Here’s what you need to know:
- U.S. job losses keep mounting, and many of the unemployed can’t get benefits.
- Wall Street braces for report on joblessness amid concern of slow recovery.
- Energy agency sees a steadying in the oil markets.
- The pandemic ruined Tesla’s momentum, and Elon Musk is livid.
- Powell’s warning on the economy spooked investors.
U.S. job losses keep mounting, and many of the unemployed can’t get benefits.
The Labor Department is expected to say Thursday that 2.5 million people filed new unemployment claims last week, according to a consensus of Wall Street analysts. Although the weekly tally of new claims has been declining since late March, the latest count is likely to push the eight-week total above 35 million.
Roughly one in four people who had jobs in February were unemployed by the end of April, the economists Alexander Bick of Arizona State University and Adam Blandin of Virginia Commonwealth University said in a report released Tuesday.
State unemployment insurance and emergency federal relief were supposed to tide households over during the shutdown. But several states have a backlog of claims, and applicants continue to complain of being unable to reach overloaded state agencies.
More than half of those applying for unemployment benefits in recent weeks have been unsuccessful, according to a poll for The New York Times in early May by the online research firm SurveyMonkey.
And 13 states have yet to fully put in place the Pandemic Unemployment Assistance program that Congress passed in March to help freelancers, self-employed individuals and other workers not normally eligible for state jobless benefits.
In states where workers have been able to apply for pandemic assistance, many got caught in what Roberta Reardon, the New York State labor commissioner, called a “federal glue trap” — an initially cumbersome application process. To New Yorkers still waiting, Ms. Reardon said, “I promise we will get you and make you whole.”
Wall Street braces for report on joblessness amid concern of slow recovery.
U.S. stock futures and global markets fell on Thursday amid more signs that the global recovery from the coronavirus pandemic will be slow and painful.
Wall Street was set to open slightly lower a day after stocks dropped more than 2 percent on comments from Jerome H. Powell, the Federal Reserve chairman, who said the economic hit could be substantial if American policymakers did not do more to support the economy.
The U.S. government is set Thursday to release its weekly report on the number of workers seeking jobless benefits. Economists expect another 2.5 million new unemployment claims, which would bring the total over the past two months above 35 million.
European stocks were about 2 percent lower Thursday after a similarly dismal day in Asia.
Markets reacted in part to a combative-sounding tweet from President Trump mentioning the temporary truce that Washington and Beijing struck in January to halt their nearly two-year trade war.
Prices for U.S. Treasury bonds, which tend to rise when investors are skittish, were mostly higher. Oil prices were slightly higher on futures markets, on the day when the International Energy Agency reported a steadying in the oil markets.
Energy agency sees a steadying in the oil markets.
Fatih Birol, the chief of the International Energy Agency, said on Thursday that he saw “signs of a gradual rebalancing” in the oil market that has been ravaged by the coronavirus pandemic, but that the process of bringing supply in line with demand was still “fragile.”
Mr. Birol, discussing the agency’s monthly report, said that this year would most likely prove to be “the worst” in history for the oil market, with April probably the worst month.
Global demand for oil fell in April to about 25 percent below its normal level, the agency said, but is expected to slowly recover as more countries ease lockdown measures. The agency estimated that by the end of May, 2.8 billion people would be living under “some form of confinement,” down from a peak of four billion people.
At the same time, oil producers are making deeper and more rapid supply cuts than some analysts had expected. The agency forecast that demand may substantially outpace supply in the second half of this year, working off some of the massive glut that has built up.
Oil prices have recovered in recent days with Brent crude, the international benchmark, trading around $30 a barrel, well above its low of about $19 a barrel in late April but still down more than 50 percent for the year. The American standard, West Texas Intermediate, which briefly fell into negative prices, is trading about $26 a barrel.
Mr. Birol praised Saudi Arabia’s recent decision to cut an additional one million barrels a day beyond an agreement made on April 12, when OPEC members, Russia and other major producers agreed to 9.7 million barrels a day in cuts. The United Arab Emirates and Kuwait have also said they will chip in with modest trims.
The pandemic ruined Tesla’s momentum, and Elon Musk is livid.
A few months ago, everything seemed to be going Elon Musk’s way.
After a turbulent start to 2019, Tesla, the electric car company he co-founded, had reported profits two quarters in a row and its stock was surging. Mr. Musk claimed vindication by defeating a defamation lawsuit and was staying out of trouble on Twitter. Tesla was on a tear.
But the coronavirus set Mr. Musk off. His dreams of dominating the car industry were put on hold when Alameda County, Calif., forced Tesla’s Fremont plant, which brings in most of the company’s revenue, to shut down in late March.
That frustrated Mr. Musk, who had long dismissed the seriousness of the coronavirus — promoting unproven research, suggesting that Covid-19 deaths were overstated and predicting that there would be zero new cases in the United States by the end of April. (There were almost 32,000.)
His anger boiled over last week, as he threatened to move the factory out of California and sued the county in federal court, Niraj Choksi reports. This week, Mr. Musk officially reopened the plant, to the frustration of some workers and county officials who had been negotiating a reopening plan with Tesla for weeks.
As the plant reopened, Mr. Musk thanked employees for making “the factory come back to life.”
“I have vastly more respect for someone who takes pride in doing a good job,” he said in an email, “whatever the profession, than some rich or famous person who does nothing useful.”
Powell’s warning on the economy spooked investors.
The Federal Reserve chair, Jerome H. Powell, delivered a stark warning on Wednesday that the United States was experiencing a blow that could permanently damage the economy if Congress and the White House did not provide sufficient financial support to prevent a wave of bankruptcies and prolonged joblessness.
In Washington, discussions of additional rescue measures have run aground, with Democrats proposing sweeping new programs and Republicans voicing concerns over the swelling federal budget deficit, which is projected to hit $3.7 trillion this year.
President Trump and his economic advisers have pressed the pause button on negotiations for additional spending, waiting to see how much the economy rebounds as states begin lifting restrictions on business activity.
“Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” Mr. Powell said at a Peterson Institute for International Economics event.
The comments, which were the latest, and perhaps most influential, negative note investors have heard this week, triggered a nearly 2 percent drop in the S&P 500 on Wednesday. On Tuesday, the nation’s top infectious disease expert, Dr. Anthony S. Fauci, warned that a too-rapid reopening of large parts of the American economy could risk a difficult-to-control resurgence of Covid-19.
The market had been steadily climbing since late March, when the Federal Reserve signaled that it was ready to purchase unlimited bonds to stabilize key financial markets and President Trump signed a $2 trillion economic rescue package.
That rally, however, may have taken some of the pressure off lawmakers.
“There is an inverse correlation between stock prices and the desire from Congress to provide additional stimulus,” said William Delwiche, an investment strategist at Baird, a financial firm based in Milwaukee.
China gets its ‘OK Boomer’ moment over the nation’s future.
A commercial extolling Chinese youth, showed online and on state-run television, provoked an immediate nationwide backlash in the country, writes The New York Times columnist Li Yuan.
The clash playing out across the Chinese internet over the past week amounts to a debate about the future of the world’s other superpower — specifically, for the minds and the souls of China’s younger generation. These tensions have been simmering for a long time, but the coronavirus outbreak — and the Chinese government’s propaganda campaign to play down its initial missteps — have brought those tensions to the fore.
Today’s youth is too brainwashed, too nationalistic and too eager to snitch on professors and other public figures who don’t toe the Communist Party line, said prominent members of China’s “boomer” generation, who remember a time when the country seemed more open and accepting.
Many of the younger generation looked at the images on the commercial of affluent, happy young people and didn’t recognize themselves. China’s biggest boom years are over, many think. China’s older generation, having amassed all the money and power, is simply trying to co-opt them with flattery.
Sony shares are down after the pandemic hits its electronics business hard.
Shares of the Japanese electronics and entertainment giant Sony closed nearly 4 percent lower on Thursday following its announcement the day before that its operating profits could fall by 30 percent or more in the current fiscal year.
The coronavirus has hit Sony’s electronics business hard, while giving a boost to some of its entertainment offerings, as people stuck at home seek to keep themselves busy.
But the strength of the company’s film and music properties was not enough to offset the damage the pandemic has wrought: The company recorded a 57 percent drop in operating profits to 35.4 billion yen in the three months ending in March, Sony said in its annual earnings report released on Wednesday.
Annual operating profit fell 5 percent to 845.5 billion yen from the previous year, it said.
Some of the company’s new movie and music releases have been pushed back because of the pandemic, and ticket sales are down as theaters remain closed. The damage has been offset by increased streaming, the company said, with revenues from its music and pictures segments growing year on year in the three-month period that ended in March.
J.C. Penney could file for bankruptcy as soon as Friday.
J.C. Penney, the department-store chain that was founded in 1902, might file for bankruptcy as soon as Friday after skipping two interest payments on its debt in the past month, according to two people familiar with the matter.
The company is in talks to secure about $450 million in debtor-in-possession financing, which would allow it to keep operating the business, according to the people, who spoke on condition of anonymity because discussions were confidential. The company declined to comment.
The people said that the filing date could change, and that the amount of financing was still being negotiated. It would follow last week’s bankruptcy filing from the Neiman Marcus Group, as department stores struggle to navigate their businesses through the coronavirus pandemic.
J. Crew also filed for bankruptcy last week. A filing from J.C. Penney, however, would be the biggest bankruptcy yet during the pandemic, based on its number of locations and workers. The retailer, which is based in Plano, Texas, has 846 stores in the United States and Puerto Rico and 90,000 employees.
J.C. Penney skipped a $12 million interest payment due last month, saying at the time that it was a “strategic decision” in order to take advantage of a 30-day grace period before it was considered in default. The deadline for that would be Friday. The chain also skipped a $17 million interest payment due on May 7, with a grace period of five business days. The deadline to make that payment also appears to be Friday.
Reporting was contributed by Stanley Reed, Niraj Chokshi, Li Yuan, Ben Dooley, Carlos Tejada, Jeanna Smialek, Jim Tankersely, Matt Phillips, Sapna Maheshwari, Michael J. de la Merced and Kevin Granville.
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