Stocks on Wall Street fell nearly 2 percent in early trading on Wednesday and European shares sank to their lowest levels in months as the focus returned to the pandemic’s new wave.
In Europe, governments are weighing far more severe shutdowns to curb the spread of the coronavirus, after localized efforts seem to have failed. In the United States, New Jersey’s largest city — Newark — has imposed a curfew and reinstated some limits on gatherings to control an outbreak there, while other local governments are considering taking similar steps.
The echoes of the early days of the pandemic, when the shutdowns took a heavy toll on the economy, are not lost on financial markets.
The Stoxx Europe 600 index tumbled 3 percent, and in Britain, the FTSE 100 index fell more than 2 percent.
Highlighting the economic concern, oil prices fell about 5 percent. The price of West Texas Intermediate crude, the U.S. benchmark, dropped below $37 a barrel.
“The financial markets are still nervous about rising case numbers in the pandemic,” Paul Donovan, chief economist at UBS Global Wealth Management, said in a comment to clients. “The concern is about the impact this may have on fear levels, either amongst consumers or amongst policymakers. In fact it seems policy maker fear is the bigger concern at the moment.”
President Emmanuel Macron of France is expected to address the country on Wednesday to detail more restrictions as the number of daily cases in France surges. On Tuesday, the seven-day average of cases was more than 38,000. Already, two-thirds of the population live in areas with a 9 p.m. curfew. The expansion of this curfew and asking people to stay home on weekends are among the measures being considered.
In Italy, protests have broken out in response to a monthlong increase in restrictions, which includes a 6 p.m. closing time for bars and restaurants. In Germany, Chancellor Angela Merkel is meeting with the heads of the federal states on Wednesday to discuss new measures. Among the steps the German government might take include limits on nonessential travel, as well as the closure of restaurants, bars and gyms. The plan could go into effect next week and last through November.
In the United States, traders have already been on edge as the presidential election approaches and lawmakers fail to reach an agreement on what economists say is an essential plan to support businesses and out of work Americans. The rise in cases across the country is only adding to their concerns, analysts say.
“Uncertainty about COVID-19-related mobility restrictions and US politics mean we should expect volatility to remain elevated for the balance of the year,” Mark Haefele, chief investment officer for UBS Global Wealth Management, wrote to clients this week. “The continued spread of the virus and enactment of new measures risk slowing or reversing the bounce back in European growth in recent months, and delay the pace at which economic activity can return.”
Christopher F. Schuetze contributed reporting.
Boeing said on Wednesday that it planned to slash another 7,000 jobs through the end of next year, building on a much larger cut announced this spring. In all, the company expects to end 2021 with about 130,000 employees, nearly 19 percent fewer than at the start of this year.
“As we align to market realities, our business units and functions are carefully making staffing decisions to prioritize natural attrition and stability in order to limit the impact on our people and our company,” Dave Calhoun, Boeing’s president and chief executive, said in a note to employees on Wednesday.
News of the job cuts comes as Boeing reported a $466 million loss in the three months through September, on revenue of more than $14 billion. Revenue from its commercial airplane business fell about 56 percent from the same quarter last year as Boeing deals with crises caused by the pandemic and the grounding of the 737 Max in March 2019 after 346 people were killed in two fatal crashes.
The Max could return to the skies in the coming months, after making significant progress among global regulators. Boeing said it has completed about 1,400 test and check flights aboard the plane, a workhorse of its fleet, as it prepares for the recertification.
The company’s Max backlog has fallen by more than 1,000 orders this year because of cancellations and stricter accounting that weighs the diminishing odds that an order will be fulfilled. Over all, the company has more than 4,300 commercial planes in its backlog, which it values at $313 billion.
Boeing said it expected it would take about three years for airline passenger traffic to recover to the numbers seen in 2019. Foot traffic at federal airport checkpoints on Tuesday was down about 66 percent compared with a year ago, according to the Transportation Security Administration.
Years before he became president, Donald J. Trump got a very sweet deal from some very big financial institutions.
First, they agreed to lend him a total of $770 million to build a 92-story skyscraper in downtown Chicago. Then, when the 2008 financial crisis hit and Mr. Trump defaulted on his loans, those same banks and hedge funds either gave him years more to repay his loans or simply forgave much of what he owed. The Internal Revenue Service considers such forgiven debts to be taxable income, but Mr. Trump managed to avoid paying almost any taxes.
On Wednesday, after The New York Times reported on the project’s travails, Mr. Trump defended his handling of the Trump International Hotel and Tower in Chicago.
“I was able to make an appropriately great deal with the numerous lenders on a large and very beautiful tower,” the president wrote on Twitter. “Doesn’t that make me a smart guy rather than a bad guy?”
As a developer long ago, and continuing to this day, the politicians ran Chicago into the ground. I was able to make an appropriately great deal with the numerous lenders on a large and very beautiful tower. Doesn’t that make me a smart guy rather than a bad guy?
— Donald J. Trump (@realDonaldTrump) October 28, 2020
There is no question that the deal was a great one for Mr. Trump. His lenders — including Deutsche Bank and Fortress Investment Group, the hedge fund and private equity firm — had the right to seize the building as collateral but opted not to. Their conclusion was that it would be simpler and safer to reach a peaceful resolution to the dispute with the litigious and publicity-seeking reality-TV star.
As a result, about $270 million of debt that Mr. Trump owed to Fortress and other private equity firms and hedge funds was wiped away. Mr. Trump still owes Deutsche Bank a total of at least $330 million, including $45 million on the Chicago project. Those Deutsche Bank loans, which Mr. Trump has personally guaranteed, are due in 2023 and 2024.
In his tweet on Tuesday, Mr. Trump implied that his Chicago tower’s struggles were the result of politicians having run the city “into the ground.”
That is revisionist history. Mr. Trump and his daughter Ivanka have repeatedly boasted that the skyscraper was a great place to live. “I love Chicago” was the headline on a piece Mr. Trump wrote for The Chicago Tribune about his building in 2014.
The reality is that Mr. Trump’s hotel-and-condo tower has struggled compared to other nearby buildings — in part because of the tarnished Trump brand. Retailers balked at renting space in the skyscraper’s mezzanine interior. The Real Deal noted last year that the tower only had one retail client and called the skyscraper “Chicago retail’s biggest failure.”
Deutsche Bank, Germany’s largest bank, reported a profit in the third quarter of 2020 after a loss a year ago as volatile financial markets caused trading revenue to surge.
The bank, which is trying to recover from years of scandals and losses, has also cut costs.
It said that it earned 309 million euros, or $364 million, from July through September, compared with a loss of 832 million euros in the third quarter of 2019.
Deutsche Bank has long been regarded as one of Europe’s most troubled big banks. The earnings, the third quarterly profit in a row, provided some reassurance that the bank and others like it are surviving the pandemic and are less likely to set off a financial crisis.
Much of the improvement in profit came from helping clients to trade debt and currencies. Fees from trading those assets increased by nearly half, the bank said. That helped offset an increase, compared with a year earlier, in the amount of money the bank set aside for problem loans.
The bank also reduced the number of employees who work at retail branches and other activities by 3,000 from a year ago, to 87,000.
PayPal announced plans to invest more than $50 million in eight Black- and Latino-led venture capital firms as part of a $530 million initiative to combat systemic racism and police brutality, reported first in the DealBook newsletter.
The eight firms — Chingona Ventures, Fearless Fund, Harlem Capital, Precursor, Slauson & Co., Vamos Ventures, Zeal Capital Partners and one fund yet to be named — were chosen after PayPal interviewed more than 60 candidates, all of whom applied through PayPal’s website. (PayPal declined to specify how much money each will receive.)
The payments giant had been thinking about how to erase the racial wealth gap, something that other companies have also addressed, and hit upon supporting Black- and Latino-led venture firms. These investors provide crucial capital to entrepreneurs at a stage that PayPal itself can’t — it invests in Series A fund-raising rounds and later — and are focused on businesses that bigger venture firms have largely ignored.
“So little venture money goes into minority communities,” said Dan Schulman, PayPal’s chief executive. “This is a way to think about how we start to create wealth creation.”
With its investments, PayPal will instantly become one of the biggest investors for each of the firms. The money “certainly moves the needle in terms of what we’re trying to do,” said Austin Clements of Slauson & Company. But corporate America could do more to help fight racial inequality, said Samara Hernandez of Chingona: “A lot of it is just P.R.”
The Commerce Department on Thursday will release its initial estimate of economic growth for the third quarter, and it’s going to show that the economy grew at its fastest rates since reliable records began after World War II.
But that doesn’t mean the economy has recovered from its collapse earlier this year, and it’s important to know why.
The numbers will certainly show the economy rebounding. Economists surveyed by FactSet expect that gross domestic product — the broadest measure of goods and services produced in the United States — grew about 7 percent from the second quarter, or 30 percent on an annualized basis.
It doesn’t make sense to consider Thursday’s report in isolation. The third quarter’s record-setting growth is effectively an echo of the second quarter’s equally unprecedented contraction, when business shutdowns and stay-at-home orders led gross domestic product to fall by 9 percent. Strong growth was inevitable as the economy began to reopen.
The economy is still in a hole. If G.D.P. fell by 9 percent in the second quarter and rose by about 7 percent in the third quarter, the economy is not almost back to where it started. The big drop in output in the second quarter means that third-quarter growth is being measured against a smaller base, and the economy is still 3 to 4 percent smaller than it was before the pandemic. (For comparison, the economy shrank 4 percent during the entire Great Recession a decade ago.)
Annualized figures are even more misleading. Gross domestic product in the United States is usually reported at an annual rate, meaning how much output would grow or shrink if that rate of change were sustained for a full year. But during periods of rapid change, annual rates can be confusing.
In the second quarter, for example, G.D.P. fell at an annual rate of 31.4 percent. That makes it sound as if the economy shrank by nearly one-third, when in fact it shrank by a bit less than a tenth.To avoid confusion, The Times plans to emphasize simple, nonannual percentage changes from both the second quarter and the fourth quarter of last year, before the pandemic began. (We gave a more detailed explanation of this decision before the second-quarter report in July.)
UPS reported revenue of $21.2 billion for the third quarter on Wednesday, a 16 percent increase from the same period last year, with many Americans still shopping online instead of at stores during the pandemic and retailers relying on shipping services to get purchases to customers’ homes. The company earned $2 billion for the quarter, up 11.8 percent compared with last year. “Our results were fueled by continued strong outbound demand from Asia and growth from small and medium-sized businesses,” the UPS chief executive, Carol Tomé, said in a statement.
Microsoft reported its most profitable quarter ever on Tuesday, as the pandemic accelerated the shift of work and school to online services. Sales for the quarter that ended in September were $37.2 billion, up 12 percent from a year earlier, and profit rose 30 percent to $13.9 billion. Revenue from Microsoft’s core cloud computing platform, Azure, grew 48 percent in the quarter, and large companies and other organizations accelerated their commitments to buy more cloud services in the future, with bookings up 18 percent, excluding currency fluctuations.
3M reported sales of $8.4 billion for the third quarter on Tuesday, a 4.5 percent increase from the same period last year. Demand for cleaning and home improvement supplies among other goods bolstered 3M’s domestic sales, offsetting lower sales for products such as office supplies, which took a hit as the pandemic continues to keep workers at home. 3M has ramped up production of N95 masks to respond to shortages of personal protective equipment for health care workers during the pandemic.