Stock Market News: Live Updates Ahead of the Fed Meeting Today
Stock Market News: Live Updates Ahead of the Fed Meeting Today
U.S. stocks ticked higher and global markets were mixed on Wednesday as investors waded through a variety of corporate earnings reports while waiting for the U.S. Federal Reserve policymakers to announce the results of their meeting later in the day.
The S&P 500 was up nearly half a percent in early trading. European markets were led by France’s CAC 40, which was 0.7 percent higher by midmorning. Asian markets had a mostly positive day.
The yield on the U.S. 10-year Treasury note rose and oil futures gained, with Brent crude reaching $43.89 a barrel, up nearly 1.4 percent. Gold, which nearly reached $2,000 an ounce earlier this week, was flat, at $1,958.
Among the European companies reporting quarterly earnings on Wednesday were Deutsche Bank (down 1.9 percent despite a surge in trading revenue), Barclays (down 4.5 percent after a net loss that it attributed to the pandemic) and the luxury group Kering, the parent company of Gucci (which gained 4 percent after a smaller-than-expected drop in sales).
Later on Wednesday, the Fed will issue a statement marking the completion of its two-day meeting. The get-together is likely to yield little action — rates are already at near-zero — but it could provide a fresh read on how Fed officials are thinking about the economic outlook, and hints about their plans for the future.
Hong Kong’s Hang Seng Index gained 0.5 percent for the day, China’s Shanghai Composite jumped 2.1 percent and the Nikkei in Japan fell 1.2 percent.
In Hong Kong, after the markets closed, the government reported that the territory’s economy contracted 9 percent in the second quarter from a year ago, the fourth consecutive quarter of declines.
Boeing’s revenue plunged 25 percent in the second quarter compared to a year ago as it contended with ongoing fallout from the grounding of the 737 Max and the devastating aviation slowdown brought on by the coronavirus pandemic. The decline contributed to a quarterly loss of $2.4 billion.
“These past few months have been unlike anything we’ve seen,” Boeing’s president and chief executive, Dave Calhoun, said in a message to staff. “The pandemic’s effect on our communities and industry is ongoing. And the challenges we face as a company are still unfolding.”
The pandemic has dealt a lasting blow to Boeing’s airline customers. Delivery of commercial airplanes fell to 20 for the quarter from 90 a year earlier. Commercial revenue plummeted 65 percent to $1.6 billion. Boeing said its government, defense and space programs helped to offset the difficulties faced by its commercial business, which had contributed to a decision during the quarter to cut about 16,000 workers worldwide. In the message to employees on Wednesday, Mr. Calhoun warned that more cuts could come.
“The prolonged impact of COVID-19 causing further reductions in our production rates and lower demand for commercial services means we’ll have to further assess the size of our work force,” he said.
The report came a day after a global airline industry group, the International Air Transport Association, downgraded its forecast for when revenue will return to normal, blaming poor virus containment in the United States and other developing economies, a slow rebound for business travel, and low consumer confidence. Now, passenger traffic is not expected to return to last year’s levels until 2024, led first by domestic flights, it said.
Boeing on Wednesday also pushed back its timeline for ramping up production of the 737 family of planes, including the troubled 737 Max jet, which has been grounded since March 2019 following two fatal crashes. Boeing says it expects to reach a production rate of 31 of the 737 Max planes per month by the beginning of 2022. That is about half the rate Boeing had targeted before the Max was grounded.
The Max inched closer to flying again in recent weeks, after the Federal Aviation Administration concluded a series of test flights and said it was close to formally proposing changes that would address its safety concerns. As a result, the Max could start flying passengers again toward the end of the year or early next year, according to analysts.
Federal Reserve officials on Wednesday will conclude a two-day policy meeting that is likely to yield little action — rates are already at near-zero and are almost certain to stay there for an extended period — but could provide a fresh read on how policymakers are thinking about the economic outlook, and hints about their plans for the future.
On Tuesday the Fed extended its emergency lending programs through the end of 2020, a three-month addition that, while not surprising, signaled how lasting the economic damage from the coronavirus is proving.
The chair, Jerome H. Powell, who will hold a remote news conference at 2:30 p.m., is sure to field questions on the newly extended programs, which were introduced to try to keep markets functioning and credit flowing.
The Fed took unprecedented actions in March and April to provide a first line of defense for the economy as coronavirus cases swept the nation and shut down entire business sectors. Most of the nine programs were set to expire on or around the end of September, evidence that officials expected that normal conditions might return by fall.
That optimism has been upended by a surge in new infections, which has continued to depress economic activity. While state and local economies have reopened, many have had to roll back or delay their plans, and experts warn that the situation could take a turn for the worse if the virus takes hold more deeply.
Jeff Bezos of Amazon, Tim Cook of Apple, Mark Zuckerberg of Facebook and Sundar Pichai of Google are set to testify before Congress on Wednesday, starting at noon Eastern time, to make their case about why their companies actually are not that powerful.
The four will answer questions from House lawmakers who have been investigating their companies’ business practices for more than a year to examine if they stifle competition and harm consumers.
Here’s what The New York Times’s tech reporters are predicting at the hearing:
Mr. Bezos is likely to say that Amazon is actually quite small, arguing that e-commerce makes up about only 12 percent of all retail sales in the United States and that Walmart sells more than his company.
He’s likely to say Amazon’s third-party sellers are thriving, outpacing the growth of Amazon’s own sales directly to customers.
Mr. Cook is likely to argue that competition is alive and well in the App Store.
He’s also likely to argue that Apple is not a monopoly because it controls just 15 percent of the global smartphone market.
Mr. Zuckerberg is likely to point to TikTok, a Chinese-backed video app, as a sign that competition in social networking is thriving.
Mr. Zuckerberg will most likely point to the vast digital ads marketplace to argue that Facebook has no advertising monopoly.
Mr. Pichai is likely to argue that Google has plenty of internet-search competition and that its high market share is because people like its products.
Mr. Pichai is likely to argue that Google has helped drive down prices in advertising and increased choices for advertisers.
General Motors suffered a loss in the second quarter as the coronavirus pandemic took a heavy toll on its operations in most regions of the world.
The automaker lost $800 million as its second-quarter revenue was more than halved, to $16.8 billion compared with $36.1 billion in the same period a year ago. The company used $9 billion in cash during the quarter but still has $28.3 billon on hand.
In North America, which generates the bulk of G.M.’s profit, new vehicle deliveries fell 36 percent to 565,000 cars and light trucks. The pandemic forced the company to halt production in North America for two months, and depressed purchases of new vehicles by both consumers and fleet customers like rental-car companies.
Its smaller South American unit suffered an even harsher blow, as deliveries fell 65 percent in the quarter, to 57,000 vehicles. In China, where the virus outbreak has receded faster than in the United States, deliveries fell 5 percent.
The fallout of the global coronavirus pandemic has pulled Hong Kong’s economy further into decline over the past three months, with the Chinese territory on Wednesday reporting a 9 percent contraction.
Hong Kong has been dealt additional economic blows alongside the virus, including monthslong anti-government protests last year and a bruising trade war between China and the United States that has dampened trade in the city.
Wednesday’s disappointing economic data showed a slight easing from January when the government reported economic growth dropped by the most in more than four decades. Nevertheless, it marked the fourth quarter of economic decline for the global financial hub battered by protests and a public health crisis that has weighed on consumer spending, tourism and trade.
The news comes as the city is dealing with another lockdown more severe than those in the past, as health authorities struggle to contain and trace new virus cases. It also stands in contrast to positive economic news from mainland China, where heavy infrastructure spending helped to pull the world’s second biggest economy out of its first contraction in nearly a half-century. Earlier this month, China reported its economy expanded by 3.2 percent over the three months ending June.
On Thursday morning, when the Commerce Department announces the nation’s second-quarter economic output, the data is likely to reflect the biggest decline in the 70-plus years that such statistics have been compiled. But you may see two widely different numbers.
Forecasters expect the report to show that gross domestic product — the broadest measure of goods and services produced — fell at an annual rate of about 35 percent. That doesn’t mean, however, that the economy shrank by more than a third in a mere three months.
The United States has traditionally reported the figure as an annual rate — that is, how much the economy would grow or shrink if the change were sustained for a full year. But when annual rates are applied to short-term changes, the results can be misleading.
For that reason, The New York Times plans to emphasize the nonannualized percentage change in its coverage. And on that basis, if the forecasters are on target, the G.D.P. should be about 10 percent lower in the second quarter than in the first.
Here are some of the big stories from Tuesday:
Universal Pictures and AMC Entertainment, the No. 1 movie chain in the world, reached a deal to allow movies to move to homes after a mere three weeks in theaters in the United States, almost certainly changing the way that Hollywood does business.
L Brands, the owner of Victoria’s Secret and Bath & Body Works, said that it would lay off 850 associates at its headquarters in Columbus, Ohio, or 15 percent of staff there, as it works to separate the brands into two stand-alone companies and manage sales drops tied to the coronavirus outbreak.
The Trump administration said that it would extend a $765 million loan to Eastman Kodak Company to begin producing critical pharmaceutical components, in an effort to allay American dependence on foreign countries for essential medicines.
Global same-store sales at Starbucks plunged 40 percent in the three months that ended in June from the same period last year because of store closures, shortened operating hours and fewer customers in the wake of the coronavirus pandemic.
Fraudsters may have obtained hundreds of millions of dollars in loans from a disaster loan program meant to help small businesses devastated by the coronavirus pandemic, the Small Business Administration’s internal watchdog said.
Big retailers have made strong statements recently about their new rules requiring customers to wear face masks when shopping, saying that the health of their workers and customers is paramount.
But when it comes to enforcing those mandates, the companies are taking a decidedly hands-off approach, writes Michael Corkery:
Walmart has told employees that they should not prevent a customer from entering the store if they refuse to wear a mask. Walgreens said that “for the safety of our team members” the company would not bar customers without masks from its stores. Lowes also said it would “not ask our associates to put their safety at risk by confronting customers about wearing masks.”
Many shoppers and workers say the retailers’ reluctance to police their customers’ mask wearing ultimately renders the new rules toothless and will perpetuate the spread of the coronavirus. And workers find themselves thrust onto the front line of a cultural and political war over masks that can lead to ugly confrontations and, at times, violence.
Last weekend, two episodes stood out: In one, a video of an altercation involving two shoppers in Walmart wearing masks with a Nazi swastika went viral, while a man was arrested after an incident in a Walmart in Palm Beach County, Fla., in which he pulled a gun on another shopper who had asked him to put on his mask.
Some shoppers say the retailers are taking the easy way out by announcing mask policies that are not true mandates. But retailers are likely on solid legal ground if they decline service to someone refusing to wear a mask, especially if they offer alternative ways for customers to shop, such as home delivery and curbside pickup.
Deutsche Bank, Germany’s largest lender, reported a small but better-than-expected profit Wednesday as it cashed in on market turbulence caused by the pandemic.
The bank said its net profit during the second quarter of the year was 61 million euros, or $72 million, compared to a loss of more than 3 billion euros a year earlier. Like other big banks, Deutsche Bank recorded a surge in trading fees as clients frantically adjusted their portfolios in response to the pandemic.
Deutsche Bank, based in Frankfurt, has been paring back its investment banking but remains a force in currency trading and bond markets. Sales in the unit that handles those activities surged 40 percent to more than 2 billion euros, helping to offset a nearly fivefold increase in the amount that Deutsche Bank had to set aside to cover problem loans.
Among other banks issuing earnings reports, Barclays reported a smaller-than-expected profit and said it would increase its reserve for bad loans by 1.6 billion pounds ($2.1 billion). And Santander fell to the first loss in its 163-year history after a big write-down on its assets.