Wall Street continues its rally as global stocks show some confidence.
U.S. stocks continued their rally on Tuesday, climbing for a third consecutive day, and global markets rose as more governments made plans to gradually reopen their economies and investors prepared to scrutinize corporate earning announcements.
The S&P 500 rose about 1.4 percent in early trading. The index had rallied about 1.5 percent on Monday. European markets were 1 to 2 percent higher, following mixed trading in Asia.
But U.S. oil prices continued to whipsaw on Tuesday. The price of West Texas Intermediate, the type of oil used to determine industry prices in the United States, fell nearly 20 percent in volatile trading on Tuesday, before recouping most of those losses. The price is now about $12.50 a barrel, a level virtually unheard-of before the double whammy of the coronavirus outbreak and a price war between Saudi Arabia and Russia.
Brent crude, the international benchmark, wavered between gains and losses and was about $21 a barrel.
Oil prices plunged last week when financial investors rushed to sell their futures before they expired and found few buyers. A similar dynamic is working against oil prices currently as major investors shift away from the near-month contract and diversify with those that expire in other months. On Monday, one of the biggest oil investment vehicles, an exchange-traded fund called United States Oil Fund, detailed plans in a financial filing to spread its exposure across contracts that expire as late as September.
Though the swings in oil prices last week churned up stock markets too, stock investors seem to have set aside those concerns to focus instead on the possible easing of restrictions in major economies around the world. In the United States, at least a dozen states are moving to ease restrictions, and several European countries have loosened rules. Later on Tuesday, French officials are expected to announce how they will lift the country’s lockdown.
Fueled both by expectations for a rebound in the economy, and unprecedented amounts of government spending in response to the coronavirus pandemic, the S&P 500 has rallied nearly 30 percent from its late March lows.
Still, investors will have more data to consider soon. Companies like Ford and Starbucks are scheduled to report financial results for the first quarter of the year on Tuesday. While the earnings reports may further cloud the hopes for a healthy global recovery, they may also give companies a chance to outline the steps they are taking to reopen.
Treasury Secretary Steven Mnuchin said on Tuesday that companies that received more than $2 million in small business loans would be audited by the Small Business Administration and could face “criminal liability” if it turned out that they were not eligible to apply for the relief money.
Mr. Mnuchin’s comments come as backlash grows over big, publicly traded companies receiving millions of dollars in loans while many small businesses have been unable to access the $660 billion pot of bailout money. At least 116 public companies have taken loans over $2 million and haven’t returned those funds.
“We want to make sure this money is getting to where it should be,” Mr. Mnuchin said on CNBC.
The second round of the small business loan program started on Monday and it was marred by technical glitches and frustration among banks and borrowers. Last week, the Treasury Department and S.B.A. clarified the certification requirements for borrowers to dissuade big companies that have access to other forms of capital from applying. Several companies returned their loan money in recent days amid the backlash.
Mr. Mnuchin said on Tuesday that he thought it was “outrageous” that the Los Angeles Lakers basketball franchise had taken about $4.6 million from the program. The team said on Monday that it repaid the loan.
“The purpose of this program was not social welfare for big business,” Mr. Mnuchin said.
The Treasury secretary noted that banks had been encouraged to process the loans as quickly as possible and that the onus is on the borrowers to honestly assess if they are eligible for the loans, which are meant for businesses with fewer than 500 workers.
“It’s really the fault of the borrowers,” Mr. Mnuchin said. “It’s the borrowers who have criminal liability if they made this certification and it’s not true.”
A slew of companies are reporting their quarterly earnings this week, offering a glimpse of how the coronavirus pandemic impacted business in the first three months of the year and a prediction for what that damage will look like going forward.
PepsiCo reported strong earnings in the first quarter as consumers stocked up snacks and beverages for the Super Bowl and, later, the coronavirus quarantines. PepsiCo said net sales in the quarter rose 7.7 percent to $13.88 billion with its snack, beverages and food divisions all seeing robust sales. While other companies have suspended share buybacks or dividends to shareholders because of the effect of the pandemic, PepsiCo said it intends to repurchase $2 billion in shares and provide $5.5 billion in dividends.
Southwest Airlines lost $94 million in the first quarter of the year, a relatively light blow in an industry ravaged by the coronavirus pandemic. Still, the company ended the quarter with $4.2 billion in revenue, nearly 18 percent less than the same period last year. Southwest has more than $9 billion in cash and short-term investments, slightly more than Delta and well above the approximately $6 billion that United has in reserve.
BP said Tuesday that profits for the first quarter fell by two-thirds compared with a year earlier. The London-based oil giant said that what it calls underlying replacement cost profit, the metric most closely followed by analysts, was $791 million for the quarter, down from $2.36 billion a year earlier. The company reported a $4.4 billion loss for the period, mostly because of a $3.7 billion inventory loss on holdings of oil.
United Parcel Service reported $18 billion in revenue in the first quarter of the year, 5 percent more than in the same period last year. Still, earnings per share missed forecasts and the company warned that disrupted supply chains have taken a toll on its customers and withdrew its forecasts for the rest of the year.
Sales and profits increased at 3M in the first three months of the year as demand spiked for face masks and other personal protective equipment. Global sales grew 21 percent in its health care division, while consumer sales went up 4.6 percent, the company said Tuesday. 3M said it would begin reporting sales every month, even as it withdrew full-year financial forecasts it had made in late January.
Harley-Davidson on Tuesday reported a steep drop in retail sales of motorcycles in the first quarter. In the United States, sales were up 6.6 percent until mid-March, and then ended the quarter 15.5 percent below the same period last year, the company said.
The S.B.A. system crashes as a new round of small-business loans opens.
Minutes after a $310 billion aid program for small companies opened for business on Monday, the online portal for submitting applications crashed. And it kept crashing all day, much to the frustration of bankers around the country who were trying — and failing — to apply on behalf of desperate clients.
Some irritated bankers vented on social media at the Small Business Administration, which is running the program. Rob Nichols, the chief executive of the American Bankers Association, wrote on Twitter that the trade group’s members were “deeply frustrated” at their inability to access the system. Until the problems were fixed, he said, “#AmericasBanks will not be able to help more struggling small businesses.”
Pent-up demand for the funds has been intense, after the program’s initial $342 billion funding ran out in under two weeks, stranding hundreds of thousands of applicants whose loans did not get processed. Last week, Congress approved the additional $310 billion for small businesses hit by the coronavirus pandemic. Bankers were expecting the money to once again run out quickly, and so on Monday at 10:30 a.m., when round two opened, they were ready to go.
But for the second time in a month, the relief effort, called the Paycheck Protection Program, turned into chaos, sowing confusion among lenders and borrowers.
When the University of California, San Francisco, was running perilously low on personal protective equipment, the university’s chancellor called Marc Benioff, the hyperconnected billionaire who is a founder and the chief executive of Salesforce.
The phone call set off a frenzied effort by Mr. Benioff and his team that drew in major companies like FedEx, Walmart, Uber and Alibaba. In a matter of weeks, Mr. Benioff’s team spent more than $25 million to procure more than 50 million pieces of protective equipment. Fifteen million units have already been delivered to hospitals, medical facilities and states, and more are on the way.
The relative ease with which Salesforce acquired so much protective gear stands in sharp contrast to the often chaotic government efforts to secure it. And while the national stockpile of supplies has been depleted, Mr. Benioff and his team simply called their business partners in China and started writing checks.
Once it was apparent that the Salesforce team could obtain and deliver supplies, they took steps to formalize their efforts and set a lofty target.
By March 29, 10 days after the chancellor called Mr. Benioff, Salesforce had found more than 50 million pieces of protective equipment, with millions already delivered.
The deceptive power of simplicity.
Why did Zoom become a staple of our pandemic routines? How come Netflix is the king of home entertainment and Amazon rules shopping online?
There’s no magic formula for why some companies and products last and others fizzle, but one overlooked ingredient is simplicity. “It just works” are magic words.
Facebook, envious of Zoom’s success, is putting weight behind its own video-calling feature. It could catch on, given the billions of people already hanging out on Facebook. But vaults of money and a big audience aren’t everything. Remember … Skype?
Zoom took hold because it nails the basics. Audio quality on Zoom is crystal clear, it feels social and joining business meetings online has been a breeze. None of this is rocket science, but it’s deceptively difficult to make tasks look easy.
Many celebrations and milestones have been delayed, but grief is in abundance, and the greeting card aisle offers a snapshot of the virus’s wicked toll. Sympathy cards are nearly all sold out.
CVS, one of the nation’s largest sellers of greeting cards, said that it was seeing “higher demand for sympathy cards than most other types of greeting cards during the pandemic” and was experiencing shortages in certain stores. Shoppers across the country have posted on social media that their local Winn-Dixie or ShopRite was running out of cards.
Some of the shortages have been caused by distribution problems. Pharmacies and grocery chains, focused on keeping their shelves stocked with household staples, are not allowing card companies to come into the stores and restock regularly.
Barbara Macchiaroli’s longtime companion died of the virus the day after Easter in a nursing home. He was 90. They haven’t had a funeral, but the cards — 34 so far — have been arriving at her house every day. The senders have written memories about his beautiful singing voice, his devotion to the local Kiwanis Club and his love of Ford Model A’s.
“The cards have comforted me in a way I never expected they would,” she said. “I think it is because I can’t be with people right now.”
Catch up: Here’s what else is happening.
Amazon may have violated federal worker safety laws and New York State’s whistle-blower protections when it fired an employee from its Staten Island warehouse who protested the company’s response to the coronavirus outbreak, according to a letter the office of the New York attorney general, Letitia James, sent the company last week.
JetBlue announced on Monday that it would require all passengers to wear a face covering during travel starting May 4. The mask must cover the nose and mouth throughout the entire journey, from check-in to deplaning. JetBlue did not say whether it would provide masks to its passengers.
Boeing plans to resume operations in South Carolina next week, bringing several thousand employees back to work on the 787 Dreamliner about a month after sending them home. Those who can work remotely will continue to do so, and managers will tell the recalled workers when to return to Boeing’s complex in North Charleston, the company said.
Reporting was contributed by Karen Weise, David Gelles, Alan Rappeport, Stanley Reed, Gregory Schmidt, Su-Hyun Lee, Brett Sokol, Michael Corkery, Sapna Maheshwari, Niraj Chokshi, Shira Ovide, Stacy Cowley, Carlos Tejada, Kevin Granville and Daniel Victor.