Wall Street Rallies as Investors Focus on the Recovery

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Wall Street resumed its rally on Wednesday. With a more than 3 percent gain, the S&P 500 is now up about 23 percent from its March 23 low.

The market has been steadily climbing since it hit that bottom, a rebound that began after the Federal Reserve and lawmakers in Washington took steps to protect the U.S. economy from a collapse amid the coronavirus pandemic. Stocks are still down about 19 percent from their late February high.

More recently, the gains have reflected hope that the peak of the pandemic in many cities is near, or already past. The growth rate of hospitalizations in hot spots like New York is slowing; China has lifted its lockdown of Wuhan, the city where the virus emerged; and governments in parts of Europe are making plans to do the same.

To some extent, the recent gains also reflect Wall Street’s fear of missing out on the rebound that many analysts predicted would eventually come.

“If you wait until the coast is clear, you will have missed a huge part of the gains,” said Matt Maley, chief market strategist at Miller Tabak a trading and asset management firm. “And professional investors can’t afford to do that.”

For now, though, it is big money managers — not mom-and-pop retail investors — who are in on the action. Hedge fund traders and mutual fund managers have swooped into the market, driving sharp gains for blue-chip shares that have been battered by the market sell-off.

Still, the market’s recent optimism is set against a grim backdrop of economic and human catastrophe that continues to play out — and which threatens to undercut any rally at a moment’s notice.

In Europe, data released on Wednesday showed that Germany and France, the largest economies in the region, were heading toward their sharpest downturns since World War II.

There’s more data to come. A new report on weekly jobless claims on Thursday is certain to show millions more Americans are out of work. The two prior reports recorded more than 10 million claims for unemployment in late March.

After a 3.4 percent rise on Wednesday, the S&P 500 has bounced 23 percent from its low in a disastrous March, despite a darkening outlook for economic growth and corporate profits.

One reason: It’s the time to buy for investors able to stomach the market’s swoons.

Cole Smead, a portfolio manager at the Smead Value Fund, has been snapping up bargains in beaten-up parts of the market, like oil and energy producers, homebuilders and shopping-mall companies, that are closely tied to short-term swings in the economy.

“We will never get these prices again,” said Mr. Smead, whose fund has $1.3 billion in assets.

As economically damaging as the pandemic will no doubt be, Wall Street is starting to see a path forward that wasn’t clear a few weeks ago. Slowing infection rates, hefty government relief packages and the Federal Reserve’s efforts to calm the markets have helped eased investors’ minds.

Some of the buyers are opportunistic hedge fund traders and mutual fund managers, driving sharp gains for blue-chip shares that were battered by the market sell-off. Some are traders feeling pressure to get into a rising market. And some are short-sellers forced to buy to minimize their own losses.

But mom-and-pop investors have largely been sitting out — a sign that the rally doesn’t reflect widespread optimism.

WeWork has not made scheduled rent payments to the landlords of some of the buildings where it operates its co-working spaces, according to a person briefed on the situation.

The decision to hold back rent is part of WeWork’s efforts to renegotiate better deals with building owners as the company tries to cut costs and limit its losses. WeWork’s executive chairman, Marcelo Claure, said in December that the company would try to get better terms from landlords, but the economic swoon caused by the coronavirus pandemic has made the task more urgent.

“Rather than implementing a company-wide policy on rent payments, we are individually reaching out to our more than 600 global landlord partners to work in good faith towards finding asset-specific solutions that benefit all parties involved,” WeWork said in a statement.

The person briefed on the situation said WeWork was seeking to renegotiate leases around the world, not just in the United States.

The Wall Street Journal first reported that WeWork was skipping rent payments.

The virus outbreak has emptied many of WeWork’s locations and may reduce demand for its space over the longer terms. Seeing the empty spaces, landlords might be persuaded to reduce WeWork’s lease payments, but they also know that SoftBank, the company’s dominant shareholder, committed billions of dollars to finance WeWork’s expansion.

In a sign of just how desperate hospitals and doctors are for cash during the coronavirus pandemic, insurance companies, notorious for slow-walking their payments to health care providers, are now speeding up how quickly they pay.

“There was a universal cry for cash,” said Paul Markovich, the chief executive of Blue Shield of California, which said it would advance up to $200 million in payments to hospitals and doctors.

With revenues down for surgeries and other care not viewed as essential, providers are scrambling for money to pay for protective equipment and other supplies. “The pressure on the entire health care ecosystem is something I’ve never seen before,’‘ said Mr. Markovich, who hopes to get out the first payments as soon as this week.

“We’re effectively advancing payment now and collecting later,” he said, even as it is also working with customers about letting them delay paying premiums.

UnitedHealth, which owns one of the nation’s largest insurance companies, said it would also take a series of steps, like waiving the need for pre-authorization when patients see a new doctor or go to a skilled nursing facility, that should result in nearly $2 billion in payments getting in the hands of providers more quickly. Providers could be paid in a matter of days rather than several weeks.

United also announced it would be making $125 million available in small-business loans to medical groups that work with its Optum unit, which provides consulting and other services.

Highmark, a Blue Cross plan in Pittsburgh, said it was advancing more than $30 million to primary care doctors, who have been particularly hard hit as many patients have decided to forgo face-to-face doctors’ visits.

New data on electricity use suggest that U.S. economic activity probably declined more over the past three weeks than it did during the entire year and a half of the Great Recession. It may already be the deepest downturn since the Great Depression; it is certainly the fastest.

These numbers are important because our official statistics cannot keep pace with the abrupt economic changes the coronavirus shutdown has caused. All those closed stores, silenced factories and darkened office buildings are yet to be counted in the government’s official economic numbers, which take months to collect, process and report.

But evidence of the sharp economic shift shows up in a large and rapid decline in electricity usage over recent weeks.

Demand for food assistance in the United States is surging, as millions of Americans find themselves out of work and school closures mean that many families who counted on them for free or subsidized meals need to turn elsewhere.

The rise in need is coming just as food banks face shortages of both donated food and volunteer workers.

It’s a nationwide phenomena:

  • At Food Bank for the Heartland in Omaha, the amount of food donated for March dropped by nearly half. The food bank typically purchases $73,000 of food in a month this time of year but has spent $675,000 in the past four weeks.

  • In Jonesboro, Ark., after a powerful tornado struck, a food bank received less than half the donations it expected because nervous families held on to what they had.

  • In Washington State and Louisiana, the National Guard has been called in to help pack food boxes and ensure that the distributions run smoothly.

  • Feeding America, the nation’s largest network of food banks, with more than 200 affiliates, has projected a $1.4 billion shortfall in the next six months alone.

“I’ve never seen anything like it,” said Stacy Dean, vice president for food assistance policy at the Center on Budget and Policy Priorities, a left-leaning research organization in Washington. She has studied food security for more than a quarter century. “People love the phrase ‘the perfect storm,’” she added, “but nothing is built for this.”

Europe’s pandemic-induced lockdowns were widely expected to throw the continent into a deep recession. Germany and France, the largest economies, said on Wednesday that they were headed toward their sharpest downturns since World War II, a warning that showed just how bad it’s about to get.

France officially slid into a recession after suffering one of the worst quarterly contractions in more than 50 years. Growth tumbled an estimated 6 percent from January to April, from the fourth quarter, the central bank said. For every two weeks the population remains under confinement, the economy shrinks by at least 1.5 percent, it added.

And Germany is sliding toward its deepest recession on record, with growth expected to plunge almost 10 percent from April through June, five leading economic institutes said Tuesday.

The federal stimulus bills enacted in March, including a $2 trillion economic relief plan, offer help for the millions of American small businesses affected by the coronavirus pandemic.

Cash grants. Low-interest loans. Payments to offset some payroll costs for businesses that keep or rehire workers. There are also enhancements to unemployment insurance and paid leave.

Here are the answers to common questions about these programs. If you have questions, or have applied for small business aid and can tell us how the process went, we’d love to hear from you.

More information on money help during this difficult period be found in our F.A.Q. for individuals and our Hub for Help.

  • The used-car retailer CarMax said on its website on Wednesday that it would furlough 15,500 employees, effective April 18. The company’s president and chief executive, Bill Nash, will forgo half of his salary, and the company’s senior leadership will take an unspecified reduction in pay.

  • The Walt Disney Company has been badly battered by the pandemic, with its theme parks closed and movies postponed, but the company on Wednesday offered an upbeat update on its nascent streaming service: Disney Plus has passed 50 million paid subscribers worldwide in just five months of operation. Before its November introduction, analysts had predicted that Disney Plus would take a full year to sign up half that many subscribers. A hit series, “The Mandalorian,” has greatly increased demand. The pandemic has likely also helped, with parents looking for ways to entertain homebound children.

  • Nordstrom, one of the country’s best-performing department stores, said in a regulatory filing on Wednesday that it did not have a “firm date” on when its stores would reopen. Most of the company’s work force — about 69,000 people, according to a separate filing — has been furloughed “or assigned zero hours of work.” Nordstrom has also temporarily closed its headquarters in Seattle.

  • Amazon said it planned to pause a pilot program that shipped products for sellers on its marketplace in a bid to ease the pressures on its logistics operations, which are stretched thin by the surge in online shopping. The program, called Amazon Shipping, picked up packages that were already packed and labeled from a seller’s warehouse and then delivered them using Amazon’s delivery network. It competed with U.P.S. and FedEx’s ground service.

  • Airbus, the European aerospace giant, said it was cutting production by about a third in response to the reshaping of the aircraft market. “Our airline customers are heavily impacted by the COVID-19 crisis,” Guillaume Faury, Airbus’s chief executive, said in a statement. “We are actively adapting our production to their new situation.”

  • The London-based Jewish Chronicle, one of the oldest Jewish newspapers in the world, said on Wednesday that it would cease publication after being crushed by the financial impact of the coronavirus pandemic. Founded in 1841, The Chronicle claims to be the oldest continuously published Jewish paper in the world.

Reporting was contributed by Peter Eavis, Reed Abelson, Jeanna Smialek, Emily Flitter, Ana Swanson, Stacy Cowley, Karen Weise, Noam Scheiber, Liz Alderman, Jack Ewing, Sapna Maheshwari, Conor Dougherty, Niraj Chokshi, Adam Satariano, Choe Sang-Hun, Jack Nicas, Ceylan Yeginsu, Austin Ramzy, Mohammed Hadi, Matt Phillips, Katie Robertson, Carlos Tejada and Amie Tsang.

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