Wall Street’s focus was on economic recovery Tuesday, and stocks rallied along with crude oil prices.
The S&P 500 rose more than 1 percent, with shares of companies most likely to benefit from the lifting of restrictions on travel and commerce faring well. Shares of Delta Air Lines, United Airlines and other big carriers rose, as did Marriott International.
Oil prices have been climbing all month as the restarting of factories and resumption of travel raised expectations that demand would rise. On Tuesday, West Texas intermediate crude rose another 3 percent, and shares of companies in the energy industry, like Chevron and Halliburton, were also higher.
It’s been a turbulent period for stocks, with the S&P 500 alternating between gains to losses on a daily basis last week, as expectations for an eventual recovery from the coronavirus pandemic have squared off against the reality that the damage is still severe and likely to continue for some time.
News of progress on vaccine development — even if small scale and early stage — has been one factor fueling the gains.
Tuesday was no exception, after the biotech company Novavax said on Monday that it was starting trials of its vaccine on humans, with preliminary results expected in July. On Tuesday, the pharmaceutical giant Merck said it bought the rights to develop a potential drug that had “potent antiviral properties against multiple coronavirus strains,” and was also beginning work on vaccine candidates.
The reopening of businesses has been another. One largely symbolic opening on Tuesday was that of the New York Stock Exchange’s trading floor. A small number of traders returned to the floor, wearing masks and following social-distancing rules, the exchange said.
Shares in Europe and Asia were also higher as investors shrugged off negative news like rising tensions between the United States and China and the combustible political situation in Hong Kong. Instead, they focused on Japanese leaders gradually lifting emergency measures there, while European leaders have also moved to ease travel restrictions.
But any gains are susceptible to a sudden change in sentiment if the reopening plans result in new outbreaks or fresh concerns about the longevity of economic slowdown emerge.
Americans are feeling worse about the present but slightly better about the future than they did a month ago, according to a survey by the Conference Board.
After two months of decline as the coronavirus pandemic forced widespread lockdowns, the board’s index of consumer confidence rose slightly this month in a preliminary reading as “the gradual reopening of the economy helped improve consumers’ spirits,” the research group said Tuesday.
“While the decline in confidence appears to have stopped for the moment, the uneven path to recovery and potential second wave are likely to keep a cloud of uncertainty hanging over consumers’ heads,” said Lynn Franco, the board’s senior director of economic indicators.
The share of those surveyed saying business conditions are good decreased to 16.3 percent from 19.9 percent, while those saying conditions are bad increased to 52.1 percent from 45.3 percent. But 43.3 percent said they expected business conditions to improve over the next six months, up from 39.8 percent, while those expecting a decline decreased to 21.4 percent from 25.1 percent.
Hoping to take advantage of wreckage in the wake of the coronavirus pandemic, investors are preparing to snap up commercial real estate at rock-bottom prices.
Long before states and cities closed businesses and issued stay-at-home orders, many real estate funds were stockpiling cash and waiting for a buyer’s market. Some have raised billions of dollars in the last several weeks.
As a result, investment firms are sitting on roughly $300 billion of equity ready for deployment, said Douglas M. Weill, a founder of Hodes Weill & Associates, a global real estate capital advisory firm in New York. “It’s a staggering amount of dry powder,” he said.
Every commercial property owner has its specific problems, but mom-and-pop landlords that own a handful of apartment buildings, retail centers or other assets are in a much more compromised position, said Sanford D. Sigal, president and chief executive of NewMark Merrill, a shopping center owner and manager in Woodland Hills, Calif.
“Very few small owners are equipped for this type of market,” said Mr. Sigal, who expected to collect about 57 percent of his May rent from tenants across some 70 properties in California, Colorado and Illinois. “I’ve seen more deals in the past week that were worth looking at than I did in the entire prior year.”
Even as American employers let tens of millions of workers go, some companies are choosing a different path. By instituting across-the-board salary reductions, especially at senior levels, they have avoided layoffs.
The ranks of those forgoing job cuts and furloughs include major employers like HCA Healthcare, the hospital chain, and Aon, a London-based global professional services firm with a regional headquarters in Chicago.
Others that managed to avoid layoffs include smaller companies like KVH, a maker of mobile connectivity and navigation systems that employs 600 globally and is based in Middletown, R.I.
“We’d never done a pay cut before,” said Martin Kits van Heyningen, who started KVH in his parents’ basement more than three decades ago.
The trend is a reversal of traditional management theory, which held that salaries were sacred and it was better to cut positions and dismiss a limited number of workers than to lower pay for everyone during downturns.
There is often a genuine desire to protect employees, but long-term financial interests are a major consideration as well, said Donald Delves, a compensation expert with Willis Towers Watson. “Companies learned the hard way that once you lay off a bunch of people, it’s expensive and time-consuming to hire them back,” he said.
There’s recently been a surge of people who are picking up their online orders in-person at Walmart, Target, Home Depot and other stores big and small. With the best shopping ideas coming from big box retailers, Amazon is missing out, writes the On Tech columnist Shira Ovide.
I’ve been impressed by how old-school companies, from Best Buy to my local cheese shop, have quickly adapted to offering low-contact pickups like this. Some of this activity is a temporary coronavirus-related spike, but I bet some of these habits will stick.
Three years ago, Amazon agreed to pay $14 billion to buy the Whole Foods supermarket chain. This was the moment when Amazon acknowledged the importance of physical stores, and I couldn’t wait to see how the company reimagined in-person shopping experiences that had not changed much in my lifetime. And then, not much happened.
Yes, Whole Foods stores are offering home deliveries now. But it’s other retailers that are rethinking how their physical stores can work hand-in-hand with online shopping.
The lawsuit says drivers must wait months to receive unemployment benefits, if they receive them at all, compared with the two to three weeks that the state has said is typical for other workers. The plaintiffs are seeking an injunction requiring the state to immediately pay their benefits and the benefits of other drivers to whom they are owed.
Some drivers are being directed to a federal pandemic relief program intended for contractors, even though the state considers them employees and conventional unemployment benefits would pay them far more. According to the lawsuit, a key problem is that the state has not forced Uber and Lyft to provide the data on workers’ earnings that employers must typically supply.
An Uber spokesman said the company had provided the state with the earnings data it had requested, though he declined to elaborate on whether the data would be sufficient to calculate unemployment benefits promptly. Lyft said the company was working with the state to provide access to earnings data.
“During this pandemic emergency, we have been moving heaven and earth to get every single unemployed New Yorker their benefits as quickly as possible — including Uber and Lyft drivers,” said Jack Sterne, a spokesman for the Cuomo administration.
How Powell’s Books is managing through the crisis.
Powell’s Books, an enormous independent bookstore in Portland, Ore., was initially laid low by the pandemic. In the days after it decided to close its stores and suspend operations in mid-March, the company laid off some 450 of its roughly 500 employees.
Since then, the company’s chief executive, Emily Powell, has been trying to hire back employees where she can, all while trying to reimagine how bookstores work in the age of social distancing.
Ms. Powell discussed Powell’s, the book business and Amazon on a live Corner Office call with reporter David Gelles on Tuesday afternoon. It was part of a series of live Corner Office calls happening each Tuesday, and a replay is available now.
A condensed and edited version of their conversation will be available in the coming days, and next week David will chat with Joey Bergstein, chief executive of Seventh Generation, about the great toilet paper shortage, social responsibility during the crisis and more.
Chinese leaders meeting since last week in Beijing have stressed their efforts to create jobs and get the country back to work. But surveys and interviews show many young workers are entering into the work force in the worst market in decades.
“When it was April and I still couldn’t start my job, I started to feel worried,” said Huang Bing, 24, who graduated last year from a prestigious Chinese drama school. Her new job, set to begin this past January, ended before it began.
“I began worrying that I may not be able to work this year at all,” Ms. Huang said. “I can’t just keep waiting.”
Online, young people despair over finding a good job, with many settling for something that pays less. Many others are reluctant to relent. “The graduates do not fully understand the market,” said Martin Ma, a human resources officer for a Chinese software company. “Their expectations are quite high.”
For the world, global growth will be hard to rekindle until China gets fully back to work. But the damage to the Communist Party could be long-lasting. It derives its political power from the promise of delivering a better life for the Chinese people, a promise that has become increasingly difficult to fulfill.
The stock trading floor of the New York Stock Exchange reopened on Tuesday, though at a reduced head count to allow space for social distancing measures to remain in force. Gov. Andrew M. Cuomo rang the opening bell at 9:30 a.m. at the start of trading.
Floor brokers and trading floor officials will be allowed back, while designated market makers — the specialist traders who buy and sell in order to “make markets” in certain securities — will continue to operate remotely.
Those who are returning must comply with a number of restrictions to regain access to the floor including avoiding public transportation, submitting to temperature checks on entry and wearing a face mask. They will also be expected to maintain a six-foot social distance and avoid physical contact such as shaking hands.
Other markets are also planning to reopen. Cboe Global Markets, owner the Chicago Board Options Exchange, said on Tuesday that it planned to reopen the trading floor on June 8 and resume operation in a modified manner.
The ability to trade electronically muted the market impact of the more than two-month shuttering of the trading floor, one of the most significant disruptions to the floor operations of the exchange since 1914, when it was closed for about four months as World War I began (not when the United States entered the war, as an earlier post said.).
Back then, the exchange floor was the only way to trade shares listed on the exchange. But floor volume fell from around 70 percent of all New York Stock Exchange trading activity in the early 1990s to less than 20 percent by 2006, academic studies found.
But even that likely overstates the impact of the floor. Over the past decade, the New York Stock Exchange’s share of American stock trading has fallen to about 24 percent from 80 percent, with trading in U.S. stocks now shared by 12 public exchanges and many more nonpublic venues.
That means that the share of stock that actually is touched by the New York Stock Exchange’s flesh-and-blood traders is quite small — as little as 1 percent, according to one recent study.
Catch up: Here’s what else is happening.
Latam, the largest airline in Latin America, said on Tuesday it had filed for bankruptcy protection, the latest carrier to fall victim to the pandemic. The company, based in Santiago, Chile, said it had secured $900 million in financing from major shareholders, including the Cueto and Amaro families and Qatar Airlines, and that it would work with creditors to reduce its debt while it continues operating. Avianca, Colombia’s flagship airline and one of the world’s oldest carriers, filed for bankruptcy protection earlier this month.
Lufthansa will receive a bailout worth 9 billion euros, or $9.8 billion, to help the airline survive an “existential emergency” caused by the pandemic and a virtual shutdown of passenger air traffic, the German government said Monday. The agreement, reached after several weeks of negotiations, will give the government part ownership of the airline for the first time since it was privatized in 1997.
Reporting was contributed by Joe Gose, David Gelles, Nelson Schwartz, Alexandra Stevenson, Keith Bradsher, Elizabeth Paton, Jack Ewing, Jason Karaian, Matt Phillips, Noam Scheiber, Jesse Drucker, Jessica Silver-Greenberg, Kevin McKenna, Sarah Kliff, Tim Arango, Shira Ovide, Thomas Fuller, Niraj Chokshi, Mohammed Hadi, Julie Creswell, Neal E. Boudette, David Yaffe-Bellany and Kevin Granville.
Nick Trahair, CLM,CHA serves as General Manager of the GrandStay Hotel & Suites of Traverse City, MI.
Prior to joining the staff at the GrandStay, he served as the Regional Operations Manager for a large hospitality management company based in the Midwest and also has worked in the food and beverage management field.