SoftBank Faces a $17 Billion Hit and Stocks Dip: Live Updates – The New York Times

Stocks on Wall Street dip as investors regroup after last week’s surge.

U.S. stocks slipped on Monday as investors weighed the implications of a new oil deal between major petroleum-producing nations, and awaited the release of earnings reports from corporate America.

The S&P 500 was down more than 1 percent in early trading. Asian markets also fell, led by a 2.3 percent decline in Japan. Major European markets were closed for the Easter holiday.

Monday’s drop came after the S&P 500 had one of its best weeks in decades. The index rallied more than 12 percent last week, as investors took heart in signs of progress in the fight against the coronavirus. Also boosting the market was the announcement of expansive new measures by the Federal Reserve to help ensure companies and governments can access credit markets.

But the recent optimism will be tested in the coming weeks as big companies report earnings for the first three months of the year and discuss the outlook for their businesses on conference calls with analysts. What corporate executives say could provide important insights about the economy.

Among those reporting earnings this week are the country’s six largest banks, as well as Johnson & Johnson, Bed Bath & Beyond and Schlumberger, which provides services to oil and gas companies.

The banks, which include JPMorgan Chase, Bank of America and Goldman Sachs, play a crucial economic role, but their importance is heightened now. Any sign that the banks are reducing lending significantly would suggest that the coronavirus shock is feeding on itself and could lead to a prolonged recession. In addition, the federal government is relying on banks to deliver much of its financial support to businesses. Senior executives on earnings calls are likely to discuss how such efforts are going.

Analysts at Goldman Sachs forecast that earnings of companies in the S&P 500 will decline by 33 percent this year, but then surge by more than 50 percent in 2021.

Investors on Monday were also parsing the implications of the oil production deal between members of the Organization of Petroleum Exporting Countries and other major countries to trim output to put a floor on fuel prices. Low oil prices are generally good for the world economy, but the disruptions to the energy industry and to countries that depend on selling petroleum have unnerved investors.

On Monday, oil futures were slightly higher in the wake of the deal announcement, and trading in major oil producers, like Exxon and Chevron, was mixed.

SoftBank warned investors on Monday that the value of its tech fund may have dropped by as much as $16.7 billion over the last fiscal year, a surprise announcement that came as the coronavirus rocked a portfolio already weakened by losses on big bets like WeWork.

SoftBank has used its $100 billion purse to make huge wagers on companies, like WeWork and Uber, that it believed could fundamentally remake industries, drive out competitors and generate gigantic profits.

But in a statement posted to its website, SoftBank said it anticipated that the fund would record a loss of 1.8 trillion yen for the fiscal year that ended in March “due to the deteriorating market environment.”

The loss will be partially offset by revenue from Softbank’s other businesses, with the company saying it expects to end the year 1.35 trillion yen in the red — its first annual loss in 15 years.

While the coronavirus has been devastating for many firms, Softbank’s investments in tech companies that provide services like ridesharing and hotel booking have made it particularly vulnerable to the economic disruptions caused by the pandemic.

It has been a tough year for SoftBank, which has seen a number of its flagship investments go sour. In October, the company pledged almost $10 billion to bail out WeWork after its highly anticipated initial public offering fell apart over allegations of mismanagement. In March, Softbank’s bet on satellite start-up OneWeb went bad when the company announced it had filed for bankruptcy and planned to sell itself.

SoftBank said last month that it would sell down $41 billion dollars of its assets to shore up its cash position and finance an $18 billion investment in its own shares.

Smithfield Foods said Sunday that its Sioux Falls, S.D., plant, one of the nation’s largest pork processing facilities, would remain shut indefinitely after a number of employees were infected with coronavirus.

It came after Gov. Kristi Noem of South Dakota said on Saturday that nearly 240 workers at the plant had tested positive for the virus — about half of the state’s total number of cases.

Many meat processing facilities have been hit hard by the virus. Three workers have died at a Tyson Foods poultry plant in Camilla, Ga. Tyson also shut a pork plant in Iowa after an outbreak there among workers. JBS USA, the world’s largest meat processor, confirmed the death of one worker at a Colorado facility and shuttered a plant in Pennsylvania for two weeks.

In a statement announcing the closure, Smithfield’s chief executive warned that the closures are threatening the U.S. meat supply. The shuttered plant produces about 4 percent to 5 percent of the country’s pork, Smithfield said.

One day after oil-producing nations agreed to the largest-ever production cut, the reaction in oil markets on Monday was largely muted. Although prices briefly jumped at the start of trading, they eventually lost their gains.

Brent crude, the international benchmark was unchanged at $31.47 a barrel, while West Texas Intermediate, the main U.S. marker, was up 1 percent to $22.98 a barrel.

As large as the cut is — 9.7 million barrels a day, beginning in May, reflecting about 10 percent of global output during normal times — many traders and analysts have said it is insufficient and too late to avoid a huge glut of supplies in the current quarter.

There is also skepticism about the degree to which a wide range of countries will comply to the deal. Mexico’s success in reducing its proposed share of the overall cut from 400,000 to 100,000 barrels a day may well be repeated by other countries, some analysts said.

“It’s simply too late to prevent a superlarge inventory build of over one billion barrels,” wrote analysts from Citigroup in a note to clients on Sunday.

Still, the agreement marked an unprecedented coordinated effort by Russia, Saudi Arabia and the United States to stabilize oil prices and, indirectly, global financial markets. It will head off the huge production increases that Saudi Arabia and its allies were planning for earlier this month and, over time, is expected to help reduce inventories.

Saudi Arabia and Russia typically take the lead in setting global production goals. But President Trump — facing a re-election campaign, a plunging economy and American oil companies struggling with collapsing prices — took the unusual step of getting involved after the two countries entered a price war a month ago. Mr. Trump had made an agreement a top priority.

Analysts expect oil prices, which soared above $100 a barrel only six years ago, to remain below $40 for the foreseeable future.

“This is at least a temporary relief for the energy industry and for the global economy,” said Per Magnus Nysveen, head of analysis for Rystad Energy, a Norwegian consultancy. “The industry is too big to be let to fail.”

Airlines have canceled a staggering number of flights, but thousands still take off every day, leaving many of the people needed to keep them running to reckon with whether to continue working and how to stay safe if they do.

For Molly Choma, a flight attendant for Alaska Airlines, those remaining flights provided a financial cushion. After the pandemic halted the photography business she has nurtured on the side, she took on flights from colleagues who could not, or would not, staff them.

Already, hundreds of flight attendants and pilots have fallen ill and at least five have died from the coronavirus, according to to the labor unions that represent them.

Though the industry secured $25 billion from the federal government to pay employees through September, the future remains bleak. It took several years for passenger volume to rebound after the terrorist attacks in 2001, a shock less severe than the current crisis, which is seen by many as the worst in the history of aviation.

The uncertain future of the industry factored into Ms. Choma’s decision to keep doing what she has done since she became a flight attendant right out of college 11 years ago.

“I don’t know if it’s stupid or crazy, but I just feel like I’m supposed to be here doing this work, taking these five or 10 people where they need to go,” she said. “It’s like a guttural, instinctive reaction that this is what I’m supposed to be doing right now.”

Ever since the coronavirus pandemic forced thousands of traders, sales representatives, analysts, bankers and risk managers out of their workplaces and into their homes, the foot soldiers of finance have been making do with technology that’s far more ordinary than many of them are used to.

Two computer screens instead of four. Slower wireless connections. Plain old cellphones — missed calls and all — instead of a specialized telephone known as a “turret.” Instant messaging and video conferencing replacing quick bursts of conversation across a floor.

The individual inconveniences are relatively minor but together, they have had a noticeable impact on the functioning of markets, according to traders, investors and regulators. The rapid-fire, split-second nature of global trading has slowed slightly because communicating decisions takes longer. And that, in turn, has added a layer of unexpected friction to already volatile markets.

Companies invest heavily in technology and have elaborate setups meant to simplify communication between trading desks, analysts and clients. Milliseconds make a difference in this environment, because prices can change swiftly.

Troy Rohrbaugh, the head of global markets at JPMorgan Chase recalled how, one day in mid-March, when the market was swinging wildly, a large client needed to sell a significant chunk of bonds. Mr. Rohrbaugh, who was in his office at the bank’s Midtown headquarters, stepped onto the trading floor to confer with a couple of traders and a salesman.

“We were done and dusted and shelling a price to a client in two minutes, three minutes,” he said. “Can you imagine that conversation taking 30 minutes or longer in markets that are moving as rapidly as they are now?” He continues to work from the office despite a recent outbreak of the coronavirus there.

Here is a ghastly effect of the pandemic: After weeks of concern about shortages in grocery stores, and scenes of food banks overrun by millions of unemployed and hungry Americans, farmers are liquidating their crops because big institutional buyers, like schools and hotels, have closed.

In Wisconsin and Ohio, farmers are dumping thousands of gallons of fresh milk into lagoons and manure pits. An Idaho farmer has dug huge ditches to bury one million pounds of onions. And in South Florida, tractors are crisscrossing bean and cabbage fields, plowing perfectly ripe vegetables back into the soil.

“It’s heartbreaking,” said Paul Allen, a co-owner of R.C. Hatton Farms, who has had to destroy millions of pounds of beans and cabbage in South Florida and Georgia.

Some farms have tried to donate crops to food banks and other charitable groups, but there is only so much perishable inventory that these organizations can absorb, with their limited numbers of refrigerators and volunteers. And many farms, already hurting financially, cannot take on the storage and transportation costs.

Farms are not well set up to sell into retail stores. The machines used by dairy processors, for example, are designed to package shredded cheese into large bags for restaurants, or put milk in small cartons for schools. Updating that equipment to make supermarket-friendly bags of cheese would require millions in capital.

Exporting much of the excess food is not feasible either, farmers say, because many international customers are also struggling through the pandemic and recent currency fluctuations make exports unprofitable.

Catch up: Here’s what else you need to know.

• Ford Motor said on Monday it expects to report a loss of $600 million before interest and tax in the first quarter as its wholesales of vehicles fell by 21 percent compared to a year earlier. The company reported a profit of $2.4 billion before interest and tax in the first quarter of 2019.

• Amazon said it will hire another 75,000 workers, after it already added 100,000 new employees over the past month, the company said in a blog post Monday. Amazon also said on Sunday that it has also put some restrictions on its grocery pickup and delivery service, but that it still expects that finding available delivery windows will be “challenging for customers.”

• After slashing the majority of its trips domestically and abroad, United Airlines said it would add a few international routes next month. The carrier plans to start daily service on May 4 on three routes: Chicago to London, Newark to Amsterdam and Washington to Frankfurt. It also plans to offer three flights a week between Washington and Buenos Aires starting on May 5.

Reporting was contributed by Ben Dooley, Stanley Reed, Niraj Chokshi, Edmund Lee, Vanessa Friedman, David Yaffe-Bellany, Vikas Bajaj, Michael Corkery, Matt Phillips, Clifford Krauss, Katie Robertson and Carlos Tejada.