July 14, 2020, 4:19 p.m. ET
Boeing customers canceled orders for 60 737 Max jets last month, the latest blow for a plane that has been grounded since March 2019 following a pair of fatal crashes. Most of the cancellations were from companies that buy planes and lease them to airlines. Boeing also received one new order, from FedEx, for a 767 freighter.
“We continue to closely monitor the commercial marketplace by staying very engaged with our customers around the globe to fully understand short term and long term requirements,” Greg Smith, Boeing’s chief financial officer, said in a statement.
Boeing has lost 323 orders for various planes this year, after accounting for new orders and cancellations. The company removed another 461 orders from its backlog, under stricter accounting methods adopted in 2018 that consider a customer’s financial health and their ability to negotiate or walk away from contracts.
Including that adjustment, Boeing’s order backlog stood at 4,552 at the end of June, down from 5,406 at the start of the year.
The Trump administration, which mistakenly sent $1.4 billion of stimulus money to dead people, has begun canceling checks that were delivered to the deceased.
The Internal Revenue Service said in an update on its website that such checks should still be returned to the federal government but that it was taking action to ensure they cannot be cashed.
“The Bureau of Fiscal Services has canceled outstanding Economic Impact Payment (EIP) checks issued to recipients who may not be eligible, including those who may be deceased,” the I.R.S. said.
A Government Accountability Office report released last month found that about $1.4 billion of the $270 billion of direct stimulus payments went to the deceased. Lawyers at the I.R.S. had initially determined that they could not legally deny payments to people who filed their tax returns in 2018 or 2019, even if they had since died. In the rush to get the money out the door, the Treasury Department and the I.R.S. did not consult death records.
It is not clear whether the I.R.S. is taking any legal action against heirs who already cashed or deposited money that was sent to their deceased relatives.
The payments were for up to $1,200 per person. Congress and the White House are planning to begin deliberations on another round of stimulus payments and deciding who — among the living — should be eligible.
Stocks on Wall Street rose on Tuesday, after another volatile day in which the major benchmarks swung between gains and losses as investors assessed the tightening of restrictions on businesses and a fresh batch of corporate earnings reports.
The S&P 500 rose more than 1 percent after recouping its early losses. Energy stocks were among the best performers in the index, as crude oil prices also reversed an early decline. Noble Energy rose 10 percent, while Halliburton rose about 5 percent.
Stocks have been pushed and pulled by changing narratives about the coronavirus pandemic and its impact on the economy. On Monday, an early rally had turned into a loss as California’s governor ordered the closure of indoor operations for a host of businesses.
Traders also now have to contend with earnings reports from corporate America, which in many cases are the first chance many companies have had to detail the impact of the pandemic on corporate profits.
On Tuesday, JPMorgan reported that its earnings had halved in the second quarter, while Wells Fargo had its first quarterly loss since 2008, and Delta Air Lines said revenue plunged by 88 percent. JPMorgan’s shares rose slightly, while those of Wells Fargo and Delta fell.
Stocks in Europe were mostly lower, in part after data released by Britain Tuesday showed that the economy grew by only 1.8 percent in May, far less than the 5.5 percent widely predicted. The government’s independent budget review office said Britain was on track for “the largest decline in annual G.D.P. for 300 years.”
Lael Brainard, a Federal Reserve governor, warned that a second wave of coronavirus could imperil the economy and markets once again, even though financial conditions have calmed since the wild days of March and the labor market has begun to mend.
“A broad second wave could reignite financial market volatility and market disruptions at a time of greater vulnerability,” Ms. Brainard said, speaking to the National Association for Business Economics. And in any case, “the strength of the recovery will depend importantly on the timing, magnitude and distribution of additional fiscal support.”
Ms. Brainard, who was nominated by President Barack Obama, made clear that she thought the central bank’s emergency lending programs should be intended for a broad range of businesses.
“It remains vitally important to make our emergency credit facilities as broadly accessible as we can in order to avoid the costly insolvencies of otherwise viable employers and the associated hardship from permanent layoffs,” she said.
That comment bears on a debate that has been taking place behind the scenes at the Fed and the Treasury Department. The Treasury pledges congressionally appropriated money to protect the Fed’s credit programs against losses, and Treasury Secretary Steven Mnuchin and his staff weigh in on their design.
Some Fed officials have been eager to create programs that allow a lot of businesses to take advantage of the funding, but Mr. Mnuchin has been more cautious.
Ms. Brainard warned that a “wave” of business failures was possible, which is why it is important that Fed facilities stand ready to help.
“Already this year, we have seen about $800 billion in downgrades of investment grade debt and $55 billion in corporate defaults — a faster pace than in the initial months of the global financial crisis,” she said.
Wells Fargo on Tuesday reported its first quarterly loss since 2008, losing $2.4 billion as the pandemic’s economic shocks ravaged nearly every line of its business.
In a sign of more trouble ahead, the bank added $8.4 billion to its reserve for loan losses, more than twice what it set aside last quarter. It said it would, for the first time since the Great Recession, cut its dividend this quarter, dropping its payments to investors to 10 cents a share, down from the 51 cents it has paid for the last few quarters.
Charles W. Scharf, the bank’s chief executive, said he was “extremely disappointed” with the bank’s performance.
“While the negative impact of the pandemic is unprecedented and many of our business drivers were negatively impacted, our franchise should perform better,” he said in a statement. “We will make changes to improve our performance regardless of the operating environment.”
The bank’s revenue for its second quarter, which ended June 30, dropped to $17.8 billion, down nearly 18 percent from a year ago. Last year, it earned $6.2 billion during the quarter.
Wells Fargo is bracing for coming losses on its commercial loans, especially in real estate, where it set aside $6.4 billion. Consumer loans, especially mortgages, are also flashing warning lights; the bank added $2 billion to cover anticipated losses there.
Revenue at Delta Air Lines declined by 88 percent in the second quarter compared to a year earlier, reflecting what its chief executive described as the “truly staggering” toll the coronavirus pandemic has had on the aviation industry. That decline contributed to a $5.7 billion quarterly loss, compared to last year’s $1.4 billion profit.
“Given the combined effects of the pandemic and associated financial impact on the global economy, we continue to believe that it will be more than two years before we see a sustainable recovery,” Ed Bastian, Delta’s chief executive officer, said in a statement.
The airline has seen “a small, but welcome” increase in passengers since April, driven by domestic travel, Mr. Bastian said on an conference call with financial analysts. But that growth stalled in recent weeks as infections rose across the country and some states and cities like New York and Chicago required some travelers to quarantine themselves, he said.
Delta has scaled back its flight schedule for August and expects revenues between July and September to be down 75 percent to 80 percent compared with the previous year. Business travel, which accounts for half of the airline’s revenues, has yet to meaningfully recover.
The airline also said it ended the quarter with $15.7 billion in cash on hand, enough to help it survive another 19 months even if it can’t stem its current losses. By the end of June, Delta was losing $27 million per day, down from $100 million per day during the depths of the crisis. It is aiming to stop that daily bleeding altogether by year’s end.
The company’s quarterly losses were driven by a 93 percent decline in passengers, though they included a more than $2 billion write-down associated with investments in a trio of troubled foreign carriers: Latam Airlines Group, Grupo Aeroméxico and Virgin Atlantic.
More than 45,000 employees have taken temporary voluntary unpaid leave. Last week, United Airlines said it could furlough as many as 36,000 workers when federal stimulus funding for payroll runs out at the end of September.
Delta has not yet detailed what impact the expiration of funds may have, though it did warn nearly 2,600 pilots last week that they could be furloughed. More than 17,000 employees have volunteered to take early retirement or buyout packages, so far, and the airline hopes enough will sign up to eliminate the need for furloughs, Mr. Bastian said.
JPMorgan Chase on Tuesday revealed that it had earned $4.7 billion during the months of April, May and June, just under half of what it earned during the same period a year ago, as it diverted billions of dollars to a reserve fund in order to prepare for a potential economic shock.
Despite the drop in earnings, another number suggested a boom time. While businesses and many regular services in vast swaths of the United States were closed to try to stem the coronavirus pandemic, JPMorgan brought in the largest quarterly revenue haul in its history: nearly $34 billion, compared to just over $29 billion in the second quarter of 2019. The increase was driven by a surge in its Wall Street businesses, including trading in stocks, bonds and other financial market instruments, where a record haul of $16 billion in JPMorgan’s Corporate & Investment Bank division represented a 66 percent increase from last year.
The bank added nearly $11 billion to the pool of money it keeps ready to cover any losses, $9 billion more than last year. Of that, almost $6 billion was designated to handle losses on loans to consumers, including credit cards.
Citigroup said Tuesday that its quarterly profit fell 73 percent as it set aside $5.6 billion to cover future loan losses triggered by the widespread unemployment caused by the pandemic.
The bank also reported net credit losses of $2.2 billion, a 12 percent increase from last year, resulting from individuals and businesses that have already defaulted on loans during the crisis, bringing the Citi’s total credit cost in the second quarter to $7.9 billion.
As the third largest credit issuer in the United States, Citigroup is particularly vulnerable to increases in credit card delinquencies, which tend to dovetail with a rise in unemployment. The bank said it had offered forbearance on two million credit card accounts representing 6 percent of balances so far.
Net income fell to $1.3 billion in the second quarter of 2020 from $4.8 billion a year earlier. Revenue rose 5 percent to $19.77 billion as the pace of trading activity rose.
“While credit costs weighed down our net income, our overall business performance was strong during the quarter, and we have been able to navigate the COVID-19 pandemic reasonably well,” Michael L. Corbat, Citigroup’s chief executive, said in a statement.
Banks have shouldered the burden of processing applications and distributing funds for the federal government’s massive aid effort, the Paycheck Protection Program, which gave small businesses potentially forgivable loans to help them stay afloat during the virus crisis. Citibank saw an 18 percent surge in deposits during the second quarter to $1.23 trillion as a result of cash infusions associated with federal aid programs.
Nearly every day for the past four months, Eddie Quezada has followed the same routine. When he returns home from his job managing the produce section at a Stop & Shop store on Long Island, he strips off his clothes on the porch and immediately deposits them in the wash. The coronavirus, which infected Mr. Quezada and several co-workers, still feels like an ever-present threat.
But this month, Stop & Shop ended a 10 percent pay raise that it had been providing to Mr. Quezada and about 56,000 other employees since the start of the pandemic as an acknowledgment that their work was essential and appreciated.
“What we are doing is still very risky,” said Mr. Quezada, 49. “We should get at least something for that.”
Stop & Shop is the latest retailer to end raises that it gave out during the height of the pandemic, when grocery and pharmacy workers became celebrated alongside health care workers for their courage and commitment in showing up to work each day. Amazon, Kroger and Albertsons have also quietly ended pandemic hourly pay raises, though some companies continue to give out bonuses. ShopRite said it planned to end its $2-an-hour raise early next month.
Many of the retailers said the extra hourly pay — which some referred to as “hero pay” — was meant to reward employees while they worked through months of wildly surging sales. But lately, there is less reason for the large raises, the companies said, because the panic-buying has ebbed.
In many ways, the job of the essential retail worker has become more difficult since the start of the health crisis. Employees are now taking on new roles like having to remind both customers and colleagues to wear masks inside stores, which has led to heated and even violent confrontations.
In March, the Advertising Council, a nonprofit organization that creates public service announcements about social issues, was days away from introducing a campaign with the White House about work force training when the economy locked down. The ads finally debuted on Tuesday, retooled to address the pandemic’s devastating effect on jobs.
With more than 18 million workers receiving jobless benefits in late June, the effort focuses on education and certification resources that can be found online. The campaign, created with partners like Apple and IBM, was originally called “Choose Something New,” meant as an inspirational message to people looking to change career paths. It became “Find Something New,” focusing on those struggling to find work during a national emergency.
“The tone of the campaign really needed to shift to be more urgent and actionable,” said Michelle Hillman, the chief campaign development officer at Ad Council. “We needed to really understand the landscape of what was happening.”
More companies are cautiously venturing back into marketing as states try to reopen. After several months focusing on health-related messaging, Ad Council recently revisited the work force campaign, which now includes rewritten copy and workers filmed at a distance using iPhones.
The campaign will run in space donated by television networks like Fox and NBC, digital platforms like Facebook and Snap and in print publications and on billboards. Viewers will be directed to resources at FindSomethingNew.org.
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Best Buy, the electronics retailer with about 1,000 locations in the United States, said on Tuesday that it planned to require customers to wear face coverings in its stores starting Wednesday. The company said that it would provide masks to customers who did not have one, and would make exceptions for small children and people who could not wear masks for health reasons, according to a blog post. Customers who do not want to wear a mask will be asked to shop online or through curbside pickup, the company said.