Tech Stock Selloff Leads Markets Lower: Live Updates
The latest economic and business news during the coronavirus pandemic.
High-flying tech stocks stumbled sharply on Thursday, setting the S&P 500 up for its worst daily performance since June.
The S&P 500 dropped about 3.5 percent, while the tech-heavy Nasdaq composite was down about 5 percent. Apple was down nearly 7 percent. Amazon and Microsoft were both down more than 5 percent.
As investors have bet that the coronavirus crisis would amplify the dominance of the tech companies’ business models, share prices of large cap technology companies have surged, generating the lion’s share of the stock market’s gains.
The rip-roaring race for tech shares has increasingly pulled in armchair investors, who have taken up speculating on stocks amid the work-from-home environment. Many of those traders have opted not to buy actual shares, but instead to speculate in options trades, which are essentially leveraged bets on where share prices will go.
Such traders make these bets — mostly they have been “calls” or bets that the tech share prices would rise — with options dealers, who then have to hedge their risks. Dealers hedge their risks by buying “puts,” or leveraged bets that shares will fall.
Analysts say dealers have rushed to boost their bets on falling shares in recent days in an attempt to hedge their risks, amplifying the sell-off in technology shares.
“I think today for tech stocks, you’re seeing that dynamic play out — you have a sell-off that is being chased by dealers,” said Yousef Abbasi, director of U.S. institutional equities at StoneX, a brokerage firm.
Stocks had been on a significant tear in recent days. Prior to Thursday, the S&P 500 had been up in nine of the last 10 sessions, a run that some observers said suggested that investors appeared to have adopted a Pollyannish outlook.
“Stocks were extended, complacency and optimism, widespread,” William Delwiche, an investment strategist at Baird, a financial firm based in Milwaukee, wrote in an email. “Given the speed of the move and imbalanced positioning, the cart doesn’t need to go over much of a bump to send apples flying everywhere.”
Thursday’s tumble was one of the worst jolts to the market since a new bull market began in late March. Since March 23, when the Federal Reserve signaled its willingness to provide unlimited support to key financial markets, stocks have notched remarkable gains.
As of the close of trading on Wednesday, they were up 60 percent over that period, helping pull the market to new record-highs.
The performance of the market — the S&P 500 was up more than 10 percent for the year as of Wednesday’s close — has been a conundrum for some who have wondered whether such gains were sustainable in the face of a deep economic decline set off by the pandemic.
On Thursday, a fresh update on new claims for unemployment insurance showed that the virus was still battering the labor market, with more than 800,000 people filing claims for new benefits last week. About 29 million were receiving some form of unemployment assistance as of mid-August, a sign of deep distress in the “real” economy.
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Initial weekly unemployment claims, both regular claims and those under the Pandemic Unemployment Assistance program
The government reported on Thursday that 833,000 workers filed new claims for state unemployment benefits last week, the latest evidence that the coronavirus pandemic is still battering the labor market.
The figure, not seasonally adjusted, represents an increase from 826,000 the previous week. The seasonally adjusted number of new state claims last week was 881,000.
An additional 759,000 new claims were filed last week by unemployed freelancers, part-time workers and others who are receiving federal relief under a separate emergency relief program, up from 608,000 the week before.
There has been progress from the early weeks of the pandemic, when tallies surged past six million. But recent improvements have been more laborious.
“I’m really concerned that the pandemic assistance claims are rising,” said Gregory Daco, chief U.S. economist at the forecasting firm Oxford Economics. “Altogether you’re looking at 1.6 million filing. It’s pretty bad at this stage in the crisis.”
“I feel like this is a very fragile labor market at a critical juncture,” he added.
More than five months into the pandemic, the claims numbers continue to dwarf previous records.
“It could reflect a weakening economy in some of the states worst impacted by the health crisis,” he said, “or it could be that some of the workers that had returned are finding that it’s not possible or sustainable to return to their primary economic activity in the current environment.”
More than nine million laid-off workers have been rehired. And most analysts expect that the monthly jobs report, scheduled for release on Friday, will show a dip in August from double-digit unemployment rates.
There were modest reductions in new weekly claims through most of August, an encouraging trend. But this week, comparisons to previous announcements from the Labor Department need a flashing “WARNING” signal.
That’s because the department has changed the way it adjusts state jobless claims figures for predictable seasonal patterns, like school staff returning in the fall or temporary holiday workers who are laid off in January.
With the pandemic, claims have been anything but predictable. So the department tweaked its calculations to improve accuracy, but the change means that the seasonally adjusted numbers released on Thursday are not comparable with those from previous weeks.
As a result, The Times is emphasizing unadjusted figures.
— Patricia Cohen and
Karen Kent hopes this will be the last week she will have to file a jobless claim. A cafeteria worker at a high school in Pennington, N.J., Ms. Kent, 47, was laid off in early March when the pandemic hit and schools closed.
Last week, she got a call telling her she was the one cafeteria worker from her school going back to work. Her first shift is supposed to start next Wednesday.
Her husband, who works for a fire protection service company, held on to his job, but because he works on commission, his income was unpredictable.
“The $600 is the only reason we stayed afloat,” Ms. Kent said of the weekly federal supplement to unemployment benefits that expired in July. Without it, her state benefits came to just $157. “We’re at the stage where we’re pretty lean,” she said.
She and her husband live in affordable housing, and they have twice deferred their monthly mortgage payment of $537 and condo association fee of $234. Then there’s the $185 they owe to Verizon and $457 in unpaid medical insurance bills.
Ms. Kent was glad she was called back to her $11.40-an-hour job. But she has asthma and a heart condition and worries about her exposure to the virus while working at a school.
“I’m terrified because I don’t know if I’m going to have enough protection,” she said. “But you have to do what you have to do to pay the bills.”
— Patricia Cohen and
Some businesses are hiring. Postings at the job search site Indeed rose slightly last week, although the total is still more than 20 percent below what it was this time last year.
The hospitality, tourism, and sports and fitness sectors are in the worst shape, with postings down more than 40 percent from a year ago. Listings for higher-wage jobs in banking, finance and software development are also much scarcer.
Construction, driving and warehouse jobs seem to be the most plentiful.
The job site ZipRecruiter has seen a gradual increase in listings over the past couple of months, but the pace of growth began to slow mid-August, Julia Pollak, the company’s economist, said.
Consumers pulled back on spending once the $600 weekly jobless benefit supplement ceased. At the same time, many small businesses are running out of the money they received through the federal Paycheck Protection Program.
A recent survey from the National Federation of Independent Business found that one out of five small-business owners said they would have to shut down if economic conditions did not improve in the next six months.
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The $600-a-week federal supplement to unemployment benefits ended in July, but most states are moving ahead with a temporary replacement: a weekly $300 supplement paid out of federal disaster relief funds.
As of Wednesday, 45 states had been approved for a grant from the Federal Emergency Management Agency for the program. Six of those — Arizona, Louisiana, Missouri, Montana, Tennessee and Texas — have started paying out benefits, according to the Labor Department.
Most other states will probably not start payments until mid-September or later. The supplement is expected to last four or five weeks.
South Dakota is the only state that has said it is not taking part. Gov. Kristi Noem says her state doesn’t need the money.
A handful of states, including Kentucky, Montana and West Virginia, plan to add $100 to the supplement.
Economists say the weekly booster is crucial to the economy’s recovery. “The data are showing us that the expiration of the supplemental benefits is having a clear impact on consumption,” said Carl Tannenbaum, chief economist at Northern Trust. “As a result, the momentum of the economic recovery seems to be slowing as we move to the end of the third quarter.”
The big question, Mr. Tannenbaum said, is how Congress will react to the latest evidence from the labor market and whether it will prompt Republicans and Democrats to agree on another relief package.
“Are we going to build a bridge of sufficient length to get to the post-Covid environment without permanent economic damage?” he asked.
What do the populations of Canada, the United States, Spain, Germany and Australia have in common? More people in these countries say economic conditions will improve in the next 12 months than those who say they will worsen, according to an international survey by the Pew Research Center.
But this optimistic outlook isn’t widely shared. In three other countries — the Netherlands, Belgium and South Korea — the majority of the population said the situation would worsen. In the remaining six countries surveyed, which include the U.K., Sweden, and Japan, a plurality of respondents said the economy was more likely to get worse. Pew said it conducted a representative survey of more than 14,000 adults between June and early August by phone.
Reflecting the impact of large (and often unprecedented) drops in economic output in the second quarter, when many countries shut down businesses and ordered people to stay at home, far more people said their national economy was currently bad.
“Public attitudes about the economy have turned bleak in much of the world,” Shannon Schumacher and Mara Mordecai, researchers at Pew, wrote in the report published with the survey results on Thursday.
People who viewed their country’s response to the coronavirus pandemic as bad were more likely to also say the economic situation was bad, the researchers wrote, adding that this was particularly noticeable in the United States.
“Among Americans who say their country has responded poorly to Covid-19, 87 percent say the economy is bad, compared with half among those who say the response went well — a 37 percentage point difference,” they wrote.
France will spend 100 billion euros. The aim is to restore its economy to pre-crisis levels by 2022.
Moving to combat its worst recession in decades, France unveiled a massive 100 billion euro ($118 billion) stimulus plan Thursday aimed at restoring the battered economy to pre-crisis levels by 2022, handing companies large tax cuts and hiring subsidies in the hope of stimulating investment and creating jobs.
“We have to learn to live with the virus, and to survive it,” Prime Minister Jean Castex said at a press briefing. “The economy has clearly been weakened,” he added, “and we need to relaunch it and prepare for the future.”
The package, the biggest spending effort in Europe, comes on top of nearly €400 billion that President Emmanuel Macron made available to help keep thousands of business from going bankrupt and millions of people employed since a nationwide quarantine caused the economy to crater. Growth is expected to contract by 11 percent this year because of the pandemic.
But a new wave of infections is rolling across France, and the prospect of a protracted downturn has prompted the government to try to shield the economy from further damage.
The effort focuses on supply-side stimulus and a transition to so-called green technology across the economy, mainly by shoring up manufacturing and infrastructure spending. Industrial companies will get €35 billion in production tax breaks to stimulate investment and job creation, and the state will subsidize industrial development in hard-hit regions.
Around a third of the money will go toward making the nation’s infrastructure more environmentally sound, by upgrading major freight and transportation train lines and renovating schools, apartment buildings and other structures with more ecological technology. All told, the government said it hopes to create at least 160,000 new jobs through the stimulus measures next year.
That may not be nearly enough to ease the nation’s swelling jobless rolls. Around 30 percent of France’s active population was out of work in the second quarter, and economists and the government itself have warned of a tsunami of job losses in the fall as Airbus, Renault and other large companies downsize to make up for slumping demand.
To help combat the problem, France is throwing another €6.5 billion in subsidies at companies to encourage them to hire younger workers who are finding it nearly impossible to get a job in a down market, and increasing spending on job furlough and retraining programs.
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Michael R. Bloomberg, the former New York City mayor, announced on Thursday that his philanthropic foundation would make a $100 million donation to four historically Black medical schools, in an effort to improve the health and wealth of Black communities, today’s DealBook newsletter reports.
The immediate goal is to ease the financial burden on about 800 medical students, who will each receive grants of up to $100,000. The donation to four institutions — Charles R. Drew University of Science and Medicine, in Los Angeles; Howard University College of Medicine, in Washington; Meharry Medical College, in Nashville; and Morehouse School of Medicine, in Atlanta — is one of the biggest by a single donor to historically Black schools.
It follows other pledges to historically Black institutions by Reed Hastings of Netflix and his wife, Patty Quillin, and MacKenzie Scott, the author and philanthropist who was once married to the Amazon chief executive Jeff Bezos. Mr. Bloomberg’s gift is the first major donation from the Greenwood Initiative, a racial justice program he started in the waning days of his 2020 presidential campaign.
It also has a broader aim: to increase the number of Black doctors in the United States. The famously data-driven Mr. Bloomberg and his team were convinced by statistics showing that Black doctors help provide better health outcomes for Black patients and are more likely to work in underserved communities. That became even more of a concern amid the pandemic’s disproportionate impact on Black people.
“By increasing the number of Black doctors, we hope the gift will help to save more Black lives and reduce the health problems that limit economic opportunity in Black communities,” Mr. Bloomberg told The Times.
— Michael J. de la Merced and
The Trump administration has announced an order to suspend the possibility of eviction for millions of renters who have suffered financially because of the coronavirus pandemic. The Centers for Disease Control and Prevention said the order was an emergency action, which it is entitled to take under the law.
We have answers to questions that renters may have about the order. Please email your questions to hubforhelp@nytimes.com.
Who is eligible?
You must meet a five-pronged test.
You need to have used your “best efforts” to obtain any and all forms of government rental assistance.
You can’t “expect” to earn more than $99,000 in 2020, or $198,000 if you’re married and filing a joint tax return. If you don’t qualify that way, you could still be eligible if you did not need to report any income at all to the federal government in 2019 or if you received a stimulus check this year.
You must be experiencing a “substantial” loss of household income, a layoff or “extraordinary” out-of-pocket medical expenses (which the order defines as any unreimbursed expense likely to exceed 7.5 percent of your adjusted gross income this year).
You have to be making your best efforts to make “timely” partial payments that are as close to the full amount due as “circumstances may permit,” taking into account other nondiscretionary expenses.
Eviction would “likely” lead to either homelessness or your having to move to a place that was more expensive or where you could get sick from being close to others.
A lot of that is pretty subjective. If it’s a close call, who decides?
Landlords who disagree with renters’ self-assessments could try to evict nonpaying tenants by arguing that they are not a “covered person” within the order’s scope and dare them to fight back legally. Then it could be up to a housing court judge to decide if a renter is eligible or if the landlord can, in fact, evict.
How do I prove to my landlord that I’m eligible?
The C.D.C. order makes reference to a declaration that renters should draft and then provides an example of one near the end of the document online.
Amazon said Thursday that it planned to add 7,000 new permanent jobs across the United Kingdom this year as online shopping continues to surge. The new roles are in addition to the 3,000 roles already added in the U.K. in 2020. Amazon also said it would create more than 20,000 seasonal jobs across the England, Scotland, Wales and Northern Ireland for the holiday season.
The amount of U.S. government debt will nearly outpace the size of the nation’s economy in the 2020 fiscal year, the Congressional Budget Office said on Wednesday. Total debt held by the public is expected to reach an estimated 98 percent of the size of the economy for the fiscal year, which ends on Sept. 30, the budget office said. The budget office now expects the debt to exceed the size of the economy in fiscal year 2021. By 2023, it said on Wednesday, it expects the debt as a share of the economy to reach its highest level in American history, surpassing the World War II era.
United Airlines said Wednesday that it expects to furlough 16,370 employees starting Oct. 1, when federal restrictions on job cuts that were a condition of government aid end. The announcement, which comes a week after a similar one from American Airlines, could put further pressure on Congress and the Trump administration to renew stimulus funding. The Oct. 1 cut would affect nearly 7,000 flight attendants, nearly 3,000 pilots and thousands of others who work in maintenance, airport operations and other roles.
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