The S&P 500 is up 23 percent from its March low.
Wall Street resumed its rally on Wednesday. With a more than 3 percent gain, the S&P 500 is now up about 23 percent from its March 23 low.
The market has been steadily climbing since it hit that bottom, a rebound that began after the Federal Reserve and lawmakers in Washington took unprecedented steps to protect the world’s largest economy from a collapse amid the coronavirus pandemic. Stocks are still down about 19 percent from their late February high.
More recently, the gains have reflected hope that the peak of the pandemic in many cities is near, or already past. The growth rate of hospitalizations in hot-spots like New York is slowing, China has lifted its lockdown of Wuhan, the city where the virus emerged, and governments in parts of Europe are making plans to do the same.
To some extent, the recent gains also reflect Wall Street’s fear of missing out on the rebound that many analysts predicted would eventually come.
“If you wait until the coast is clear you will have missed a huge part of the gains,” said Matt Maley, chief market strategist at Miller Tabak a trading and asset management firm. “And professional investors can’t afford to do that.”
For now, though, it is big money managers — not mom-and-pop retail investors — who are in on the action. Hedge fund traders and mutual fund managers have swooped into the market, driving sharp gains for blue-chip shares that have been battered by the market sell-off.
Investors also seem to have become inured to some of the bad news. On Wednesday, for example, McDonald’s said its sales had slumped in March because of the pandemic. It’s shares rose anyway.
Still, the market’s recent optimism is set against a grim backdrop of economic and human catastrophe that continues to play out — and which threatens to undercut any rally at a moments notice.
In Europe, data released on Wednesday showed that Germany and France, the largest economies in the region, were heading toward their sharpest downturns since World War II.
There’s more data to come. A new report on weekly jobless claims on Thursday is certain to show millions more Americans are out of work. The two prior reports recorded more than 10 million claims for unemployment in late March.
The Federal Reserve said on Wednesday it had temporarily lifted a growth restriction it had imposed on Wells Fargo in the wake of the bank’s fake account scandal in another effort to expand small business owners’ access to emergency loans.
The Fed said in an announcement that the move was a response to “extraordinary disruptions from the coronavirus,” which has cause a widespread economic shutdown and resulted in the loss of millions of jobs. The federal government is trying to keep small businesses afloat through the $349 billion Paycheck Protection Program, which provides forgivable loans they can use to pay their employees, rent and mortgages. The program has had a rocky start.
Wells Fargo, which is the country’s fourth-largest bank, said on Sunday its balance sheet had reached a $1.95 trillion limit that prevented it from making more loans. That limit was imposed two years ago and was meant to be in place until the banks leaders could demonstrate that it was being run in a way that no longer put its customers at risk.
The bank has not yet made the necessary changes, according to regulators, but reaching the limit meant it could not participate fully in the program.
Another way to see the recession: Power usage is way down.
New data on electricity use suggest that U.S. economic activity probably declined more over the past three weeks than it did during the entire year and a half of the Great Recession. It may already be the deepest downturn since the Great Depression; it is certainly the fastest.
These numbers are important because our official statistics can’t keep pace with the abrupt economic changes the coronavirus shutdown has caused. All those closed stores, silenced factories and darkened office buildings are yet to be counted in the government’s official economic numbers, which take months to collect, process and report.
But evidence of the sharp economic shift shows up in a large and rapid decline in electricity usage over recent weeks.
Demand for food assistance in the United States is surging, as millions of Americans find themselves out of work and school closures mean that many families who counted on them for free or subsidized meals need to turn elsewhere.
The rise in need is coming just as food banks face shortages of both donated food and volunteer workers.
It’s a nationwide phenomena:
At Food Bank for the Heartland in Omaha, the amount of food donated for March dropped by nearly half. The food bank typically purchases $73,000 of food in a month this time of year but has spent $675,000 in the past four weeks.
In Jonesboro, Ark., after a powerful tornado struck, a food bank received less than half the donations it expected because nervous families held on to what they had.
In Washington State and Louisiana, the National Guard has been called in to help pack food boxes and ensure that the distributions run smoothly.
Feeding America, the nation’s largest network of food banks, with more than 200 affiliates, has projected a $1.4 billion shortfall in the next six months alone.
“I’ve never seen anything like it,” said Stacy Dean, vice president for food assistance policy at the Center on Budget and Policy Priorities, a left-leaning research organization in Washington. She has studied food security for more than a quarter century. “People love the phrase ‘the perfect storm,’” she added, “but nothing is built for this.”
The Federal Reserve viewed a ‘profoundly uncertain’ outlook in March.
Federal Reserve officials viewed the coronavirus as a risk that made the economic outlook “profoundly uncertain” when they chose to slash interest rates to near-zero in early March.
Minutes from the Fed’s March 15 meeting, released on Wednesday, offer a glimpse at the conversations behind the central bank’s early response to the economic effects of the virus.
Officials had made their first emergency rate cut since 2008 just weeks earlier at an unscheduled meeting on March 3, then slashed borrowing costs to rock-bottom on a Sunday evening while rolling out a mammoth bond-purchasing program aimed at calming troubled markets.
“All participants viewed the near-term U.S. economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain,” according to the minutes. Officials also “noted that financial markets had exhibited extraordinary turbulence and stresses.”
Among the areas showing signs of severe strain were the markets for commercial paper, a kind of short-term debt companies use to finance their operations, as well as corporate bonds, according to the minutes.
A “few” participants at the meeting would have preferred to cut interest rates less drastically than the full percentage point move the Fed made. They wanted to preserve room to lower rates later and worried that a big cut “ran the risk of sending an overly negative signal about the economic outlook,” according to the minutes.
Amazon will pause its shipping pilot program.
Amazon said on Wednesday that it planned to pause a pilot program that shipped products for sellers on its marketplace in another move to ease the pressures on its logistics operations, which are stretched thin by the surge in online shopping as Americans hunker down.
The pilot program, called Amazon Shipping, picked up packages that were already packed and labeled from a seller’s warehouse and then delivered the items to customers through Amazon’s delivery network. It competed with U.P.S. and FedEx’s ground service. Started in 2018, Amazon Shipping had expanded to a handful of cities, including Los Angeles, New York and Chicago. The last shipments will be on June 5.
The pause was first reported by Business Insider.
Europe’s biggest economies brace for the sharpest drop since World War II.
Europe’s pandemic-induced lockdowns were widely expected to throw the continent into a deep recession. Germany and France, the largest economies, said on Wednesday that they were headed toward their sharpest downturns since World War II, a warning that showed just how bad it’s about to get.
France officially slid into a recession after suffering one of the worst quarterly contractions in more than 50 years. Growth tumbled an estimated 6 percent from January to April, from the fourth quarter, the central bank said. For every two weeks the population remains under confinement, the economy shrinks by at least 1.5 percent, it added.
And Germany is sliding toward its deepest recession on record, with growth expected to plunge almost 10 percent from April through June, five leading economic institutes said Tuesday.
Tesla plans to cut salaries and furlough some employees starting on Monday, according to an internal memo viewed by The New York Times.
“This is a shared sacrifice across the company that will allow us to progress during these challenging times,” Valerie Workman, Tesla’s head of human resources for North America, said in the memo. The electric carmaker expects to resume normal operations at its U.S. facilities on May 4, she said.
Salaries will be cut by up to 30 percent for vice presidents and more senior executives and by 20 percent for employees at the director level and above. Pay will be reduced by 10 percent for the rest of Tesla’s salaried work force. Tesla employees who cannot work from home and haven’t been reassigned to other on-site work would be furloughed, according to the memo.
The news of pay cuts and furloughs at Tesla was first reported by Bloomberg News. The company did not respond to a request for comment.
Tesla suspended operations at its factory in Fremont, Calif., on March 23 under pressure from local officials. The automaker appeared to continue making cars for several days in defiance of a county order halting all nonessential activity.
Gig workers are facing challenges getting unemployment aid.
The $2 trillion relief bill made contractors eligible for unemployment assistance during the coronavirus pandemic. But a variety of obstacles — including the difficulty of bringing state unemployment systems up to speed and strict eligibility guidelines from the Labor Department — have left most ride-share drivers and other gig workers unable to take advantage so far.
Few states appear ready to process applications from gig workers, and some are turning them away. Critics have also expressed concern that guidance from the Labor Department issued over the weekend may be excluding workers who should qualify.
The guidance appeared to leave out drivers who could theoretically choose to work on any given day but are not doing so because few passengers are requesting rides. It also appeared to exclude certain workers who choose not to work because they are at a high risk from the coronavirus.
A Labor Department representative said the situations laid out in the guidance “are not exhaustive, and we expect many ride-share workers to be eligible.” The two big ride-hailing companies, Uber and Lyft, also said they expected many drivers to qualify.
Here’s what you need to know about coronavirus relief for small business.
The federal stimulus bills enacted in March, including a $2 trillion economic relief plan, offer help for the millions of American small businesses affected by the coronavirus pandemic.
Cash grants. Low-interest loans. Payments to offset some payroll costs for businesses that keep or rehire workers. There are also enhancements to unemployment insurance and paid leave.
Here are the answers to common questions about these programs. And we will update this article as we learn more about the details.
More information on help, including details on the stimulus checks that many people will be receiving, can be found in our F.A.Q. for individuals about stimulus relief and our Hub for Help. If you have questions, or have applied for small business aid and can tell us how the process went, we’d love to hear from you.
Catch up: Here’s what else is happening.
Nordstrom, one of the country’s best-performing department stores, said in a Wednesday filing that it did not have a “firm date” on when its stores would reopen. Most of the company’s work force — about 69,000 people, according to a separate filing — has been furloughed “or assigned zero hours of work.” Nordstrom has also temporarily closed its headquarters in Seattle.
Airbus, the European aerospace giant, said it was cutting production by about a third in response to the reshaping of the aircraft market. “Our airline customers are heavily impacted by the COVID-19 crisis,” Guillaume Faury, Airbus’s chief executive, said in a statement. “We are actively adapting our production to their new situation.”
The London-based Jewish Chronicle, one of the oldest Jewish newspapers in the world, said on Wednesday that it would cease publication after being crushed by the financial impact of the coronavirus pandemic. Founded in 1841, The Chronicle claims to be the oldest continuously published Jewish paper in the world.
Reporting was contributed by Jeanna Smialek, Emily Flitter, Ana Swanson, Stacy Cowley, Karen Weise, Noam Scheiber, Liz Alderman, Jack Ewing, Sapna Maheshwari, Conor Dougherty, Niraj Chokshi, Adam Satariano, Choe Sang-Hun, Jack Nicas, Ceylan Yeginsu, Austin Ramzy, Mohammed Hadi, Matt Phillips, Katie Robertson, Carlos Tejada and Amie Tsang.