Global markets tumble on more negative outbreak news.
Global markets fell on Thursday amid more signs that the global recovery from the coronavirus will be slow and painful.
European stocks opened more than 1 percent lower after a similarly dismal day in Asia and a drop in the United States on Wednesday. Futures markets were predicting that Wall Street would also fall at the open, though perhaps not as sharply.
Markets reacted in part to a combative-sounding tweet from President Trump mentioning the temporary truce that Washington and Beijing struck in January to halt their nearly two-year trade war. They were also responding to comments from Jerome H. Powell, the Federal Reserve chairman, who said the economic hit could be substantial if American policymakers don’t do enough to support the economy.
Prices for U.S. Treasury bonds, which tend to rise when investors are skittish, were mostly higher. Oil prices were slightly higher on futures markets.
In Japan, the Nikkei 225 index fell 1.7 percent. Hong Kong’s Hang Seng index dropped 1.4 percent. Mainland China’s Shanghai Composite index lost 1 percent. South Korea’s Kospi fell 0.8 percent.
In London, the FTSE 100 index was down 1.9 percent in morning trading. The DAX index in Germany fell 1.6 percent, while France’s CAC 40 fell 1.9 percent.
The Labor Department is expected to say Thursday that 2.5 million people filed new unemployment claims last week, according to a consensus of Wall Street analysts. Although the weekly tally of new claims has been declining since late March, the latest count is likely to push the eight-week total above 35 million.
Roughly one in four people who had jobs in February were unemployed by the end of April, the economists Alexander Bick of Arizona State University and Adam Blandin of Virginia Commonwealth University said in a report released Tuesday.
State unemployment insurance and emergency federal relief were supposed to tide households over during the shutdown. But several states have a backlog of claims, and applicants continue to complain of being unable to reach overloaded state agencies.
More than half of those applying for unemployment benefits in recent weeks have been unsuccessful, according to a poll for The New York Times in early May by the online research firm SurveyMonkey.
And 13 states have yet to fully put in place the Pandemic Unemployment Assistance program that Congress passed in March to help freelancers, self-employed individuals and other workers not normally eligible for state jobless benefits.
In states where workers have been able to apply for pandemic assistance, many got caught in what Roberta Reardon, the New York State labor commissioner, called a “federal glue trap” — an initially cumbersome application process. To New Yorkers still waiting, Ms. Reardon said, “I promise we will get you and make you whole.”
A few months ago, everything seemed to be going Elon Musk’s way.
After a turbulent start to 2019, Tesla, the electric car company he co-founded, had reported profits two quarters in a row and its stock was surging. Mr. Musk claimed vindication by defeating a defamation lawsuit and was staying out of trouble on Twitter. Tesla was on a tear.
But the coronavirus set Mr. Musk off. His dreams of dominating the car industry were put on hold when Alameda County, Calif., forced Tesla’s Fremont plant, which brings in most of the company’s revenue, to shut down in late March.
That frustrated Mr. Musk, who had long dismissed the seriousness of the coronavirus — promoting unproven research, suggesting that Covid-19 deaths were overstated and predicting that there would be zero new cases in the United States by the end of April. (There were almost 32,000.)
His anger boiled over last week, as he threatened to move the factory out of California and sued the county in federal court, Niraj Choksi reports. This week, Mr. Musk officially reopened the plant, to the frustration of some workers and county officials who had been negotiating a reopening plan with Tesla for weeks.
As the plant reopened, Mr. Musk thanked employees for making “the factory come back to life.”
“I have vastly more respect for someone who takes pride in doing a good job,” he said in an email, “whatever the profession, than some rich or famous person who does nothing useful.”
The Federal Reserve chair, Jerome H. Powell, delivered a stark warning on Wednesday that the United States was experiencing a blow that could permanently damage the economy if Congress and the White House did not provide sufficient financial support to prevent a wave of bankruptcies and prolonged joblessness.
In Washington, discussions of additional rescue measures have run aground, with Democrats proposing sweeping new programs and Republicans voicing concerns over the swelling federal budget deficit, which is projected to hit $3.7 trillion this year.
President Trump and his economic advisers have pressed the pause button on negotiations for additional spending, waiting to see how much the economy rebounds as states begin lifting restrictions on business activity.
“Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” Mr. Powell said at a Peterson Institute for International Economics event.
The comments, which were the latest, and perhaps most influential, negative note investors have heard this week, triggered a nearly 2 percent drop in the S&P 500 on Wednesday. On Tuesday, the nation’s top infectious disease expert, Dr. Anthony S. Fauci, warned that a too-rapid reopening of large parts of the American economy could risk a difficult-to-control resurgence of Covid-19.
The market had been steadily climbing since late March, when the Federal Reserve signaled that it was ready to purchase unlimited bonds to stabilize key financial markets and President Trump signed a $2 trillion economic rescue package.
That rally, however, may have taken some of the pressure off lawmakers.
“There is an inverse correlation between stock prices and the desire from Congress to provide additional stimulus,” said William Delwiche, an investment strategist at Baird, a financial firm based in Milwaukee.
A commercial extolling Chinese youth, showed online and on state-run television, provoked an immediate nationwide backlash in the country, writes The New York Times columnist Li Yuan.
The clash playing out across the Chinese internet over the past week amounts to a debate about the future of the world’s other superpower — specifically, for the minds and the souls of China’s younger generation. These tensions have been simmering for a long time, but the coronavirus outbreak — and the Chinese government’s propaganda campaign to play down its initial missteps — have brought those tensions to the fore.
Many of the younger generation looked at the images on the commercial of affluent, happy young people and didn’t recognize themselves. China’s biggest boom years are over, many think. China’s older generation, having amassed all the money and power, is simply trying to co-opt them with flattery.
Shares of the Japanese electronics and entertainment giant Sony were down more than 3 percent in intraday trading on Thursday following its announcement the day before that its operating profits could fall by 30 percent or more in the current fiscal year.
The coronavirus has hit Sony’s electronics business hard, while giving a boost to some of its entertainment offerings, as people stuck at home seek to keep themselves busy.
But the strength of the company’s film and music properties was not enough to offset the damage the pandemic has wrought: The company recorded a 57 percent drop in operating profits to 35.4 billion yen in the three months ending in March, Sony said in its annual earnings report released on Wednesday.
Annual operating profit fell 5 percent to 845.5 billion yen from the previous year, it said.
The company’s shares opened 3.5 percent lower Thursday morning, before recovering some ground by midafternoon.
Some of the company’s new movie and music releases have been pushed back because of the pandemic, and ticket sales are down as theaters remain closed. The damage has been offset by increased streaming, the company said, with revenues from its music and pictures segments growing year on year in the three-month period that ended in March.
Consumers stuck at home have also spent more on Sony’s online gaming services as they while away the hours by downloading and playing games for the company’s PlayStation 4.
But the pandemic has been catastrophic for the company’s electronics business, as well as its financial services offerings.
The near complete shutdown of factories in China and elsewhere earlier this year disrupted production of electronic goods and components, which account for more than a quarter of the company’s overall business. The problems were exacerbated by declining consumer demand.
Looking ahead, Sony declined to make any definite predictions for the year, citing the uncertainty caused by the pandemic. But the company said it was still on track to release its highly anticipated PlayStation 5 gaming console in time for the 2020 holiday season.
Uber raised $900 million in a debt sale to help fund potential acquisitions, the ride-hailing company said Wednesday.
Uber is in talks to acquire Grubhub, the food-delivery service, although the deal has not yet been finalized and could still fall apart. If it goes through, it would create one giant player in food delivery as more people turn toward those services in the coronavirus pandemic.
Uber’s debt sale puts it alongside Disney, ViacomCBS and Live Nation, which have all raised cash to ride out financial uncertainty caused by the pandemic. Uber said it would put the proceeds toward “working capital and other general corporate purposes, which may include potential acquisitions and strategic transactions.”
Companies like Uber are trying to limit damage to their business from the coronavirus — Uber’s main ride-hailing business has cratered as people have stopped traveling — and double down on services that are growing. The food delivery business has also been highly competitive, with rivals regularly undercutting one another on delivery prices, so a deal that would unite two of the players could help reduce those pressures.
J.C. Penney, the department-store chain that was founded in 1902, might file for bankruptcy as soon as Friday after skipping two interest payments on its debt in the past month, according to two people familiar with the matter.
The company is in talks to secure about $450 million in debtor-in-possession financing, which would allow it to keep operating the business, according to the people, who spoke on condition of anonymity because discussions were confidential. The company declined to comment.
J. Crew also filed for bankruptcy last week. A filing from J.C. Penney, however, would be the biggest bankruptcy yet during the pandemic, based on its number of locations and workers. The retailer, which is based in Plano, Texas, has 846 stores in the United States and Puerto Rico and 90,000 employees.
J.C. Penney skipped a $12 million interest payment due last month, saying at the time that it was a “strategic decision” in order to take advantage of a 30-day grace period before it was considered in default. The deadline for that would be Friday. The chain also skipped a $17 million interest payment due on May 7, with a grace period of five business days. The deadline to make that payment also appears to be Friday.
Reporting was contributed by Niraj Chokshi, Li Yuan, Ben Dooley, Carlos Tejada, Jeanna Smialek, Jim Tankersely, Matt Phillips, Sapna Maheshwari and Michael J. de la Merced.