European markets fall as U.S.-China tensions rise.
European markets fell more than 1 percent in early trading on Friday after a mixed day in Asia, as investors confronted the possibility of worsening tensions between Washington and Beijing.
Stocks in Germany led the drop, falling 1.5 percent. Other markets also signaled rising worries among investors. Prices for U.S. Treasury bonds, typically regarded as a safe haven in troubled times, rose. Oil prices were lower on futures markets.
Futures that track Wall Street were predicting that U.S. stocks would open moderately lower later on Friday.
Investors were bracing for President Trump to unveil more measures aimed at China in a news conference scheduled for Friday. The Trump administration has criticized Beijing’s recent move to strengthen its authority over Hong Kong, a semiautonomous Chinese city that enjoys special trade and financial relations with the United States. Any sharp move by the administration risks inviting retaliation from Beijing, worsening tensions between the world’s two biggest single economies.
Investors were also parsing mixed retail sales data from Europe, as well as business confidence figures from Britain.
The multitrillion-dollar patchwork of federal and state relief programs has not kept bills from piling up or prevented long lines at food banks. But it has mitigated the damage. Now the expiration of those programs represents a cliff that many Americans and the economy are hurtling toward.
The $1,200 checks are long gone, at least for those who needed them most, with little imminent prospect for a second round. The lending program that helped millions of small businesses keep workers on the payroll will wind down if Congress does not extend it. Eviction moratoriums that are keeping people in their homes are expiring in many cities.
And the $600 per week in extra unemployment benefits that have allowed tens of millions of laid-off workers to pay rent and buy groceries will expire at the end of July.
President Trump and other Republicans have played down the need for more spending, saying the solution is for states to reopen businesses and allow companies to bring people back to work. So despite pleas from economists across the political spectrum — including Jerome H. Powell, the Federal Reserve chair — any federal action is likely to be limited.
To some Republican lawmakers, extra unemployment benefits and other assistance made sense when businesses were shut down and the government was discouraging people from leaving home. But as the economy reopens, they say, the benefits could impede the recovery by providing an incentive not to return to work.
Many economists feel those fears are overblown. Generous benefits might be a deterrent to work in normal times, they argue, but these are hardly normal times. Even the most optimistic forecasters expect the unemployment rate to be well above 10 percent when the extra benefits expire, meaning there will be far more jobless workers than available jobs.
The French carmaker Renault said on Friday that it would cut nearly 15,000 jobs worldwide and drastically reduce production as it tries to deal with “the major crisis facing the automotive industry.”
About a third of the job cuts would be in France, Renault said. The company, which is partly owned by the French government, indicated it is likely to close several factories while it cuts the number of cars it produces annually to 3.3 million, from 4 million. Renault will also pull out of China, where it has failed to get much traction.
Renault has been hit hard by the pandemic. Renault sales in the European Union, its most important market, fell almost 80 percent in April, when dealerships were closed and most buyers were not leaving their homes.
The move came just hours after Twitter added new fact-checking labels to hundreds of tweets, Kate Conger and Mike Isaac reported, escalating the social media network’s confrontation with Mr. Trump.
White House officials drafted an executive order that would make it easier for federal regulators to argue that companies like Facebook, Google and Twitter are suppressing free speech when they move to suspend users or delete posts.
“They’ve had unchecked power to censure, restrict, edit, shape, hide, alter virtually any form of communication between private citizens or large public audiences,” Mr. Trump said as he signed the order on Thursday.
American Airlines and Delta Air Lines are offering buyouts to employees as they prepare for a rebound in demand for air travel that most industry expect will take years to materialize.
“Delta will have to be a smaller airline as we adjust to reduced demand and the need for distancing and safety during travel,” Delta’s chief executive, Ed Bastian, told employees in a memo on Wednesday. “A smaller Delta unfortunately means fewer people will be required.”
Delta is offering two programs — an early retirement option and a general buyout package — to most employees except for pilots, whose union is still in talks with management, Mr. Bastian said. The email did not say how much of its work force the airline was seeking to pare.
The American program, also announced on Wednesday, applies to management and support staff, which the airline hopes to cut by about 30 percent, or about 5,000 workers.
The British low-price airline easyJet said on Thursday that it planned to reduce staff by up to 30 percent and that it expected to fly in the July-September period at nearly 30 percent of the capacity a year earlier. When flights restart, staff and passengers will be required to wear masks and, at least initially, no onboard food service will be offered, the company said.
Going into the crisis, American had 130,000 employees and Delta had 90,000; about 40,000 workers at each have taken voluntary leave or early retirement. Most airline jobs are protected into the fall as a condition of the CARES Act, which provided $50 billion to passenger airlines, half of it earmarked to pay employees through September.
An early rally in the stock market Thursday faded late in the day after President Trump said he would hold a news conference about China amid rising tensions between the world’s two largest economies.
The S&P 500 turned negative after earlier rising as much as 1 percent. Before the reversal, stocks had been set for a third day of gains this week, a rally that reflected optimism about prospects for an economic rebound.
Mr. Trump’s announcement of a Friday news conference came as the United States intensified pressure on China over Hong Kong. China’s legislature on Thursday approved a plan that would broaden many of the mainland’s security practices to the semiautonomous city. The Trump administration signaled Wednesday that it was likely to end some or all of the U.S. government’s special trade and economic relations with Hong Kong because of the move.
Tension between Washington and Beijing, which are currently negotiating a trade deal, has been one of the few factors that has managed to deter bullish investors who have looked past the coronavirus pandemic’s immense human and economic toll, and instead have focused on signs of a recovery as they bid stocks higher.
Catch up: Here’s what else is happening.
Nordstrom, the top-performing department store in the United States, said on Thursday that its net sales fell 40 percent to $2 billion in the first quarter, and that it posted a net loss of $521 million. Digital sales accounted for more than half of its total net sales during the quarter. The retailer closed stores on March 17 and started reopening in early May. It said it now has about 40 percent of its locations open.
Costco Wholesale said on Thursday that its net sales rose 7.3 percent to $36.5 billion in its quarter ending May 10 and that it posted a net profit of $838 million, as the pandemic prompted customers to stock up on goods. The warehouse chain, which has more than 500 U.S. locations, said its income took a hit from a $283 million pretax charge “from incremental wage and sanitation costs related to Covid-19.”
J.C. Penney, the 118-year-old retailer that filed for bankruptcy this month, said on Thursday that it has reopened 304 of its stores, roughly one-third, and plans to have almost 500 stores open by June 3. The chain said that it was offering curbside pickup at its opened stores and special shopping hours for “at-risk customers” on Wednesdays and Fridays.
Reporting was contributed by Ben Casselman, Niraj Chokshi, Kate Conger, Jack Ewing, Mike Isaac, Maggie Haberman and Carlos Tejada.