Stocks Rise and Earnings Season Begins: Live Markets Updates – The New York Times

U.S. stocks climb as investors look for signs of recovery.

Stocks on Wall Street rose on Tuesday, following global markets higher after China reported a smaller-than-expected hit to trade and some countries began to take tiny steps to reopen their economies.

The S&P 500 rose about 3 percent, with shares of companies that have been hard hit by the coronavirus-related shutdowns — like airlines, cruise companies and casino operators — all faring well.

Stocks have been slowly climbing their way out of a slump that had wiped trillions of value from financial markets in late February and early March, as investors have begun to look for signs of the eventual recovery from the outbreak. In parts of Europe, a small-scale return to normalcy has begun: Spain allowed some construction work to resume and a few factories to reopen on Monday, and Austria and Italy followed with a gradual easing of restrictions that allowed some shops to reopen.

Stocks were also helped on Tuesday by March trade data from Chinese customs officials that was better than expected. But the optimism may not linger, as China’s reopening could be a long and painful process, worsened by slumping demand for its goods in countries dealing with the coronavirus outbreak.

Technology stocks stood out for a second day on Tuesday, with Amazon extending a rally that has lifted its share by nearly 12 percent this week — to a record high — as the online retailer continues to face a surge in demand from consumers who are staying home. The company said on Monday that it was hiring another 75,000 workers to keep up with demand.

But investors will be tested by a slew of corporate earnings results due out starting this week. On Tuesday, shares of big banks fell after JPMorgan Chase and Wells Fargo both announced that they were taking substantial provisions for coming loan losses. JPMorgan dropped about 3 percent, while Wells Fargo was down by about 4 percent, and Citigroup was down about 3 percent.

Energy stocks also fell, following crude oil futures lower.

Oil prices slide, falling briefly below $20 a barrel.

Only two days after Saudi Arabia, Russia and other major oil producers agreed to the biggest production cut in history, crude prices tumbled on Tuesday by as much as 10 percent in an early sign that the deal will not do to balance supply and demand.

The American oil price benchmark, West Texas Intermediate, fell briefly below $20 a barrel, a level it has rarely been at in the last three decades, before settling at $20.11, down 10 percent for the day. The global Brent benchmark fell by a more moderate 7 percent to break just below $30 a barrel.

Prices are far below what most oil companies need to drill new wells profitably. Many producers are shutting down rigs and laying off workers.

The agreement between members of the Organization of the Petroleum Exporting Countries and its allies — a group known as OPEC Plus — calls for production to drop by 9.7 million barrels a day for two months beginning May 1, and more modest cuts after that until early 2022. But the coronavirus pandemic and the world’s response to it has slashed global oil demand by up to 35 million barrels a day, or roughly one-third.

The agreement reached Sunday by the more than 20 members of OPEC Plus came after President Trump pushed Saudi and Russian leaders to reach a deal. Mr. Trump, who has previously cheered low oil prices, has recently sought to prop up prices to help cushion the ailing American oil industry, which is responsible directly and indirectly for 10 million jobs.

Oil prices have fallen by roughly 60 percent since the beginning of the year.

Airports are getting bailout funds as travel is halted.

The Transportation Department said on Tuesday that it had awarded about $10 billion in grants to airports from the recently passed federal bailout — funds that are meant to support operations and replace revenue lost from the near-halting of air travel in March.

The number of people screened at airport security checkpoints fell to just under 150,000 from nearly 2.3 million over the month, according to Transportation Security Administration data.

Georgia’s Hartsfield-Jackson Atlanta International Airport received $339 million, more than any other airport. Los Angeles International Airport was second with $324 million, followed by Dallas-Fort Worth International Airport, with $299 million.

All told, 22 airports received more than $100 million, including all three in the New York area. The Airports Council International – North America, an industry group, said last week that its members could lose as much as $23 billion as a result of the pandemic.

The I.M.F. predicts the worst downturn since the Great Depression.

The International Monetary Fund issued a stark warning about economic damage from the coronavirus, saying on Tuesday that the global economy faces its worst downturn since the Great Depression as shuttered factories, quarantines and national lockdowns cause economic output around the world to collapse.

In its World Economic Outlook, the I.M.F. projected that the global economy would contract by 3 percent in 2020, an extraordinary reversal from earlier this year, when the fund forecast that the world economy would outpace 2019 and grow by 3.3 percent. This year’s fall in output would be far more severe than the last recession, when the world economy contracted by less than 1 percent from 2008 to 2009. A 3 percent decline in global output would be the worst since the Great Depression, the I.M.F. said.

“As countries implement necessary quarantines and social distancing practices to contain the pandemic, the world has been put in a Great Lockdown,” said Gita Gopinath, chief economist of the I.M.F. “The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes.”

Ms. Gopinath said that the loss of global output would be “far worse” than the 2008 financial crisis and that policymakers are facing an unusual predicament in that traditional stimulus measures are little match for a pandemic that is being fought with shutdowns and quarantines.

If the pandemic persists into the second half of the year, the contraction could be twice as severe and the expected rebound in 2021 could fail to materialize if additional waves of the virus spread later in the year. Over the next two years, the pandemic could shave $9 trillion from global G.D.P.

Tentatively, the fund projects growth to rebound to 5.8 percent next year.

In 2020, the I.M.F. projects that the U.S. economy will contract by 5.9 percent. In Europe, it will shrink by 7.5 percent, led by steep declines in Italy and Spain.

Emerging markets and developing economies will not be spared, but in some cases they fare better. In China, where the virus originated and where draconian measures were imposed to combat it, growth is forecast to slow to a rate of 1.2 percent this year.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said the economic damage was not likely to be erased quickly, particularly if people continue to be worried about contracting the virus.

“We know after the Great Depression people carried the scars of that experience with them for many, many years,” Mr. Kashkari said in an interview on the “Today” show. “I think the longer that this goes on, the more people who are affected by it, the longer that recovery is going to be.”

The Group of 7 finance ministers and central bankers, who were supposed to meet in Philadelphia this week, held a virtual meeting on Tuesday to assess the global economic crisis.

In a joint statement following the meeting, they pledged to coordinate their efforts to restore economic growth, protect jobs and reinforce the global financial system. They noted that the I.M.F. was prepared to deploy its $1 trillion lending capacity to help vulnerable economies cope with recessions.

JPMorgan’s profit dives as it sets aside reserves for coming losses on loans.

JPMorgan Chase, the largest U.S. bank, revealed on Tuesday that its net income for the first three months of 2020 fell by 69 percent as it set aside $6.8 billion to protect from future losses. But the bank’s Wall Street trading business was roaring.

Net income for the first three months of 2020 dropped to $2.9 billion from $9.2 billion in the same quarter a year earlier.

The bank said it added $6.8 billion to its reserves, in anticipation of the economic slowdown caused by the coronavirus pandemic and falling oil prices.

The volume of its deposits grew as worried investors sold complex holdings and converted them to cash. There were some bright spots: Revenue in the bank’s markets division reached $7.4 billion, a record.

Revenue from trading of foreign currencies, bonds and government debt rose by 34 percent compared with a year ago. Stock trading revenue was 28 percent higher.

The bank’s chief executive, Jamie Dimon, said in a call with reporters that JPMorgan’s corporate customers took cash out of their revolving credit lines at twice the rate they had during the 2008 financial crisis. “People got scared,” Mr. Dimon said.

Other companies also released quarterly earnings reports:

• Wells Fargo reported a steep drop in profit to $653 million, or 1 cent per share, from $5.9 billion, $1.20 per share, for the same period a year ago. Part of the hit came from the bank setting aside $3.1 billion to deal with bad loans, a reserve that the bank’s chief financial officer, John Shrewsberry, said “ reflected the expected impact these unprecedented times could have on our customers.” Revenue also missed estimates.

• Johnson & Johnson reported higher-than-expected results, and raised its dividend. But the company warned that its full-year profit would be lower than it had earlier projected.

As the coronavirus upends economic life around the world, small towns are particularly vulnerable.

For Bristol, a lakeside town of 3,300 residents in New Hampshire, the economic destruction has come quickly. By the end of March, gift shops, yoga studios and restaurants had all shut their doors. Hundreds lost jobs, contributing to a record surge in national unemployment claims.

Now one of Bristol’s biggest employers, a factory owned by the German conglomerate Freudenberg, has shut down its production of bonded piston seals and laid off 100 people, more than a quarter of its work force.

As the coronavirus upends economic life around the world, small towns like Bristol are particularly vulnerable. Freudenberg is its lone large employer. There are just a few national chains — a Dunkin’, a Rite Aid and a Dollar General. And many of the small locally owned businesses depend on seasonal residents, who flock to Newfound Lake during the summer, doubling the town’s population for a few months.

“If this goes on too long, we won’t survive,” said Brad Tonner, who runs a gift shop called TwinDesigns with his twin brother, Jim. “This is going to kill small-town America.”

Boeing booked 31 new orders for aircraft in March, but its customers canceled 150 orders for the troubled 737 Max jet, the company said on Tuesday. The cancellations, half of which were placed by a single customer, the aircraft leasing company Avolon, come as airlines around the world slash costs in a fight to survive.

“The airline industry is confronting the Covid-19 pandemic and the unprecedented impacts on air travel,” Boeing said in a statement. “We are working closely with our customers, many of whom are facing significant financial pressures, to review their fleet plans and make adjustments where appropriate.”

Boeing was already under pressure after two deadly crashes killed a total of 346 people and grounded its entire Max fleet. As a result, the company has been engaged in a delicate discussion with federal officials to secure a financial lifeline that does not include conditions that it finds too onerous.

All told, Boeing’s order backlog shrank to 5,049 in March, from 5,351. In the first quarter, the company received 49 new orders and 196 cancellations.

Democrats call for tougher financial regulation.

Two House Democrats want to include legislation in an upcoming economic rescue package that would tighten financial regulations and reinforce some of the provisions of the 2010 Dodd-Frank Act, arguing that the recent volatility in the markets is a sign that more oversight is needed.

Representatives Katie Porter, Democrat of California, and Jesús García, Democrat of Illinois, will introduce the Systemic Risk Mitigation Act on Tuesday.

The bill would bolster the Financial Stability Oversight Council and the Office of Financial Research, two bodies that are overseen by the Treasury Department and that have been allowed to languish in terms of funding, staffing and influence by Steven Mnuchin, the Treasury secretary.

The Trump administration has been quietly chipping away at financial regulations over the last three years, and the bill would reverse some of those efforts.

It would place more stringent requirements on shadow banks, the loosely regulated nonbank lenders that take riskier bets, by automatically designating some of them “systemically important” and subjecting them to stronger capital requirements and stress tests.

It would give the oversight council the power to make rules to address risky activity. And it would create a subcommittee that would address climate risks.

Catch up: Here’s what else is happening.

• China’s exports were down 6.6 percent in dollar terms in March compared with a year ago, the General Administration of Customs announced on Tuesday. That was considerably better than the 15.7 percent drop forecast by economists surveyed at Chinese and foreign institutions by Caixin, a Chinese news organization. In another promising sign, China’s imports fell 0.9 percent in March from a year earlier, much better than a forecast by economists for a drop of 10.2 percent.

• Global airline revenue is expected to fall by $314 billion this year, a 55 percent decline from last year’s revenue, according to the International Air Transport Association. Some of those losses could be attributed to a broad economic recession, but the travel restrictions imposed by governments around the world have had a much greater toll on the industry, the group said.

Reporting was contributed by Vindu Goel, Emily Flitter, Alan Rappeport, Niraj Chokshi, Keith Bradsher, Kate Conger, David Gelles, Elizabeth Paton, Jason Karaian, Clifford Krauss, Peter Eavis, Matt Phillips, David Waldstein, Mohammed Hadi, Katie Robertson, Carlos Tejada and Daniel Victor.