Tech Meltdown Drags Wall Street Lower: Live Updates

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Stocks on Wall Street fell Tuesday for a third-straight session, led by another sharp sell-off in shares of the same giant tech companies that had led the market back into record territory last month.

The Nasdaq composite tumbled more than 4 percent, in the latest of a series of declines for technology stocks that began last week as investors abruptly began to recalibrate their appetite for the previously high-flying shares. The S&P 500 fell about 2.8 percent.

The trigger for the sell-off remains at issue. Late last week the Financial Times reported that SoftBank, a Japanese conglomerate that has a history of making outsize bets, had been a large buyer of options linked to the rising tech stocks, helping supercharge both the tech sector, and the broader stock market, in August. SoftBank declined to comment to The New York Times.

But the idea that a single large buyer could have accounted for the recent momentum of giant tech stocks — Apple alone was up more than 20 percent last month — fed the worry among some investors and analysts that the tech rally had gone too far too fast.

“We’ve seen these incredible run-ups,” said JJ Kinahan, chief market strategist at TD Ameritrade. “People are starting to question their valuation.”

On Tuesday, Apple fell more than 6 percent, and Microsoft dropped more than 5 percent. Amazon, Facebook and Google’s parent, Alphabet, were also sharply lower.

Those companies have become crucial bellwethers of the broader market this year. Since the coronavirus crisis hit in March, investors had flocked to buy their shares, convinced that their already dominant positions in the American economy would only grow stronger as lockdowns resulted in more work from home and less spending elsewhere.

As their market values surged, so did their influence over benchmarks like the S&P 500. At the end of last week, these five stocks accounted for some 24 percent of the index, according to Goldman Sachs analysts.

With Tuesday’s decline, the Nasdaq breached what market watchers call a correction — a decline of more than 10 percent from its last high. That’s an arbitrary threshold but is often taken as a signal that investors have turned more pessimistic about the markets. The S&P 500 is down about 7 percent from its highest point, reached on Wednesday.

Oil futures also fell sharply on Tuesday, reflecting concerns about supply of crude as the summer driving season in the United States ends and with the Organization of Petroleum Exporting Countries, which slashed oil production in May, now adding to output.

Shares of energy companies followed the price of crude lower, with Halliburton, Marathon Oil, and Diamondback Energy among the worst performers on the S&P 500.

Credit…Johannes Eisele/Agence France-Presse — Getty Images

Some JPMorgan Chase employees and customers misused federal coronavirus aid money, according to an internal memo reviewed by The New York Times.

The memo, which was sent by the bank’s operating committee on Tuesday, said that officials had found “instances of customers misusing Paycheck Protection Program loans, unemployment benefits and other government programs.”

The committee, a group of senior leaders that includes its chief executive, Jamie Dimon, as well as its chief risk officer and its general counsel, did not describe any specific misconduct by employees, but it said that, in general, some of the activities officials had identified could be illegal.

“We are doing all we can to identify those instances, and cooperate with law enforcement where appropriate,” they wrote.

Banks played a central role in distributing much of the $2.2 trillion in aid created by the federal government under the CARES Act to help Americans deal with the economic effects of the coronavirus. They were in charge of vetting businesses seeking aid money, and they also had a hand in distributing unemployment benefits that included an extra $600 a week in federal funds.

There was never a hope of keeping fraudsters away from the money entirely, and many lenders are scrutinizing customers’ activities. Some determined criminals created fake businesses to take advantage of the forgivable loans offered by the Paycheck Protection Program, while others got funds using stolen identities. JPMorgan, the country’s largest bank, handed out more than $29 billion in P.P.P. loans, the most by any lender.

It is not clear how widespread the misconduct among JPMorgan’s employees and customers had been or how it compared with other banks.

“We distributed the note to reiterate our high standards,” said a JPMorgan spokeswoman, Patricia Wexler.

News of the memo was reported earlier by Bloomberg.

Credit…Ting Shen for The New York Times

The latest update from the Federal Reserve on its emergency lending programs shows that its effort to support midsize businesses is funneling money to a varied set of companies — although it continues to see muted use relative to its vast capacity.

In the so-called Main Street program, which had helped to support slightly more than $1 billion in lending as of the Aug. 31 report, the Fed takes 95 percent of qualifying loans off bank balance sheets. The idea is to support cheap lending for companies that entered the pandemic recession in good shape. In theory, it could back up about $600 billion in loans.

Many borrowers and lenders have chosen not to use the program, either because they still have access cheaper private loans or because the terms are fairly restrictive, with limits on recipient indebtedness.

But the companies that are tapping the program appear to be a diverse group. So far, big loan recipients include Clair Global Corporation — a touring production support company — a large casino, a trucking company and several construction companies. Health care, oil and gas firms, fish companies and a holiday-themed apparel seller called Tipsy Elves were among the businesses that tapped the program for smaller amounts.

City National Bank of Florida made 59 of the 118 total Main Street program loans, accounting for $332 million of the total money lent — nearly a third of the total.

The Fed’s various emergency lending programs have also seen somewhat limited use as markets stabilized and economic activity picked up over the summer. Its corporate bond-buying program has steeply scaled back its purchases. The Fed held about $12.75 billion in corporate bonds as of early September, data out last week showed, up from $12.3 billion about a month earlier.

The detailed data released Tuesday show that the central bank is no longer increasing its holdings of exchange-traded funds, bundles of bonds that trade like stocks, as it focuses instead on individual bonds.

Credit…Kaiti Sullivan for The New York Times

The rise of the virtual office during the coronavirus pandemic has placed special burdens on people of color.

With fewer connections and less extensive networks than white colleagues, Black and Hispanic workers can find themselves more isolated than ever in a world of Zoom calls and virtual forums. Being visible is critical for people of color in the workplace and harder to achieve in a work-from-home environment, said Joy Fitzgerald, chief diversity and inclusion officer at the drugmaker Eli Lilly.

“To succeed, 50 percent is performance, 25 percent is perception and the other 25 percent, which is a force multiplier, is visibility,” Ms. Fitzgerald said. “But if people don’t know you, they don’t see you. It creates a higher degree of complexity and challenge for underrepresented groups.”

Kimberly Bryant, the founder of the nonprofit group Black Girls Code, cited another missing piece: the spontaneous encounters with other people of color that gave her a sense of belonging as she forged a career as an engineer.

Ms. Bryant, who like Ms. Fitzgerald is African-American, said the wave in the cafeteria, the smile in the elevator and the nod in the hallway “all would lead to connections that were instrumental in terms of my success.

Credit…Carlos Osorio/Associated Press

Lululemon, the athletic apparel retailer known for its $100 yoga pants, managed to eke out an increase in sales increase during a grim environment for clothing companies.

The retailer said on Tuesday that net revenue in the three months that ended Aug. 2 rose 2 percent to $903 million, from the same period the year before, even as sales at company-operated stores plummeted by about 51 percent. Direct-to-consumer revenue more than doubled in the second quarter, helping Lululemon post a net profit of about $87 million. Net revenue had declined 17 percent in the first quarter, as the company grappled with temporary store closures.

Lululemon, with its upscale customer base and comfortable clothing, has been viewed as a relative winner as the pandemic has roiled the retail industry and especially apparel chains. Purveyors of clothing meant for offices and formal settings have struggled in recent months, with major names like Brooks Brothers and J. Crew filing for bankruptcy. But consumers have flocked to athletic clothing and so-called athleisure garb.

Earlier this summer, Lululemon announced its acquisition of Mirror, a home fitness start-up that sells a $1,495 wall-mounted machine for streaming workout classes, signaling an expansion beyond apparel.

Barely a week ago Tesla shares were flying higher than ever. The electric-car maker had just completed a five-for-one split of its shares, which closed at a split-adjusted record price. And after a fourth consecutive quarter of profitability, it seemed on the brink of addition to the S&P 500, which would create new demand for its shares from index funds.

Now things don’t look as rosy. Tesla’s shares closed at $330.21 on Tuesday, down 21 percent on the day and one-third below their recent peak.

The tumble started after the company announced in a regulatory filing on Sept. 1 that it would raise up to $5 billion in capital by selling new shares “from time to time” at market prices. That figure represented barely 1 percent of Tesla’s market capitalization, but shares fell nearly 5 percent.

Then, on Friday, Tesla was bypassed when the S&P 500 components were shuffled. And sentiment may have been influenced by a broader swoon in technology stocks that has continued into this week.

“For the last 10 years, Tesla is a stock that has been very erratic,” said Karl Brauer, an independent auto analyst. “And in the run-up in the last four months, the fundamentals simply didn’t make sense, so it’s natural that you will have big pullbacks at various times.”

Still, on a split-adjusted basis, the decline leaves Tesla shares roughly where they were in mid-August — and more than twice as valuable as in early May, when the chief executive, Elon Musk, said on Twitter that the “Tesla stock price is too high.” The company’s market capitalization is three times the combined value of Ford Motor, General Motors and Fiat Chrysler.

Oil prices tumbled on Tuesday, as the recovery from last spring’s collapse gave way to a wave of concerns that the market was not as strong as expected.

West Texas Intermediate, the American benchmark, fell around 7 percent on Tuesday to $36.94 a barrel, while Brent crude, the international standard, slipped almost 5 percent to $39.95.

“People came back from the holiday and said that this whole summer of bullishness is over,” said Roger Diwan, vice president for energy at IHS Markit, a research firm. Instead, Mr. Diwan said, market participants are responding to signs of weakening demand, growing supplies of oil, and what promises to be a nerve-jangling presidential election campaign in the United States.

Oil prices have rallied sharply from their April lows, when some futures prices fell into negative territory, and held steady during the summer. Now, when traders look ahead, prices look too high. With the summer driving season over, the outlook for demand is weak over the next few months.

At the same time, the Organization of the Petroleum Exporting Countries, which slashed oil production in May, is now adding output, joining producers in the United States, who are also gradually pumping more crude.

“Prices have diverged from fundamentals for awhile, “ said Amrita Sen, head of oil analysis at Energy Aspects, a market research firm.

The coronavirus pandemic, which has slammed demand, is clearly far from over, with cases rising in several countries including Britain, France and Spain. And there are signs that Chinese buyers who have stocked up on crude at what seemed low prices may be reaching their limit.

Credit…Pascal Rossignol/Reuters

Boeing said Tuesday that it expects deliveries of its 787 Dreamliner to be delayed in the near-term as it conducts thorough inspections of the plane amid mounting quality-control concerns.

The company has already identified production problems with some Dreamliners, wide-body jets that are capable of carrying hundreds of people long distances. Boeing said last month that it grounded eight of the planes for inspection and repair after finding that it had fallen short of its own standards in two ways during manufacturing of the plane’s body. On Tuesday, Boeing said it identified another problem related to the plane’s horizontal stabilizer, but said that the issue did not pose an immediate safety risk.

The Federal Aviation Administration is also investigating the company for manufacturing flaws related to the plane.

“The agency continues to engage with Boeing,” the F.A.A. said in a statement. “It is too early to speculate about the nature or extent of any proposed airworthiness directives that might arise from the agency’s investigation.”

On Monday, The Wall Street Journal, citing agency documents, reported that the F.A.A. is considering whether to require deeper inspections of most of the approximately 1,000 Dreamliners delivered since 2011.

The Dreamliner is a star of Boeing’s fleet, a relatively fuel-efficient twin-aisle airplane suited to carry hundreds of passengers on long, international flights. Japan’s All Nippon Airways owns 74 of the planes, more than any other airline. United Airlines is second, with 57 planes, followed by Japan Airlines, with 49, and American Airlines, with 44.

The Dreamliner problems come as Boeing prepares for the return of the 737 Max, which was grounded worldwide more than a year ago after 346 people were killed in two fatal accidents.

That grounding and the pandemic’s devastating impact on air travel has hurt the company. So far this year, Boeing has lost a net 378 orders. It gained 54 net orders last year and 893 in 2018.

This year’s loss worsens significantly when applying an accounting method that weighs declining confidence in orders, even though they may technically still be on the books. According to that adjustment, Boeing has lost a net 932 orders this year. It has a backlog of 4,387 orders, down from more than 5,400 at the start of the year. Shares of Boeing fell nearly 5 percent on Tuesday.

Credit…Christopher Lee for The New York Times

Alaska chopped resources for public broadcasting. New York City gutted a nascent composting program that could have kept tons of food waste out of landfills. New Jersey postponed property-tax relief payments.

Across the nation, states and cities have made an array of fiscal maneuvers to stay solvent and are planning more in case Congress can’t agree on a fiscal relief package after the August recess.

House Democrats included nearly $1 trillion in state and local aid in the relief bill they passed in May, but the Senate majority leader, Mitch McConnell of Kentucky, has said he doesn’t want to hand out a “blank check” to pay for what he considers fiscal mismanagement, including the enormous public-pension obligations some states have accrued. There has been little movement in that stalemate lately.

Economists warn that further state spending reductions could prolong the downturn by shaking the confidence of residents, whose day-to-day lives depend heavily on state and local services.

“People look to government as their backstop when things are completely falling apart,” said Mark Zandi, chief economist at Moody’s Analytics. “If they feel like there’s no support there, they lose faith and they run for the bunker and pull back on everything.”

State and local governments administer most of America’s programs for education, public safety, health care and unemployment insurance. They also provide a wide variety of smaller services, such as outdoor recreational facilities or highway rest stops, that improve the quality of life. The costs of many of these programs have spiraled because of the pandemic, which has at the same time caused an economic slump that has driven down tax revenues.

Collectively, state governments will have budget shortfalls of $312 billion through the summer of 2022, according to a review by Moody’s Analytics. When local governments are factored in, the shortfall rises to $500 billion. That estimate assumes the pandemic doesn’t get worse.

Credit…David Degner for The New York Times

Used cars are usually overlooked in the fanfare accorded cutting-edge electric cars and gussied-up pickup trucks. Now they are suddenly the industry’s hottest commodity.

Consumers are snapping up used vehicles as second or third cars so they can avoid trains, buses or Ubers during the coronavirus pandemic. Others are buying used rather than new to save money in an uncertain economy, not knowing when they or their spouse might lose a job. Demand for older cars has also been fed by a roughly two-month halt in production of new cars this spring.

Across the country, the prices of used cars have shot up. The increase defies the conventional wisdom that cars are depreciating assets that lose a big chunk of their value the moment they leave the dealership. In July alone, the average value of used cars jumped more than 16 percent, according to Edmunds.com.

In June, the most recent month for which data is available, franchised car dealers sold 1.2 million used cars and trucks, according to Edmunds, up 22 percent from a year earlier. It was the highest monthly total since at least 2007.

“Used cars are supposed to depreciate, but I’d look up the book value of a car on the lot and see it was higher than at the beginning of the month,” said Adam Silverleib, president of Silko Honda in Raynham, Mass. “I’ve never seen that before.”




Ability to work from home

National Bureau of Economic Research

Ability to work from home

Ability to work from home


When companies dispatched office staff to work remotely from home, cut business trips and canceled business lunches, they also eliminated the jobs cleaning their offices and hotel rooms, driving them around town and serving them meals.

For this army of service workers across urban America, the pandemic risks becoming more than a short-term economic shock. If white-collar America doesn’t return to the office, service workers will be left with nobody to serve.

The worry is particularly acute in cities, which for decades have sustained tens of millions of jobs for workers without a college education. Now remote work is adding to other pressures that have stunted opportunities. The collapse of retailers like J.C. Penney and Neiman Marcus has wiped out many low-wage jobs. The implosion of tourism in cities like New York and San Francisco will end many more.

Fear is budding that even when the pandemic has passed, the economy may not provide the jobs it once did.

“Some law firms are finding that it is more productive for their lawyers to stay at home,” said Kristinia Bellamy, a janitor who was laid off from her job cleaning offices at a high-rise housing legal firms and other white-collar businesses in Midtown Manhattan. “This might be the beginning of the end for these commercial office buildings.”

Consider Nike’s decision in the spring to allow most employees at its headquarters in the Portland area to work remotely. Aramark, which runs the cafeteria and catering at Nike, furloughed many of its workers. With no need for full services anticipated “for an undefined period,” Aramark says, 378 employees — waiters, cooks, cashiers and others — now face permanent layoff on Sept. 25.

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