Stocks rebound from last week’s decline as oil prices rally.
Many of the world’s economies have begun to loosen restrictions on commerce, the Federal Reserve chair on Sunday signaled that the central bank has more firepower to lend to recovery efforts, and a drugmaker reported positive developments in an early trial of a coronavirus vaccine.
Taken together, the developments triggered a surge in global stock prices and other financial markets. The S&P 500 rose more than 2 percent in early trading, recouping last week’s losses. Stocks in Europe were 3 percent to 4 percent higher.
The rally had already begun before the drugmaker Moderna said its coronavirus vaccine showed promising early results in tests on humans. The early-stage tests were on just eight people, but the hope that a vaccine might be quickly developed was enough to lift stock prices even further. Moderna’s stock was up 15 percent in early trading.
Also bolstering markets was a pledge from Jerome H. Powell, the Fed chair, that there was “really no limit” to what the central bank could do with its emergency lending facilities.
“The one thing I can absolutely guarantee is that the Federal Reserve will be doing everything we can to support the people we serve,” Mr. Powell said during a television interview broadcast on Sunday.
Still, Monday’s trading had all the characteristics of a rally focused on the prospects for a return to normal. Travel stocks, like United Airlines, Expedia Group and Marriott International, were among the best performers in the S&P 500 — rising as much as 10 percent.
Reflecting optimism about the economy, oil prices were higher, with West Texas Intermediate, the U.S. standard crude, rising above $30 a barrel for the first time since March, and government bond prices fell.
Investors were looking for silver linings as the world grapples with lockdowns and other restrictions. Japan released economic figures on Monday that showed the world’s No. 3 economy formally fell into recession, but Tokyo has begun easing some of its containment efforts. Some restrictions have also been lifted in parts of Europe and the United States.
Last week, the S&P 500 had its sharpest weekly drop since late March, a 2.2 percent retreat that stood out after a long stretch in which stock investors seemed willing to look past the deeply negative outlook for the economy and the uncertain path of the pandemic.
A congressional oversight panel lays out its questions about the $2 trillion stimulus rollout.
In its first monthly review of how emergency bailout funds are being used, the Congressional Oversight Commission outlined the questions it plans to address about how the Federal Reserve and Treasury Department are administering the $500 billion program.
The money, which was allocated as part of the $2 trillion CARES Act, is being used to provide grants and loans to airlines and companies that are vital to national security and to backstop lending programs designed by the Fed.
The programs are just getting up and running. The report says that Treasury has yet to disburse the $46 billion in grant and loan money to airlines or businesses critical to national security.
Thus far, it has only used $37.5 billion for the Fed’s Secondary Market Corporate Credit Facility, which purchases outstanding corporate bonds through a special purpose vehicle. The Fed’s other facilities, which are intended to keep credit flowing to businesses and state and local governments, are expected to be operational in the coming weeks, though the timeline remains highly uncertain.
The bipartisan commission comprises two Republicans — Senator Patrick J. Toomey of Pennsylvania and Representative French Hill of Arkansas and two Democrats — Bharat Ramamurti, a former aide to Senator Elizabeth Warren, and Representative Donna Shalala of Florida.
The commission questioned how the Fed and Treasury will measure the success of the programs. Signaling its areas of concern, it questioned if the Fed facilities will favor large companies over smaller ones and if the agencies believe that the loan money will help stabilize the economy regardless of how it is used.
The next report is due in late June.
Minority business owners are still waiting for paycheck relief, a survey finds.
Black and Latino business owners are struggling to get government assistance under the Paycheck Protection Program, a new survey has found, and many say they are on the brink of closing permanently.
The survey, conducted by the Global Strategy Group for two equal-rights organizations, Color of Change and UnidosUS, included interviews with 500 business owners and 1,200 workers from April 30 to May 11. Just 12 percent of the owners who applied for government-backed loans in the $650 billion program reported receiving what they had asked for, and nearly half of all owners said they anticipated having to permanently close in the next six months.
By comparison, in a survey of small businesses by the Census Bureau from April 26 to May 2, three-quarters said they had asked for a loan and 38 percent of them said they had received one.
Here’s the business news to watch this week.
🛍 It’s a big week for retail earnings, with Walmart and Kohl’s reporting on Tuesday, Target and Marks & Spencer on Wednesday, and Best Buy and TJX on Thursday. Amazon set a high bar a few weeks ago, reporting a 26 percent jump in first-quarter sales.
🏛 The Fed chairman, Jay Powell, and the Treasury secretary, Steven Mnuchin, are to testify on Tuesday at a virtual hearing of the Senate Banking Committee, giving updates on coronavirus stimulus measures.
🤷♀️ What’s next for L Brands? The parent of Bath & Body Works unexpectedly walked away from a deal this month to sell a majority stake in Victoria’s Secret. It will face questions about its Plan B on its earnings call on Wednesday.
🏘 During lockdowns, people are doing more repairs, remodeling and intense cleaning than before; Home Depot and Lowe’s quantify the impact of that in their latest earnings on Tuesday and Wednesday, respectively. Moving is tricky these days, and data on housing starts (Tuesday) and existing home sales (Wednesday) are expected to show steep declines for April.
🇨🇳 The National People’s Congress gets underway in Beijing on Friday, two months later than expected. Responding to the pandemic and rebutting criticism of China’s initial response is expected to dominate the proceedings. In corporate news, the Chinese e-commerce behemoth Alibaba is to report its latest earnings on the same day.
SoftBank Group on Monday reported the largest annual loss in its history and one of the largest ever by a Japanese company.
The dismal results were driven largely by SoftBank’s investment in WeWork and other technology-related companies that have been hit hard by the coronavirus pandemic. Earlier, SoftBank announced that Jack Ma, the co-founder of the Chinese e-commerce giant Alibaba, had resigned from its board.
In the earnings release, the company announced an annual operating loss of 1.36 trillion yen, or $12.7 billion, in the fiscal year that ended March 31, its first annual loss in 15 years. It reported a profit of $19.6 billion during the same period last year.
The company’s losses were slightly higher than its estimates, and the Vision Fund reported a loss of $17.7 billion. It attributed the blow to the coronavirus’s impact on major companies in its portfolio like Uber, the ride-share company, and WeWork.
Japan fell into a recession for the first time since 2015, as its already weakened economy was dragged down by the coronavirus’s impact on businesses at home and abroad.
The world’s third-largest economy after the United States and China shrank by an annualized rate of 3.4 percent in the first three months of the year, the country’s government said on Monday.
That makes it the largest economy to officially enter a recession, often defined as two consecutive quarters of negative growth, in the coronavirus era. Other major economies around the world are set to follow, joining Japan as well as Germany and France in recession, as efforts to contain the outbreak ripple around the globe. The experiences of China, where the outbreak first emerged in December and January, suggest recovery will be long and difficult.
Jerome H. Powell, the Federal Reserve chair, said on Sunday that the United States would have a slow recovery from what he called the “biggest shock that the economy’s had in living memory,” suggesting that a full rebound from virus-induced lockdowns could take until the end of 2021.
In an interview on CBS’s “60 Minutes,” Mr. Powell reiterated that both Congress and the central bank may need to do more to help workers and businesses make it through the sudden and sharp slump caused by efforts to contain the coronavirus.
“This economy will recover; it may take a while,” Mr. Powell said. “It may take a period of time, it could stretch through the end of next year, we really don’t know.”
The Fed has rushed to insulate the economy as coronavirus lockdowns caused business activity to come to near standstill, leaving more than 20 million people jobless. But it remains an open question whether the central bank’s actions will be sufficient if it takes a long time for the economy to fully reopen, leaving businesses short on income for an extended period and increasing the risk that many will close.
Apple plans to reopen several stores this week in the United States, Canada and Italy, another sign of the gradual return to business across the world.
In March, Apple closed more than 450 of its stores — nearly every location outside of China — to combat the spread of the coronavirus. The company recently started to reopen shops in South Korea, Australia and Austria.
Now Apple is planning to add another 25 stores in the United States, 12 in Canada and 10 in Italy to its list of reopenings this week. The American stores are in California, Florida, Oklahoma, Hawaii, Colorado and Washington state, though some stores in those states will remain closed. Likewise, Apple is keeping 17 stores in Canada and seven stores in Italy closed.
Apple has set limits on the number of people inside its stores and requires social distancing. Apple Store employees are checking the temperatures of their colleagues and customers at the door and requiring everyone to wear face masks.
Executives of J.C. Penney received a bankruptcy judge’s approval on Saturday to spend up to $500 million while they try to save the company.
A day earlier, the 118-year-old department store chain, which was an anchor of America’s once-thriving shopping malls but is now drowning in debt, became the third major retail chain to file for bankruptcy protection this month, following J. Crew and the Neiman Marcus Group. It is the biggest corporate casualty of the coronavirus crisis so far, with more than 800 stores and nearly 85,000 employees.
The filing was expected after J.C. Penney failed to make an interest payment on its debt in April to “maximize financial flexibility,” and then skipped another payment earlier this month. The stock of the chain, which is based in Plano, Texas, has traded below $1 a share for most of this year. Its sales have steadily shrunk to $10.7 billion for the year ending Feb. 1, when it posted a net loss of $268 million.
After a court hearing Saturday held by telephone, David R. Jones, a bankruptcy judge in Corpus Christi, Texas, ruled that J.C. Penney executives could continue paying employees who have not been furloughed, as well as key vendors it needs to keep operating.
The company hopes to survive by closing stores and shedding several billion dollars in debt, but its fate remains highly uncertain. Jill Soltau, the chief executive, said in a statement that executives planned to “hit the ground running on Monday.” The judge scheduled another hearing for June 2.
Catch up: Here’s what else is happening.
The chief executive of Hertz, the century-old car rental company now at risk of bankruptcy, has resigned, the company said Monday. The company’s fate may be decided this week: It has until Friday to come up with a plan to pay back its lenders and continue to meet its ongoing financial obligations.
Consumer spending on video games, hardware and accessories surged to a record $10.86 billion in the first quarter of 2020, an increase of 9 percent compared with the same period last year, according to data from the NPD Group. Millions of Americans sought distractions while being ordered to shelter in place. Games such as Animal Crossing: New Horizons, Call of Duty: Modern Warfare and Doom Eternal were top titles, and the Nintendo Switch console was a strong seller.
Reporting was contributed by Niraj Chokshi, Mike Isaac, Sheera Frenkel, Cecilia Kang, Ben Dooley, Carlos Tejada, Jack Nicas, Jeanna Smialek, Sapna Maheshwari, Jason Karaian, Michael Corkery, Matt Phillips, Emily Flitter, Katie Robertson and Gregory Schmidt.