Stocks Erase 2020 Losses as Tech Shares Rally (Published 2020) (2024)

Stocks on Wall Street climbed on Monday, pulled higher by a rally in technology companies, as lawmakers in the United States began to discuss another coronavirus aid package.

The S&P 500 rose almost 1 percent to return to positive territory for 2020. Amazon, which jumped nearly 8 percent, and other technology companies like Citrix Systems, Microsoft and Adobe were among the best performing stocks in the S&P 500.

The tech-heavy Nasdaq composite rose 2.5 percent.

Energy stocks also climbed after Chevron announced that it had agreed to acquire Noble Energy, a Houston-based oil and gas explorer with an international dimension, for $5 billion. Noble rose more than 5 percent, and shares of smaller energy companies like Apache and Hess saw gains.

This isn’t the first time this year that Wall Street has clawed its way back into positive territory. It did so in June, before the coronavirus pandemic began to spike again in parts of the United States and other countries, sending shares lower again.

News this week on plans for more federal spending and on corporate earnings could set the direction for markets in the days ahead.

Lawmakers have returned to Washington to begin an intense week of negotiations over what would be the fourth significant bailout package since the virus shuttered large swaths of the U.S. economy earlier this year. The talks come as millions of Americans are about to see their expanded unemployment insurance benefits expire.

The House, controlled by Democrats, has signaled that it wants $3 trillion in aid, while the Republican-controlled Senate appears to want something around $1 trillion. President Trump has said he’s interested in including a payroll tax cut in the next round of aid.

Companies will also report on the state of their businesses as they release their results for the three months through June. Earnings reports are expected from Microsoft, Chipotle, Hershey and United Airlines, among dozens of others.

Republicans leaders worked Monday to resolve their differences with President Trump over the next coronavirus relief package ahead of what promises to be an intense battle with Democrats.

Senate Republicans and Trump administration officials worked Monday to resolve their differences over the next coronavirus relief package ahead of what promises to be an intense battle with Democrats.

They were coalescing around a roughly $1 trillion package that would most likely include tax breaks, direct payments and jobless aid for Americans struggling amid the pandemic; money for schools and health care; and liability protections for employers and health providers.

But President Trump and congressional leaders remained at odds over several ideas Mr. Trump is pushing that many Republicans oppose, including conditioning all new education funding on the resumption of in-person school, removing funding for testing and tracing efforts nationwide, and including a payroll tax cut.

The division among Republicans further complicated what was already expected to be an intense round of negotiations on the package with Democrats, who have vowed to accept no less than the $3 trillion stimulus proposal the House approved in May. Time is of the essence, with expanded jobless aid for the tens of millions of Americans laid off during the pandemic set to expire at the end of the month.

The focus of the aid package “is really about kids and jobs and vaccines,” Steven Mnuchin, the Treasury secretary, told reporters during the Oval Office meeting with Mark Meadows, the White House chief of staff, and Vice President Mike Pence.

Mr. Mnuchin said that there was urgency to pass something before the expanded unemployment benefits expired but did not deviate from the administration’s position that any additional funding should provide only as much as workers were earning on the job. Congress’s plodding speed is more likely to produce a bill for Mr. Trump to sign by early August.

The bill will represent an opening bid from Republicans, and its overall cost is almost certain to grow in negotiations with Democrats because it is likely to exclude any additional money to help state and local governments avert massive layoffs of public employees amid plunging tax revenues. The legislation will most likely include additional aid to a popular federal loan program for small businesses to help maintain payroll, albeit with more stringent restrictions, as well as aid for schools and hospitals.

Mr. Mnuchin said he would begin talks with Democrats after Republicans are briefed on the proposal.

The coronavirus pandemic has companies across China rushing to produce personal protective equipment. A New York Times visual investigation has found that some of those companies are using Uighur labor through a contentious government-sponsored program that experts say often puts people to work against their will, and that some of that P.P.E. has ended up in the United States and other countries.

Uighurs, a largely Muslim ethnic minority, have long been persecuted by the Chinese government. The government promotes a program that sends Uighurs and other ethnic minorities into factory and service jobs as a way to reduce poverty, but quotas on the number of workers to be transferred and penalties for those who refuse mean that participation is often coerced.

In Xinjiang, the region where the majority of Uighurs live, only four companies produced medical-grade protective equipment before the pandemic. Now there are 51, and at least 17 of them participate in the program.

The Times spent months sifting through Chinese state media, government documents, satellite images and shipping data to establish how Uighur labor is being used to produce P.P.E. and where that equipment is ending up.

These companies produce P.P.E. primarily for domestic use, but The Times identified several other companies using Uighur labor that are exporting around the world. One shipment of masks was traced from a factory in China’s Hubei province, where Uighur workers are subject to mandatory flag-raising ceremonies and Mandarin language classes, all the way to a medical supply company in the U.S. state of Georgia.

When Google and Apple announced plans in April for free software to help alert people of their possible exposure to the coronavirus, the companies promoted it as “privacy preserving” and said it would not track users’ locations. Encouraged by those guarantees, Germany, Switzerland and other countries used the code to develop national virus alert apps that have been downloaded more than 20 million times.

But for the apps to work on smartphones with Google’s Android operating system — the most popular in the world — users must first turn on the device location setting, which enables GPS and may allow Google to determine their locations.

Some government officials seemed surprised that the company could detect Android users’ locations. After learning about it, Cecilie Lumbye Thorup, a spokeswoman for Denmark’s Health Ministry, said her agency intended to “start a dialogue with Google about how they in general use location data.”

Switzerland said it had pushed Google for weeks to alter the location setting requirement.

Google’s location requirement adds to the slew of privacy and security concerns with virus-tracing apps, many of which were developed by governments before the new Apple-Google software became available. Government officials and epidemiologists say the apps can be a helpful complement to public health efforts to stem the pandemic. But human rights groups and technologists have warned that aggressive data collection and security flaws in many apps put hundreds of millions of people at risk for stalking, scams, identity theft or oppressive government tracking.

The Federal Reserve’s effort to keep the corporate debt market running smoothly continued to raise questions on Monday, with a Congressional Oversight Commission report asking whether it was a necessary use of government funds.

The Fed announced plans in late March and early April to buy corporate bonds, an effort backed by funding that Congress supplied to the Treasury Department. It began those purchases in May with exchange-traded funds, bundles of debt that trade like stocks, and more recently began to buy already-outstanding individual corporate bonds.

Senator Patrick J. Toomey, Republican of Pennsylvania and a member of the commission that oversees the Fed and Treasury’s various taxpayer-backed coronavirus response programs, has questioned whether those purchases are necessary, given that corporate bond markets are functioning well and big companies are issuing bonds at a rapid pace. The skepticism reared its head again in the latest oversight report.

“We recognize the importance of the Federal Reserve following through on its commitments,” the report said. “At the same time, the secondary market for corporate bonds is functioning well already and continued Federal Reserve intervention can have distortionary effects in both the short term and the long term.”

Jerome H. Powell, the Federal Reserve chair, has said that it was important for the central bank to follow through on its announcements. But he has noted that the Fed did not want “to run through the bond market like an elephant” snuffing out price signals.

The Fed has also noted that it has decreased the pace of purchases and stands ready to slow them even more.

The commission also raised concerns about another stimulus measure — Treasury’s decision to give YRC Worldwide, a trucking company, a $700 million loan.

The loan money was given on the basis that YRC was important for national security reasons. The government got a 30 percent stake in the company in exchange for the loan.

But the commission said that it did not appear that YRC met the national security criteria. The commission also expressed concern that YRC had faced financial struggles for years, suggesting that the government could incur losses.

In an effort to improve confidence in air travel, United Airlines said on Monday that it would step up air filtration as passengers board and disembark, and Delta Air Lines started screening travelers unable to wear masks because of health conditions.

Airlines continue to lose tens of millions of dollars every day, and several, including United, will offer an outlook this week on what is expected to be a long and uneven recovery.

United, American Airlines and Southwest Airlines will report financial results from the industry’s disastrous second quarter in the next few days. Last week, Delta said its revenue during those three months fell about 88 percent compared with the same period last year.

United said that it would leave its high-efficiency particulate air, or HEPA, filtration systems running as passengers get on and off most planes. The move, which it will put into place next week, is intended to maximize air flow.

“The quality of the air, combined with a strict mask policy and regularly disinfected surfaces, are the building blocks toward preventing the spread of Covid-19 on an airplane,” the airline’s chief executive, Scott Kirby, said in a statement. “We expect that air travel is not likely to get back to normal until we’re closer to a widely administered vaccine — so we’re in this for the long haul.”

Starting Monday, Delta said it would require passengers unable to wear face masks because of health conditions to undergo a private medical consultation by phone before boarding. Passengers who falsify health claims could be barred from future flights.

Delta and Southwest are limiting the number of passengers on their flights through at least September in an effort to leave middle seats empty. United, which is not capping passengers, has described such policies as marketing strategies. American is also not limiting the number of passengers on its flights. Of course, no policy can guarantee protection from germs spread by nearby passengers at the gate, during boarding or in flight.

Airline executives say the recovery will take years to unfold, with tens of thousands of employees expected to lose their jobs in the coming months. United has warned that it could furlough up to 36,000 people when federal stimulus funding expires this fall. American could furlough as many as 20,000. Delta and Southwest have said that they may follow suit.

Delta’s pilots union said Monday that 2,235 of the airline’s 14,000 pilots volunteered for early retirement during a sign-up period that ended Sunday. It was not immediately clear how that would affect the nearly 2,600 pilots who were warned of a possible furlough weeks ago. The airline told its pilots on Friday that it wouldavoid a furlough for a year if they agreed to a 15 percent cut to guaranteed pay, a move that the union criticized as sidestepping negotiations.

Chevron, the American oil giant, said on Monday that it had agreed to acquire Noble Energy, a Houston-based oil and gas explorer with an international dimension, for $5 billion.

Smaller oil and gas firms have been hit hard by the effects of the coronavirus pandemic, making them look like potential bargains. Noble’s share price is down about 60 percent from the beginning of the year, allowing Chevron to buy its oil and gas resources at a low cost. Chevron, based in San Ramon, Calif., said the deal would add around 18 percent to its oil and gas reserves at a cost of less than $5 a barrel.

“This is a cost-effective opportunity for Chevron,” said Michael Wirth, the company’s chairman and chief executive.

Noble would bring Chevron properties in shale drilling regions in the United States.

The deal would also give Chevron a leading position in potentially lucrative if politically daunting natural gas fields that have been discovered in the Eastern Mediterranean region. Noble has led the way in developing resources in Israeli waters, shrugging off geopolitical risks that once kept other companies out.

Noble has also made a discovery off Cyprus, where western companies are looking for gas, but where a simmering dispute between Cyprus and Turkey presents an obstacle to developing the island’s resources.

Last year, Chevron agreed to acquire Anadarko Petroleum, another explorer, but opted for taking a $1 billion termination fee when Occidental Petroleum topped its bid.

With coronavirus cases still on the rise in the United States, Warner Bros. announced on Monday that it was abandoning its Aug. 12 release date for Christopher Nolan’s film “Tenet,” the one-time marker for when Hollywood hoped moviegoing would return in earnest.

The studio, which has been delicately trying to balance its desire to return its movies to theaters with the realities of the global pandemic, did not announce a new release date for the film, which stars John David Washington and Robert Pattinson.

The studio will move its upcoming installment of the horror film “The Conjuring 3” to June 4, 2021, from Sept. 10. Release dates for “Wonder Woman 1984” (Oct. 2) and “Dune” (Dec. 18) remain as scheduled.

“Our goals throughout this process have been to ensure the highest odds of success for our films while also being ready to support our theater partners with new content as soon as they could safely reopen,” said Toby Emmerich, the chairman of Warner Bros. Pictures Group. “We are not treating ‘Tenet’ like a traditional global day-and-date release, and our upcoming marketing and distribution plans will reflect that.”

“Tenet” had originally been scheduled to come out on July 17 before the pandemic hit. The next big-budget film that is set to be released is Disney’s “Mulan,” scheduled for Aug. 21. Disney has not yet said whether it will push the movie’s release back again.

Warner Bros. did not offer concrete details for the release of “Tenet,” but it is likely that the studio will open the movie in the locations around the world where it is safe to do so before unveiling it in the United States.

Volkswagen began taking orders Monday for its first mass-produced electric vehicle, an attempt by the world’s largest carmaker to fend off an increasingly serious challenge from Tesla.

The ID.3, a four-seat hatchback, is Volkswagen’s bid to make electric cars as accessible as a Golf, but the introduction was delayed for several months by software problems. The entry level model has a list price in Germany of 35,575 euros including sales tax, or $40,700, about 10,000 euros less than a Tesla Model 3. With government subsidies, a temporary reduction of the German value-added tax and manufacturer discounts, the price of the ID.3 falls to 26,000 euros.

The ID.3 is not likely to be very profitable for Volkswagen. But the company needs to establish credibility as a maker of electric vehicles to prevent Tesla from dominating the nascent market. Tesla’s stock market value has soared recently, and is more than three times that of Volkswagen, an indication of who investors think owns the future.

Sales of electric cars in Europe have held up better in the pandemic than those of conventional vehicles, in part because carmakers are offering discounts to meet stricter quotas on carbon dioxide emissions.

Volkswagen has not announced plans to export the ID.3 to the United States, saying its first electric vehicle in the country will be an S.U.V. Germans who order an ID.3 now will receive their cars in October, Volkswagen said.

Chief executives of major American companies are bracing for prolonged pain as the pandemic keeps squeezing the economy.

Arne Sorenson of Marriott International said he was “less optimistic than I was 30 days ago.” Ed Bastian of Delta Air Lines said he was now taking a “more cautious view.” Julia Hartz of Eventbrite said she was expecting “one step forward, two steps back.”

As coronavirus cases spike in the South and West, many top executives believe that reopening plans will be disrupted and a return to normalcy will be difficult, especially amid high unemployment and the lack of a vaccine.

Executives from CVS and Chipotle have weighed in on how best to proceed, pushing for more mask-wearing and a boost in government aid in the form of expanded jobless benefits and small business support. “Getting this wrong — overreacting or acting irresponsibly — could be far more devastating to the global economy and the health of Americans,” said Jamie Dimon, the chief executive of JPMorgan Chase.

• Gap, the owner of its namesake chain, Old Navy, Banana Republic and Intermix, said it would require customers to wear masks in its North American stores. Ulta Beauty also said it would require masks starting on Monday, following similar announcements last week from major retailers like Walmart, Best Buy, Home Depot and Lowe’s. Gap said the policy would apply to everyone but small children or those who were exempt because of an underlying medical condition.

• The outdoor equipment co-op REI is facing a backlash over its handling of coronavirus cases among its employees. An employee at a store in Grand Rapids, Mich., told colleagues about testing positive on July 2 for Covid-19 — a result that managers did not acknowledge to workers until July 9, several days after the store had reopened. The employee described being asked to stay quiet about the positive test. REI changed its notification policy on Tuesday to allow managers to inform employees of known Covid-19 cases among their colleagues, after employees created an online petition accusing the co-op of prioritizing sales above workers.

• Ant Group, the financial affiliate of the e-commerce giant Alibaba, said Monday that it was planning an initial public offering in Hong Kong and Shanghai. Ant competes primarily with China’s other internet giant, Tencent, to provide payments and other financial services. The I.P.O. is expected to be big — the company was valued at $150 billion two years ago — and it offers a ray of light for Hong Kong, which has struggled under the dual uncertainties of the pandemic and a new national security law.

• Marks & Spencer, the British high-street retailer, said it would cut 950 jobs as the company speeds up a restructuring plan. The cuts will be in its head office and in stores. The company said on Monday that the accelerated plan, intended to squeeze three years of change into a single year, would make store managers more accountable for profits and losses and customer service.