately, into spending on consumer goods, down 13.6% from March. The drop fell across all major categories – durable goods, non-durable goods and services.
“It’s not every year that you get these kinds of crazy swings,” said Greg Daco, chief economist in the United States at Oxford Economics. “It takes a bit of composure to understand what is transient and what is permanent.”
The government payments, which boosted personal income “are only one time,” he said, adding, “If you withdraw these benefits, you end up with a massive loss of income.”
On the other hand, persistent fear is likely to limit spending on social and discretionary activities for some time. There are signs that spending started to rebound slightly in May, Daco added, but there is still a long way to go before activity returns to pre-crisis levels.
“You can see strong growth in spending, but we are coming out of a deep hole,” he said.
It is widely believed that the US economy will soon begin to recover from coronavirus blockages. The big debate is whether this bounce will look like a V, a W, an L or a Nike Swoosh.
More and more, economists and analysts are drawing another glyph: a question mark, writes Jeanna Smialek.
Forecasters often mark their expectations for a post-recession rebound with letters – a “V” suggests a rapid recovery, a “W” suggests a double dip, etc. – but it’s hard to do this time. As the 50 states begin to open up and consumers leave their homes, the road ahead is extremely uncertain, making the prognosis risky.
It’s not just Wall Street forecasters who shun the alphabet in favor of a range of scenarios. From the Federal Reserve to the White House, analysts have suggested that making confident predictions is probably more misleading than useful. John C. Williams, President of the Federal Reserve Bank of New York, said in an appearance last week that it was important for policy makers to prepare for every eventuality, rather than focusing on one type of reprise.
Google employs more than 130,000 contractors and agency workers, a parallel work force that exceeds its 123,000 full-time employees. Full-time Google staff are rewarded with high wages and generous benefits, but agency workers and contractors often receive less pay, less benefits, and do not enjoy the same protections, even if they work at sides of full-time employees.
Many contract and agency candidates who agreed to work at Google before the pandemic took hold in the United States were fired without compensation or financial compensation. This happened after weeks of uncertainty, as Google repeatedly postponed their start dates during which they were not paid by Google or by the recruiting agencies through which they were recruited.
Some of the potential entrepreneurs have left stable, full-time jobs after receiving a job offer from Google and are now looking for work in a difficult job market. Some, who are American, said the canceled offers had complicated and, in some cases, delayed their ability to receive unemployment benefits because they had left their last job voluntarily, according to many of the workers faced with this dilemma.
In mid-April, a spokesperson for the company said that Google intended to hire people it had already hired but who hadn’t started.
But that doesn’t seem to apply to entrepreneurs or temporary workers for Google and Alphabet, which has a market capitalization of nearly $ 1 trillion. It made a profit of $ 6.8 billion in the first three months of 2020, despite what it called “a major and sudden slowdown” in advertising.
“If these people have been promised jobs at Alphabet, which is worth a trillion dollars, it looks like the company has the responsibility to take them on,” said Ben Gwin, who works as a data analyst in a Google office for HCL America, a contracting organization. “It’s not like Google can’t afford it. “
Centers for Disease Control and Prevention Announcement sweeping new recommendations on the safest way for US employers to reopen their offices to prevent the spread of coronavirus.
Among the guidelines:
Employees should have a temperature and symptom check when they arrive at work.
Desks must be six feet apart. If this is not possible, employers should consider erecting plastic screens around the desks.
Seats must be prohibited in the common areas.
Face covers must be worn at all times.
If followed, the guidelines would radically overhaul corporate work experience. They’ve even given up years of advice on commuting, urging people to go to work alone, instead of taking public transit or carpooling, to avoid potential exposure to the virus.
Recommendations range from technical advice on ventilation systems (more open windows are most desirable) to the suggested removal of common benefits like batten makers and snack racks.
The country’s largest dollar chains announced their latest quarterly results on Thursday, blowing expectations of sales and profits. These discounters generally thrive during periods of high unemployment and weak economic growth, and the coronavirus crisis is no exception.
“We do very well in good times and we do fabulous in bad times,” said Todd J. Vasos, CEO of General dollar. His company reported a 28% increase in sales in the last quarter.
Dollar tree recorded an 8% increase in revenue over the same period. “In 2008, people also lost their jobs, and they needed us and they found us,” said Gary M. Philbin, general manager of the channel.
For the year, the stock prices of the two companies increased by almost 20%, easily surpassing the S&P 500 and almost doubling the increases recorded by Walmart and Target.
Dollar General said it has hired more than 50,000 people since mid-March, and Dollar Tree has hired more than 25,000 over a similar period. Both pay special bonuses to workers during the pandemic; Dollar General said these expenses totaled $ 60 million in the last quarter. Again, working conditions in these stores have been criticized before and since the coronavirus epidemic.
About a third of the job cuts are believed to be in France, Renault said. The company, which is partly owned by the French government, said it would likely close several factories, while reducing the number of cars produced annually to 3.3 million from four million. Renault will also be leaving China, where it has failed to gain much traction.
Renault has been hit hard by the pandemic. Renault’s sales in the European Union, its largest market, fell by almost 80% in April, when dealerships were closed and most buyers did not leave home.
Can the dollar keep its gains?
The US dollar gained about 7% this year against a basket of major currencies. But with interest rates at their lowest level, the Fed’s printing presses are accelerating and the government is borrowing huge amounts for stimulus spending, Today’s DealBook newsletter asks: Can it keep its paradise status?
A recent research note by Gregory Daco at Oxford Economics revealed that since 1973, the dollar has appreciated on average by 6% in the past six recessions, in line with its performance during the current recession. Daco expects the dollar to stay strong this year, but not for the usual reasons.
Unlike previous recessions, when investors rushed to the safety of treasury bills, foreign investors dumped US government debt at a record rate in March, which is expected to lower the dollar. But since the Fed flooded the markets with stimulus, the US stock market has become, in an unusual way, a “safe haven,” writes Daco, propelled by tech stocks whose companies benefit from home orders.
Catching up: here’s what’s going on.
Ascena Retail Group, the owner of Ann Taylor, Loft and Lane Bryant, said on Thursday that “the uncertainty created by Covid-19 forces us to weigh all the options available to protect the company and its stakeholders,” sending his actions on Friday. The company, which also owns Justice, said revenue fell 45% in the quarter ending May 2 and only reopened 450 of its 2,800 stores as of May 27.
Nordstrom, the best performing department store in the United States, said Thursday its net sales fell 40% to $ 2 billion in the first quarter and reported a net loss of $ 521 million. Digital sales accounted for more than half of its total net sales during the quarter. The retailer closed its stores on March 17 and began reopening in early May. He said he opened about 40% of his sites.
Costco Wholesale said Thursday net sales increased 7.3% to $ 36.5 billion in the quarter ending May 10 and posted net earnings of $ 838 million as the pandemic hit encouraged customers to source goods. The warehouse chain, which has more than 500 locations in the United States, said its revenues were affected by a pre-tax charge of $ 283 million “from additional wages and remediation costs related to Covid- 19 “.
The reports were provided by Nelson D. Schwartz, Ben Casselman, Niraj Chokshi, Daisuke Wakabayashi, Jason Karaian, Jeanna Smialek, Matt Richtel, Kate Conger, Jack Ewing, Mike Isaac, Maggie Haberman, Kevin McKenna, Mohammed Hadi and Carlos Tejada.