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Wall Street added to its string of gains.
Stocks on Tuesday mostly shrugged off increasingly chaotic scenes throughout the United States, as protesters and the police faced off across the country and President Trump threatened to use the military to quell widespread unrest precipitated by the death of George Floyd, a black man in Minneapolis, at the hands of the police last week.
The S&P 500 rose 0.8 percent, its sixth gain in the last seven sessions. Energy, financial and industrial shares were some of the largest gainers, suggesting that investors were focusing on tentative signs of economic stabilization instead of the potential impact of the protests.
Over the past week, thousands have been arrested, including nearly 500 people in the Twin Cities, more than 2,000 in Los Angeles and more than 1,200 in New York. And mayors of multiple cities have cited damage in the millions of dollars, adding another challenge to an economy that is already in deep distress because of the coronavirus outbreak.
But so far, investors have added the unrest to the list of other issues that they are willing to overlook. Despite a pandemic that has claimed more than 100,000 American lives, and the worst economic downturn since the Great Depression of the 1930s, the stock market has roared higher since late March, largely on the back of the creation of trillions of new dollars by the Federal Reserve, which have been pumped into the financial system.
“We’re dealing with a market that seems to lack self-awareness,” said Yousef Abbasi, global market strategist at INTL FCStone, a financial services and brokerage firm. “There are several underappreciated risks: U.S.-China relations, political risks, Covid second wave.”
Since March 23, when the Federal Reserve signaled its willingness to do whatever it took to stabilize financial markets that were in disarray because of the crisis, the S&P has soared more than 37 percent. It is now less than 10 percent below its pre-pandemic high.
Yields on government bonds rose, also reflecting a more optimistic view on the economy in the long term, and financial stocks followed.
Bond yields form the basis for the interest rates banks charge on loans, so increases in such yields can help bolster profits for financial firms. Credit card issuers, including Synchrony Financial, Discover Financial and Capital One, were some of the best performers.
With oil prices also higher on Tuesday, shares of energy companies like Chevron and Halliburton were higher. Also climbing were petrochemical companies — sensitive to prices for petroleum — such as Dow and LyondellBasell. Both companies are part of the materials sector, which was one of the best performing parts of the S&P 500.
Office towers are still going up, but who will fill them?
Before the pandemic shut down businesses, a robust economy had powered a building boom, sending office towers skyward in urban areas across the United States. The coronavirus outbreak, though, has scrambled plans and sent jitters through the real estate industry.
Skyscrapers scheduled to open this year will remake skylines in cities like Milwaukee, Nashville and Salt Lake City. Office vacancy rates, following a decade-long trend, had shrunk to 9.7 percent at the end of the third quarter of 2019, compared with 13 percent in the third quarter of 2010, according to Deloitte.
Developers were confident that the demand would remain strong. But the pandemic darkened the picture.
“There is a pause occurring as companies more broadly consider their real estate needs,” said Jim Berry, Deloitte’s U.S. real estate sector leader.
If the economic pain drags on, there could be long-lasting changes to the way people work and how tenants want offices to be reimagined, said Joseph L. Pagliari Jr., clinical professor of real estate at the University of Chicago’s Booth School of Business.
Macy’s takes another hit as it looked to reopen its stores.
In the end, the damage to the store may have been limited. But images of looters smashing windows and running through Macy’s flagship location in Herald Square was another symbolic hit to the already badly battered retailer.
The Macy’s in Herald Square looms larger perhaps than any other store in New York, not only for the company, which draws a significant amount of its brand identity and revenue from the building, which it has occupied since 1902, but also for the broader retail industry.
“Macy’s Herald Square transcends that one company,” said Stuart Appelbaum, the president of the Retail, Wholesale and Department Store Union, which represents the store’s workers. “For a lot of people, it represents all of retail itself.”
Macy’s, which employs about 123,000 people nationwide, has seen its sales plummet as a result of the coronavirus pandemic and has been racing to reopen stores as quickly as it can. The retailer reported preliminary first-quarter net sales of roughly $3 billion last month, a 45 percent drop from last year, and an operating loss of as much as $1.1 billion. The company has delayed its formal first-quarter earnings to July 1 because of the disruptions from the pandemic.
The union had recently negotiated a plan with the company to reopen the store with precautions to prevent the virus from spreading, including a requirement that all customers wear masks before being allowed to shop inside. But Mr. Appelbaum said there had been no date set and it was too early to say whether any of the damage would cause additional delays.
Amazon offers temporary care benefits to employees during the pandemic.
With summer camps canceled and schools closed, Amazon said it would offer up to 10 days of subsidized emergency child and elder care to its 650,000 employees in the United States, a move that would support employees and keep them showing up for work as the company adjusts to the demands of the pandemic. The benefit will end in early October.
The benefit, administered through Care.com, covers warehouse and Whole Foods workers as well as its corporate staff. Employees will pay $25 per day for child care at a day care facility or $5 per hour for child or adult care at their home. Subsidizing the program will cost “several million dollars,” the company said in a blog post announcing the benefit.
“We’ve heard from our employees that access to affordable family care, for both children and adults, is particularly challenging during the COVID crisis,” Beth Galetti, who runs human resources at Amazon, said in the announcement.
Last year, a group of mothers at Amazon pushed the company to offer backup care benefits, which many technology companies have long offered as a way to support women in their careers. Because of Amazon’s vast fulfillment operations, it employs far more people than its tech peers. Amazon’s corporate staff have the same benefits as its full-time warehouse workers.
Who will ride public transit again, and when?
New York City faces a dilemma: Encouraging people to return to mass transit could increase the risk of new infections. But the region’s roads, tunnels and bridges cannot handle a surge in car traffic, and there are few alternatives.
The Metropolitan Transportation Authority, which oversees most public transit in the region, said on Friday that it would be rolling out a plan to lure riders back, including ramping up service to reduce congestion, deploying the police to enforce mask usage and stationing workers across the subway to report overcrowding.
Transit officials are also urging the city to mandate that major companies create flexible start times and extend work-from-home plans to help ease crowding as businesses reopen.
Still, New York officials’ efforts to restore confidence in public transportation were dealt a blow when the Centers for Disease Control and Prevention unexpectedly released guidelines on Thursday that urged people to drive to work alone, rather than take public transportation, as states reopen.
“Transit is, and has long been, the safest way to move around any city,” said Patrick J. Foye, chairman of the M.T.A. “Our transit and bus system is cleaner and safer than it has been in history, as we clean and disinfect around the clock.”
In May, nearly half of New Yorkers said they would avoid public transportation when the city comes back to life, according to a survey conducted by Elucd, a data research company, and Industrious, a workplace operator.
In the United States, the No. 1 predictor of whether people are comfortable going back to work is whether they would take public transportation, according to Elucd.
Airlines say it’s safe to travel. But is it?
Airlines and airports around the world are doing everything they can to instill confidence that it is safe to fly again, despite the coronavirus pandemic.
Airlines are requiring face masks for passengers and staff, imposing new aircraft cleaning procedures, using social distancing to board flights, blocking middle seats on planes and, in one case, even prohibiting passengers from lining up to use plane bathrooms.
As to the airports, they are screening passengers’ temperatures through high- and low-tech means; using biometric screening to speed check-in, security and customs and immigration processes; and using autonomous robots to clean terminal floors.
But none of it is consistent. And it’s unclear whether the measures are enough.
“So much is uncertain right now,” said Henry Harteveldt, founder of Atmosphere Research Group, a San Francisco travel analysis firm. “Do airports and airlines need to invest in something long-term that will be permanent, like airport security, or are these short-term, tactical responses?”
Dr. Joshua Schiffer, an infectious disease physician at the Fred Hutchinson Cancer Research Center in Seattle, said, “It’s next to impossible to have complete confidence you won’t get infected” on flights. But he added that he hoped that airlines would provide travelers “publicly available information on what the projected risk would be to a certain destination, so you could choose your airline based on the quality of this information.”
The hit to the U.S. economy could last for a decade.
The Congressional Budget Office projected on Monday that the coronavirus pandemic could cost the United States economy $16 trillion over the next 10 years. When adjusting for inflation, the pandemic is projected to cause a $7.9 trillion, or 3 percent, loss in “real” G.D.P. through 2030.
The projections reflect the steep long-term toll that the pandemic is likely to take on the economy, which could experience dampened consumer spending and business investment in the years ahead. Much of the diminished output is projected to be the result of weaker inflation, as prices for energy and transportation increase more slowly than they otherwise would have as Americans pull back on travel.
Phillip L. Swagel, the director of the budget office, acknowledged that “an unusually high degree of uncertainty surrounds these economic projections” because of what remains unknown about the pandemic’s trajectory, as well as the impact of social distancing and the legislation enacted by the federal government.
“If future federal policies differ from those underlying C.B.O.’s economic projections — for example, if lawmakers enact additional pandemic-related legislation — then economic outcomes will necessarily differ from those presented here,” Mr. Swagel wrote in a letter to Senators Chuck Schumer of New York, the minority leader, and Bernie Sanders, the Vermont independent. The two senators had asked the budget office on Wednesday to examine the impact of the pandemic and the shuttering of local economies to combat the spread of the virus as lawmakers look to negotiate another round of economic aid.
In a joint statement following the release of the report, Mr. Schumer and Mr. Sanders said the estimate undercut Republican arguments that Congress should wait to approve another relief package, as well as President Trump’s call to include a tax cut in the next measure.
“In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency to make sure that everyone in America has the income they need to feed their families and put a roof over their heads,” the two senators said. “The American people cannot afford to wait another month for the Senate to pass legislation. They need our help now.”
Catch up: Here’s what else is happening.
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Toyota Motor said it sold 165,000 cars in May, a 26 percent decline from a year ago. But the total was higher than its revised sales target, which called for May sales of 125,000 cars and light trucks. “Retail is recovering quicker than anticipated,” the automaker said in a statement.
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Lyft told investors that its business was beginning to recover from a steep downturn caused by the coronavirus pandemic. The ride-hailing company said in a regulatory filing that rides on its platform had increased 26 percent in May from the previous month. Despite the modest recovery, rides were still down 70 percent when compared with the same month a year ago, Lyft said. It added that it expected to lose no more than $325 million in the second quarter of the year.
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Zoom, the videoconferencing company that has surged in popularity during the pandemic, said on Tuesday that its revenue soared to $328.2 million in the quarter that ended April 30, a 169 percent jump over the same period last year. Zoom said it had about 265,400 customers with more than 10 employees at the end of the quarter, a year-over-year increase of 354 percent. “The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom,” said Eric S. Yuan, the founder and chief executive of Zoom.
Reporting was contributed by Kevin Williams, Neal E. Boudette, Kate Conger, Gregory Schmidt, Karen Weise, Matt Phillips, Alexandra Alter, Jane L. Levere, Emily Flitter, Sapna Maheshwari and Michael Corkery.
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