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Wall Street enters the second half of 2020 on uncertain footing.
Stocks inched higher on Wednesday as investors started a new quarter on a cautious note, balancing tentative signs of economic resilience and a steady climb in coronavirus cases in the United States.
The S&P 500 rose half a percent, while gains in technology stocks led the Nasdaq composite to a record.
Giving stocks a push on Wednesday was news that a Covid-19 vaccine developed by Pfizer and the German biotech firm BioNTech was found to be well tolerated in early-stage human trials. Shares of Pfizer rose abut 3 percent.
But shares of automakers Ford Motor and General Motors fell after they both reported a sharp decline in sales in the second quarter. One standout was the electric-car maker Tesla, which rose 3.7 percent to become the world’s most valuable automaker, surpassing Toyota Motor‘s $202 billion valuation.
Markets on Tuesday completed a topsy-turvy first half of 2020. Over the course of six months, stocks on Wall Street experienced their biggest quarter-to-quarter swing in more than 80 years, propelled by the global pandemic and economic shutdowns, followed by extra big helpings of fiscal stimulus by central banks.
In the three months that just ended, the S&P 500 rose 20 percent, the best calendar quarter for the broad market index since 1998.
What’s ahead is anyone’s call. In the United States, the world’s largest economy, more than 48,000 coronavirus cases were announced on Tuesday, the most of any day of the pandemic. Dr. Anthony S. Fauci, the United States’ top infectious disease expert, said that the virus’s march across states in the South and the West “puts the entire country at risk.”
Lawmakers continue to look for ways to respond to the crisis, and the Senate on Tuesday agreed to extend the application period for a relief program for small businesses, granting five additional weeks for the remaining money left in the program to be spent. The program still has about $130 billion available.
But economists continue to warn that the path ahead will not be as predictable as many investors seem to hope.
“I would hesitate to call this a recovery, because ultimately the virus will determine the pace at which we can go,” Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said at an event hosted by The Washington Post on Wednesday. “A V-shaped recovery is certainly not something that I think is happening.”
There’s so much uncertainty about the coronavirus crisis that roughly 40 percent of the S&P 500, about 200 companies, have withdrawn their customary forecasts about how their businesses will perform in the months ahead, according to data from S&P Capital IQ.
The companies’ silence has unnerved analysts, who have already cut their expectations for profit growth substantially. They’re now expecting that second-quarter profits will fall more than 40 percent, according to numbers compiled by the data provider FactSet.
— Matt Phillips and Jeanna Smialek
The Fed wants to provide clarity on its policy plans, meeting minutes show.
Some businesses will not make it through the pandemic-spurred economic crisis. Consumer spending will not fully bounce back even into next year. And there is a serious chance of a double-dip downturn that could permanently scar the American labor force.
Those are some of the major points from the minutes released Wednesday of the Federal Reserve’s two-day meeting in which officials and central bank staff paint a bleak picture of what lies ahead for the American economy.
In the time since that gathering, held June 9 and 10, officials — including Jerome H. Powell, the Federal Reserve chair — have stressed that the economic outlook is deeply uncertain and have warned that containing the virus pandemic will be crucial to a recovery. But the minutes offer a glimpse into the concerns that occupied the Fed’s full slate of policymakers, 17 in all, when they last met.
The officials cited “extraordinary” uncertainty and “considerable risks” to the outlook. A number saw “substantial likelihood” of additional waves of virus outbreaks, with the potential to cause a drawn-out period of economic weakness. And they were concerned that government support could end too early or prove too small to handle the crisis at hand.
“Among the other sources of risk noted by participants were that fiscal support for households, businesses, and state and local governments might prove to be insufficient,” the minutes state. — Jeanna Smialek
McDonald’s will delay reopening its dining rooms as coronavirus cases rise.
McDonald’s is pausing its plans to resume dine-in service at thousands of locations across the United States amid a surge in coronavirus infections.
The pause, announced on Wednesday, will last for three weeks. Dining rooms are already open at about 2,200 McDonald’s restaurants, out of about 14,000 locations nationwide, and may remain open if local rules allow, the company said in a note to U.S. franchisees and employees.
“This surge shows nobody is exempt from this virus — even places that previously had very few cases,” McDonald’s president, Joe Erlinger, and Mark Salebra, the head of a group representing several thousand franchisees, wrote in the letter. “Moving forward, we will continue to monitor the situation and adjust as needed to protect the safety of our employees and customers.”
The pair said that given the surge in cases, all McDonald’s restaurants should continue to follow safety precautions employed throughout the pandemic, including wellness and temperature checks, the use of masks and gloves, thorough cleaning, enforcing social distancing and contactless service where possible.
Many states, including New Jersey, and cities, such as New York, do not allow indoor dining at restaurants. McDonald’s deferred to its franchisees, who own 95 percent of all locations, on the decision to reopen dine-in service if local rules allow. — Niraj Chokshi
Dark skies for the fireworks industry.
Across the country, the coronavirus pandemic has brought to a halt a tradition of summer: Fourth of July fireworks.
As many as 80 percent of community fireworks displays in large cities and small rural towns have been canceled this year over fear that they would create a social distancing nightmare.
For the 150 companies across the country that thrill spectators with their booming, colorful explosions in the skies, the two weeks around the July Fourth holiday make up about three-quarters of their revenue. The numerous cancellations this year, they say, are taking a significant financial toll on their businesses, many of them family owned for generations.
With July Fourth falling on a weekend, giving communities extra days to host events, “we were looking at a record year,” said James Souza, the fifth generation of his family to operate Pyro Spectaculars by Souza from California. “But of the 400 shows we expected to do around the holiday, we’ll be lucky if we do 40,” he said, noting that he had been receiving daily calls with cancellations or program changes from event planners.
“I’ve had days where I’ve lost $150,000 of business from cancellations,” said Roberto Sorgi, the fifth generation of the family that runs American Fireworks in Hudson, Ohio. “We’re going to lose 50 to 75 percent of our business from the Fourth of July, and there are no clear signs of when concerts or mass gatherings will be allowed again, so we may not have a third or fourth quarter this year. It is a very scary road ahead for all of us.” — Julie Creswell
How to make your gadgets last longer.
With the pandemic-induced recession putting so many people out of work, we need to make our tech last longer, writes Brian X. Chen.
We generally do a poor job at this. As soon as a device like a smartphone starts to feel slow or its battery deteriorates, we conclude that it’s time to buy a new one — so we upgrade. But with so many people now dealing with shrinking funds, making our tech last longer is not so hard.
Here are some of the most effective steps you can take to squeeze as much life as possible out of our phones, tablets and computers without breaking the bank.
Check Your Battery In general, pay attention to a battery’s remaining capacity. The lower the capacity, the more short-lived your device gets. If your capacity is less than 60 percent, you should think about replacing the battery.
Do a Deep Clean Gadgets need regular cleaning. Dirt and debris stuck clogging up our equipment can contribute to overheating, which shortens the life of our electronics.
Declutter Your Data The more device storage you use up, the slower a gadget gets. So set a calendar reminder to do a data purge at least once a year.
Auto sales fell sharply in the second quarter, but carmakers say demand is improving.
General Motors and Fiat Chrysler said sales of new vehicles fell by more than a third in the second quarter. But the companies added that demand has improved since April and May, when stay-at-home orders kept people away from dealerships.
“After falling into a deep recession in March, the U.S. economy has begun to recover as it reopens,” G.M.’s chief economist, Elaine Buckberg, said in a statement. “Auto sales are benefiting from historically low interest rates that make now an attractive time to buy a vehicle for many customers.”
G.M. said it expected sales to continue to rebound now that the company’s plants were operating normally. But “the path forward may not be linear, as rising infections in many states may lead to steps backward in the reopening process,” Ms. Buckberg added.
G.M. sold 492,489 cars and light trucks in the quarter, 34 percent fewer than in the same period a year ago. Fiat Chrysler sold 367,086, which represented a drop of 39 percent.
Toyota, which reports sales on a monthly basis, said June sales fell 27 percent, to 148,280 vehicles. — Neal E. Boudette
United Airlines adds scores of flights to its August schedule.
United Airlines said on Wednesday that it planned to operate about three times as many flights in August as it did in June, increasing its traffic to the equivalent of about 40 percent of its August 2019 schedule.
Even as much of the West and South see a surge in new coronavirus cases, the airline said that it was responding to growing demand for domestic and international flights. In particular, United said it would increase service to vacation destinations such as Aspen, Colo., Bozeman, Mon., and Jackson Hole, Wyo. United will also restart service to Tahiti and add flights to Hawaii, the Caribbean and Mexico.
United’s move comes as some policymakers have criticized airlines for allowing their planes to fill up with vacationers and other travelers at a time when new coronavirus cases are regularly reaching daily highs. The director of the Centers for Disease Control and Prevention, Dr. Robert Redfield, expressed “substantial disappointment” in American Airlines at a Senate hearing on Tuesday for allowing its flights to be fully booked.
The airlines have said they are taking extensive precautions to limit the spread of the virus to passengers and employees.
Still, some of United’s plans appear to be at odds with the approach government officials are taking. For example, United said it would add flights in August to Brussels, Frankfurt, London, Munich, Paris and Zurich. Yet the European Union said this week that it would bar travelers from the United States, along with a number of other countries that have not brought the pandemic under control, when it allows international air travel to resume on Wednesday.
All told, United’s August schedule represents about 48 percent of the domestic flight schedule the airline operated during the same month last year and 25 percent of last year’s international flights. The company’s July schedule was just 30 percent of last year’s domestic schedule and 16 percent of the international schedule. — Niraj Chokshi
Catch up: Here’s what else is happening.
The Federal Aviation Administration and Boeing finished a series of test flights of Boeing’s 737 Max jet, in what the federal agency described as an “important milestone” in returning the plane to service. The F.A.A. is still reviewing the data collected during the flights, which started on Monday, to determine if the plane is safe to fly again. Even if the flights prove successful, several key steps remain before the F.A.A. will lift its grounding order on the plane.
Apple said it would close 30 more of its stores in seven states, including California, Georgia and Nevada, adding to the 16 stores already closed around the country. Apple has 271 stores in the United States.
The Mexican airline Grupo Aeroméxico, which has been hurt by a sharp drop in travel during the coronavirus pandemic, filed for bankruptcy protection on Wednesday in New York. Delta Air Lines owns about 51 percent of Aeromexico’s outstanding shares, according to the company’s bankruptcy filing. Aeromexico reported a loss of 2.5 billion pesos ($110 million) in the first quarter and its liabilities totaled $5.1 billion at the end of March, up from $4.2 billion at the end of December.
Aerospace giant Airbus announced Tuesday it would cut 15,000 jobs, or about 10 percent of its global work force, citing a 40 percent slump in commercial aircraft business activity and an “unprecedented crisis” facing the airline industry. It will be the largest downsizing in the history of the company.
Reporting was contributed by Jack Nicas, Niraj Chokshi, Vikas Bajaj, Matt Phillips, Neal E. Boudette, Gillian Friedman, Jason Karaian, Liz Alderman, Christopher F. Schuetze, Emily Cochrane, Michael J. de la Merced and Gregory Schmidt.