Wed. Dec 2nd, 2020

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The S&P 500 climbed to a record on Tuesday, reaching a level few would have predicted a few months ago, and defying the economic storm facing the United States.

The index rose only slightly, but it was enough to eclipse a high reached in February, before the fast-spreading virus set off a staggering decline in stock prices.

The recovery has been fueled by trillions of dollars pumped into financial markets by the Federal Reserve and enormous spending by the government to protect American workers and businesses from the worst of the downturn.

A run-up in shares of technology giants that, because of their sheer size, hold sway over the entire market has also propelled the stock index. Put together, these factors drove a recovery that was so quick that the bear market — defined as a drop of more than 20 percent — that began earlier this year turned out to be the shortest ever, according to records going back to 1929.

The high on Tuesday comes despite the drastic economic toll of the virus, which dragged the American economy into one of the steepest downturns since the Great Depression, crushed corporate earnings and sent unemployment soaring.

Investors have largely shrugged off such concerns, and focused instead on economic updates that have not been quite as catastrophic as expected.

Last week’s retail sales data showing that Americans kept shopping in July, even as coronavirus infections continued to spread, was followed on Tuesday by strong earnings reports from Walmart and Home Depot. Separately, the Commerce Department said that construction of new homes in the United States surged nearly 23 percent in July, to the highest annual pace since February.

That focus on the good news has helped lift the S&P 500 by more than 50 percent from its low point in March.

Technology stocks have played a big role in those gains. Companies such as Apple, Alphabet and Microsoft have attracted investors despite the deep downturn in the United States, with buyers betting that those companies are poised to thrive in a stay-at-home economy and emerge from the crisis in an even stronger competitive position.

On Tuesday, Amazon was the best-performing stock in the S&P 500, rising 4 percent, with shares of a number of other technology companies — including Adobe and Salesforce — also climbing.

Still, the march higher has also meant that investors have looked past a number of risks that lie ahead. Most prominent among them this week is the inability of lawmakers in Washington to reach a consensus about another economic aid package.

Another is the latest escalation in tensions between the United States and China. The Trump administration said Monday that it would restrict the ability of the Chinese tech giant Huawei to buy a wider array of chips made or designed with American equipment and software.

Credit…Gabby Jones for The New York Times

The S&P 500 closed at a record on Tuesday, a remarkable display of investor optimism in the face of a still-shambolic American economy.

But aside from standing as testament to the sunny disposition of stock market investors, the record high also confirms the transfer of power from Wall Street’s pessimists — or “bears” — to the “bulls” who see more gains ahead.

Simply put, the record on Tuesday confirms that American investors are in a bull market again. We say ‘confirmed’ because the start of the bull market is actually traced back to when stocks hit rock bottom — which means it has been going on since March.

There’s no science behind the system for determining the start or end of a bull or bear market. It’s just tradition.

By that tradition, entry into a bear market is confirmed once stocks have fallen 20 percent from their high. That happened in mid-March, after the market crashed as the coronavirus crisis slammed the United States.

A bull market has its own criteria. Even though stocks were already up more than 50 percent from their lowest point (hit on March 23), some market traditionalists say that the bull market is only confirmed once stocks close at a record. That’s what just happened.

Why does any of this matter? Because markets often operate as something of an experiment in mass psychology. There’s a symbolic value to whether commentators, the news media and even the president are able to describe the context of the market as good or bad.

The last bull market grew out of the ashes of the 2008 financial crisis, with the S&P 500 beginning its run in March 2009, and rising more than 300 percent in almost 11 years.

That doesn’t mean the current bull market will last as long. The last one was about twice as long as usual. But this one is just getting started.

Credit…Lindsey Wasson for The New York Times

In a sign that the airline recovery will be long and painful, Boeing’s chief executive said on Monday that the company would offer a second round of buyouts, adding to the 10 percent cut the company announced in April.

“I truly wish the current market demand could support the size of our work force,” the chief executive, Dave Calhoun, said in a memo to staff. “Unfortunately, layoffs are a hard but necessary step to align to our new reality, preserve liquidity and position ourselves for the eventual return to growth.”

Mr. Calhoun did not specify how many jobs Boeing was hoping to cut. The new buyouts will help limit involuntary layoffs and will be offered to employees who work in parts of the company most affected by the pandemic, like Boeing’s commercial airplane and services businesses. Fewer employees who work on Boeing’s defense, space and government services businesses will be eligible, Mr. Calhoun said.

While recent federal data shows air travel is recovering again after stalling in July, the number of people flying each day is still less than a third of what it was a year ago. Industry executives expect that figure to remain depressed until a coronavirus vaccine is widely available.

Credit…Marie Eriel Hobro for The New York Times

Walmart’s business continued to boom in the second quarter, as sales rose 9.3 percent, driven by continuing strong demand for food and general merchandise during the pandemic and huge growth in its e-commerce business.

The company said Tuesday that its revenues were up 5.6 percent to $137.7 billion from a year ago, while e-commerce sales grew 97 percent, more than double what the company had been averaging in recent years.

Despite rising costs related to the pandemic, Walmart, the nation’s largest retailer, also managed to generate larger-than-expected profit. It earned $1.56 per share, far exceeding the $1.25 that Wall Street analysts had predicted.

Walmart’s strong results reflect how a few large retailers have been able to capitalize on the surge in demand for food and necessary items by Americans hunkered down at home. Walmart’s success, while many other retailers have struggled or failed in recent months, shows the consolidation in the retail industry has been compounded by the pandemic.

The company noted that stimulus money helped boost sales of general merchandise, making it uncertain if Walmart and other large retailers will be able to keep up the sales growth in the coming months if policymakers do not restore the benefits that expired at the end of July.

In a statement Tuesday morning, Walmart’s chief executive, Doug McMillon, thanked the company’s employees “for their tireless efforts during these unprecedented times,’’ adding that “we also appreciate the trust and confidence of our customers.”

Credit…Stephen Speranza for The New York Times

Same-store sales at Home Depot soared more than 23 percent in the quarter from May to July, as Americans across the country tackled home improvement projects while housebound during the coronavirus pandemic.

The company also saw an increase in profits, earning $4.3 billion in the second quarter compared with $3.5 billion during the same period last year.

“The investments we have made across the business have significantly increased our agility, allowing us to respond quickly to changes while continuing to promote a safe operating environment,” said Home Depot’s chief executive, Craig Menear, in a statement.

The company invested approximately $480 million in additional benefits for employees during the second quarter, including weekly bonuses for hourly workers in stores and distribution centers. The company has spent $1.3 billion on enhanced pay and benefits so far this year, it reported.

  • Uber and Lyft, which are facing mounting pressure to classify their freelance drivers as full-time employees in California, are considering licensing their brands to operators of vehicle fleets in California, according to three people with knowledge of the plans. The change would resemble an independently operated franchise, allowing Uber and Lyft to keep an arms-length association with drivers so that the companies would not need to employ them and pay their benefits.

  • The stock trading app Robinhood has raised another $200 million in funding, the company said on Monday, bringing its funding total to $800 million in recent months, and more than $1 billion since it was founded seven years ago. The new round of funding, led by the hedge fund D1 Capital Partners, values the start-up at $11.2 billion.

Credit…Massimo Paolone/LaPresse, via Associated Press

Mario Draghi, the former president of the European Central Bank, warned Tuesday that the pandemic “threatens to undermine the fabric of our society as we know it,” with a particularly devastating impact on young people whose ability to acquire skills and experience has been derailed.

Mr. Draghi, 72, who had been keeping a low profile since his term as the central bank’s president ended last year, called for more investment in education to compensate for the disruption the pandemic has caused for schools and universities.

Otherwise, he told an audience in Rimini, Italy, young people “will be left with a lack of professional qualifications and experience, compromising both their freedom of choice and their earning potential later in life.”

“The debt created by the pandemic is unprecedented and will have to be repaid mainly by those who are young today,” Mr. Draghi said. “It is therefore our duty to equip them with the means to service that debt, and to do so while living in improved societies.”

Credit…Justin Tallis/Agence France-Presse — Getty Images

Marks & Spencer, the British department store and food retailer, announced plans on Tuesday to cut 7,000 jobs in the next three months, or nearly 10 percent of its work force. The staff reductions will be in stores, its central office and across regional management.

The pandemic has dealt a deep blow to many of Britain’s most well-known retail brands, including Boots, John Lewis and Debenhams, which have also announced thousands of layoffs and store closures in recent weeks.

Just four weeks ago, M & S said it expected to cut 950 jobs. The acceleration and expansion of its restructuring plans comes as many retail areas have struggled to attract shoppers even as social-distancing measures have eased in Britain. According to Springboard data on retail activity, foot traffic on high streets and shopping centers is still down by more than a third compared to last year. Central London and other regional cities also have far fewer shoppers than market towns or suburban locations.

In a trading update on Tuesday, the Marks and Spencer Group said food sales over the last three-month period were up 2.5 percent compared with the same period last year, while clothing and home sales were down 38.5 percent. Overall revenue for the whole company was still lower than last year, even though online sales had risen by more than 40 percent.

Despite being an iconic British retailer, M & S has been struggling for years. In 2018, the company said it planned to close 100 stores by 2022. It has spent the past few years moving away from clothing and home goods and promoting its food business, while also trying to get more of its products online. The company’s share price has dropped 78 percent in the past five years.

Credit…John S. Lander/LightRocket

With more than 400 shops, the Singapore Changi Airport would be the fourth-largest mall by the number of tenants if it were in the United States.

The combination of an often affluent and captive audience has made airport commercial square footage some of the most lucrative in the world. But the pandemic has crushed the commercial calculus at airports, and no one is sure what comes next.

The leading airport for concession and retail sales in the United States is Los Angeles International, with revenue of $3,036 a square foot, according to a 2018 report from Airport Experience News. By comparison, the average mall retailer is around $325 per square foot, according to 2017 data from CoStar.

But that’s all gone now, said Alan Gluck, a senior aviation consultant at ICF. “In general, sales are in the toilet,” he said.

The very amenities that once made airports a standout for profit are the same things that are proving to be challenging.

So far, the pandemic has not paused terminals planned or in progress in the United States. Projects already underway, including at La Guardia Airport in New York and in smaller markets like Lafayette, La., are moving ahead, but taking a wait-and-see approach on adjustments.

New terminal construction should focus on space not just for the coronavirus but other respiratory illnesses, said Dr. Anthony S. Fauci, the director of the National Institute of Allergy and Infectious Diseases.

New terminals needed to allow enough space for people to spread out, offer high-efficiency particulate air filtration and distribute free masks. He would also like to see more health screening at airports.

“You can’t throw up your hands and say it is impossible,” Dr. Fauci said.

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