Wall Street is set to continue its rally as global markets drift.
U.S. stock futures were higher while most European stock indexes dipped on Monday, after a positive trading day in Asia. Shares of the biggest U.S. airlines surged in premarket trading, continuing their rally on signs that domestic air travel is starting to come back.
Futures for the S&P 500 were up about half a percent, indicating that Wall Street would open higher, continuing last week’s rally. Stocks in France and Germany were down, while Britain’s FTSE 100 was flat.
As economies begin to reopen, investors are watching for signs of a second wave of the coronavirus outbreak that could impact business all over again. According to data compiled by The New York Times, new infections are still increasing in more than a third of U.S. states. Public officials are also wary of a spike in new cases as thousands of protesters across the country demonstrate against police brutality after the death of George Floyd.
European investors were weighing fresh data from Germany that showed a 17.9 percent slump in industrial output in April compared with the month before, a record decrease in Europe’s largest economy. In Britain, there was a glimmer of hope: The government was reportedly considering allowing pubs and restaurants to open for outdoor drinking and dining beginning June 22, earlier than expected.
On Friday, stocks got a boost after U.S. jobs figures came in much stronger than expected, showing employers added 2.5 million jobs in May. The S&P 500 rose more than 2 percent, coming close to recouping all of its losses for 2020 so far. Some investors are wondering how long governments will be willing to give the global economy a push, and how long it will take for the world’s growth engines to come back to full speed.
As some of the wealthiest health care companies in the United States received billions of dollars in taxpayer funds to help them cope with lost revenue from the pandemic, they laid off or cut the pay of tens of thousands of doctors, nurses and lower-paid workers, while continuing to pay their top executives millions.
The New York Times analyzed tax and securities filings by 60 of the country’s largest hospital chains, which together have received more than $15 billion in emergency funds through the economic stimulus package in the federal CARES Act.
The hospitals — including publicly traded juggernauts like HCA and Tenet Healthcare, elite nonprofits like the Mayo Clinic, and regional chains with thousands of beds — are collectively sitting on tens of billions of dollars of cash reserves that are supposed to help them weather an unanticipated storm. They awarded their five highest-paid officials about $874 million in the most recent year for which they have disclosed their finances.
At least 36 of those hospital chains have laid off, furloughed or reduced the pay of employees as they try to save money during the pandemic.
More than a dozen workers at the wealthy hospitals said in interviews that their employers had put the heaviest financial burdens on front-line staff, including low-paid cafeteria workers, janitors and nursing assistants. They said pay cuts and furloughs made it even harder for medical workers to do their jobs, forcing them to treat more patients in less time.
‘Corporate America has failed black America.’
In the past week, it has seemed like every major company has publicly condemned racism. All-black squares cover corporate Instagram. Executives have made multimillion-dollar pledges to anti-discrimination efforts and programs to support black businesses.
Yet many of the same companies expressing solidarity have contributed to systemic inequality, targeted the black community with unhealthy products and services, and failed to hire, promote and fairly compensate black men and women, David Gelles writes.
“Corporate America has failed black America,” said Darren Walker, the president of the Ford Foundation and a member of the board of Pepsi, and who is black. “Even after a generation of Ivy League educations and extraordinary talented African-Americans going into corporate America, we seem to have hit a wall.”
With dozens of cities protesting the violent deaths of George Floyd, Ahmaud Arbery, Breonna Taylor and others, a national conversation about racism is underway. For black executives, who have spent their lives excelling at business while overcoming structural discrimination, the killings and ensuing protests have unleashed an outpouring of emotion. Many are speaking candidly about their private fears, as well as their disappointment with the corporate apparatus that made them stars.
Robert F. Smith, a private equity billionaire and the richest black man in America, said he had been overwhelmed by conflicting feelings. “I am saddened, I am angry, I am upset and I am determined,” he said. “I run through that wave of emotions every minute.”
Something remarkable is percolating in the commercial real estate market: Investors may end up losing millions in tax savings on gains from the sale of their properties because of the coronavirus pandemic.
Like-kind real estate exchanges, also known as 1031 exchanges (after the provision in the Internal Revenue Code), allow investors to sell a commercial property and pay no tax on the gains as long as the money from that sale is reinvested in other real estate. It could be a similar building, land or even air rights.
To reap the benefit, real estate investors need to identify a replacement property 45 days after the sale of the original property and close on the purchase within 180 days. If the criteria are met, the investors can defer taxes on the gains from the sale of the property. The deferral can extend until the investor’s death, at which point the capital gains tax is wiped out.
If the criteria are not met, the investors face not only an enormous tax bill for the gains but additional taxes for deductions taken while they owned the building. That can amount to millions of dollars for some properties.
As lockdowns complicated closing deals, the real estate industry lobbied the Treasury Department to get extensions on those dates. But once the relief was granted, deals began to fall apart.
Mortgage rates may be appealingly low, but people shopping for a new home this spring face a challenging market.
Demand, which was pent up during coronavirus stay-at-home orders, and a dearth of homes for sale are keeping prices high and setting off bidding wars in some areas as states continue to reopen for business. Some buyers may also find it tougher to qualify for mortgages, as lenders require higher credit scores and bigger down payments in response to higher unemployment and economic uncertainty in the pandemic.
Nationally, the median price for a home, excluding new construction, was about $287,000 in April, up more than 7 percent from a year earlier, the National Association of Realtors reported.
Now, with many states lifting restrictions on home tours, the housing market is reawakening. Shoppers are feeling more comfortable visiting properties: About two-thirds of people who attended an open house within the past year said they would attend an open house now “without hesitation,” a separate survey from the Realtors association found.
But some sellers remain cautious. They want to show homes by appointment only, and they want offers from serious buyers who have been preapproved for financing, said Lawrence Yun, chief economist with the association. “They don’t want casual shoppers,” he said.
Black Americans have always had a more difficult time in the job market. The latest evidence arrived on Friday when the government reported that 21 million Americans were unemployed in May.
The jobless rate for whites dipped to 12.4 percent, but the rate for African-Americans rose to 16.8 percent, meaning that nearly 1.4 million black men and nearly 1.7 million black women were part of the labor force but without work. The Hispanic jobless rate improved from April but was 17.6 percent.
Hiring prospects for African-American and Latino workers have long been hobbled by factors that stretch from poorer educational options and lopsided incarceration rates to outright discrimination by employers.
As Jerome H. Powell, chair of the Federal Reserve, explained at a news conference in April, “Unemployment has tended to go up much faster for minorities, and for others who tend to be at the low end of the income spectrum.” The coronavirus pandemic has only amplified the problem.
The current economic crisis has struck black and Latino families particularly hard in several ways. They are more likely to work in the service industries that were the first to be hit by layoffs, and less likely to work in white-collar jobs that can be done safely from home.
Since the pandemic, fewer than half the blacks who are 16 and older have a job. Latino unemployment rates are higher than any other racial or ethnic group.
Reporting was contributed by Jessica Silver-Greenberg, Jesse Drucker, David Enrich, Patricia Cohen, Ben Casselman, David Gelles, Ann Carrns, Matt Phillips, Paul Sullivan, Carlos Tejada and Kevin Granville.