Stocks and oil prices rebound from waves of selling.
Stocks on Wall Street and in major European markets rallied on Wednesday, and oil prices reversed some of the tremendous losses that had unnerved investors for several days.
The S&P 500 rose nearly 2 percent in early trading, after a nearly 5 percent drop on Monday and Tuesday.
The selling earlier in the week had been triggered by a collapse in oil prices, as the price of one oil benchmark dipped below zero for the first time, meaning some holders were ready to pay customers to take a barrel off their hands. The inversion in oil prices reflected disappearing demand for petroleum, and the fact that there are few places left to store all the crude still being pumped.
But on Wednesday, some stability returned to the energy market, with the price of both West Texas Intermediate crude, the American benchmark, and Brent crude, the international benchmark, sharply higher. Shares of companies in the energy industry, like Halliburton and Marathon Oil, were among the best performing stocks in the S&P 500.
Bond trading also signaled some returning optimism. U.S. Treasury bond prices fell, a signal that investors were turning back to riskier investments.
Those investors had other news to consider. The United States Senate on Tuesday passed a bipartisan $484 billion coronavirus relief package that would replenish a depleted loan program for distressed small businesses and provide funds for hospitals, states and coronavirus testing.
The private equity firm that agreed to buy Victoria’s Secret in February is trying to terminate the deal as the retail chain takes a hit from the coronavirus outbreak.
But in a Delaware court filing on Wednesday, Sycamore said that L Brands had breached certain aspects of the agreement and made representations that were now false with its response to the pandemic. L Brands shares plunged by about 20 percent.
In the filing, Sycamore pointed to the temporary closure of nearly all Victoria’s Secret and Pink stores, its furlough of most employees, salary cuts for senior staff and its failure to pay rent on U.S. stores in April. The firm said that Victoria’s Secret was now “saddled” with merchandise of “greatly diminished value.”
“That these actions were taken as a result of or in response to the COVID-19 pandemic is no defense to L Brands’ clear breaches of the transaction agreement,” the firm said.
L Brands, which also owns Bath & Body Works, said in a Wednesday statement that it believed Sycamore’s attempt to terminate the acquisition was “invalid,” and that it planned to “vigorously defend the lawsuit” and work toward a close of the deal.
Rupert Murdoch’s Fox Corporation, the owner of Fox News, announced pay cuts to its executive ranks. Mr. Murdoch’s son, Lachlan, detailed the cuts, which will affect 700 employees, in a companywide memo on Wednesday.
He and his father will forgo their salaries through September, though most of their compensation comes from stock awards and bonuses. Rupert Murdoch earns $5 million in salary but his compensation tops $29 million with incentives and stock. Lachlan Murdoch’s salary is $3 million, with an additional $20 million coming from stocks and bonuses.
Other high-level executives will also take a 50 percent pay cut, and people who work at the level of vice president will have their salaries reduced by 15 percent from May through July.
Lachlan Murdoch stressed the importance of aiding front-line workers affected by the coronavirus, suggesting ways that employees could help, including “virtual volunteering.” That stands in marked contrast to how the stars of Fox News have talked about the pandemic. Hosts including Jeanine Pirro and Laura Ingraham have promoted anti-social-distancing rallies across the country.
In his memo, Lachlan Murdoch said, “As a company, we have a responsibility in this moment to help each other and those in need and we are using our platforms and resources to inform our viewers and to give back to our audiences.”
Fannie and Freddie can now buy mortgages with missed payments.
A federal regulator took another step Wednesday to help mortgage firms dealing with a surge in missed payments form homeowners affected by the coronavirus pandemic.
The Federal Housing Finance Agency said that it would allow those firms to sell newly minted loans on which borrowers have stopped making payments to Fannie Mae and Freddie Mac — the two government-backed mortgage giants. The agency said the program would be for a limited time and only for mortgages meeting eligibility criteria. It did not offer specific details, so it was not clear how many mortgages would qualify for the program.
Normally, Fannie and Freddie, which are regulated by the agency, do not buy new loans that are in a state of payment forbearance. But the regulator said it was taking this step to help keep the mortgage market running and make it easier for firms to keep writing new mortgages.
Fannie and Freddie typically buy mortgages and bundle them into securities sold to investors, guaranteeing those mortgages against the risk of default to encourage investors to buy the securities, which in theory frees up mortgage firms to write more home loans.
Tyson Foods said on Wednesday that it would close its largest pork processing facility, the latest in a string of plant closings that has put a strain on the nation’s meat supply.
The plant in Waterloo, Iowa, had been running at reduced levels in recent days because workers were staying home, the company said.
Over the last few weeks, meat plants have become major “hot spots” for the coronavirus pandemic, with some reporting widespread illnesses among workers, posing a serious challenge to meat production. Other major meatpackers like Smithfield, JBS and Hormel have also closed plants in recent days.
Tyson said it would invite the Waterloo plant’s 2,800 workers to be tested for the coronavirus at the facility later this week.
“The closure has significant ramifications beyond our company, since the plant is part of a larger supply chain that includes hundreds of independent farmers, truckers, distributors and customers, including grocers,” the head of Tyson’s fresh meats division, Steve Stouffer, said in a statement.
The Occupational Safety and Health Administration, part of the Labor Department, has announced that there will be few inspections of workplaces for coronavirus hazards aside from those in high-risk activities like health care and emergency response.
“I wish they were more involved,” John Henshaw, who led the agency during the George W. Bush administration, said of OSHA’s role. “Certainly meatpacking — I don’t understand why they wouldn’t emphasize it.”
At the same time, OSHA has provided few of the incentives, like new workplace rules dealing specifically with infectious disease, that typically prompt employers to address hazards.
A Labor Department spokeswoman said that notwithstanding the new enforcement approach, “if OSHA were to find flagrant violations of the law, the agency would use all enforcement tools available.”
The Washington Post reported last week that the agency had received thousands of complaints from workers in a variety of industries saying they felt unsafe at work because of the virus.
Delta Air Lines reported a loss of $607 million between January and March, its first quarterly loss in five years, as the travel industry started to collapse in the wake of the pandemic.
The airline said it ended March with about $6 billion in cash on hand, but added that it was also burning through $100 million in cash per day by the end of that month. After cutting costs and expenses, Delta expects to slow that rate to $50 million per day by the end of June.
“The decade of work we put into the balance sheet to lower debt and build unencumbered assets has been critical to our success in raising capital and we expect to end the June quarter with approximately $10 billion in liquidity,” said Paul Jacobson, the chief financial officer, in a statement. On Tuesday, Delta announced that Mr. Jacobson had reversed his decision to retire in order to help guide the airline through the crisis.
Under the stimulus passed last month, Delta received $5.4 billion in grants and loans to pay its employees. It said it was also eligible for a $4.6 billion loan under the law, should it decide to take it. The airline added that it planned to cut schedules by 85 percent in the second quarter, in line with competitors like United Airlines, which reported a $2.1 billion quarterly loss on Monday.
Since early March, Delta had raised about $5.4 billion in capital, including a $3 billion loan, selling and leasing back $1.2 billion in aircraft and other measures. It also drew down an existing credit line of $3 billion and cut spending.
By the end of June, the airline expects to cut expenses in half, a saving of $5 billion, as it parks hundreds of aircraft and consolidates operations. Already, 37,000 of its 90,000 employees have taken short-term unpaid leave. Delta also said it expected to save after cutting executives’ pay.
Countries with economies that are heavily reliant on oil production are finding themselves in a dual crisis, and others have been forced to change policies that no longer make economic sense.
While Russia, Saudi Arabia and the United States — the biggest oil producers — have large financial cushions, the steep drop in demand as the world was put under lockdown has upended everything. It was a possibility even veteran industry experts did not foresee.
“No one imagined a crisis of this scope,” said Daniel Yergin, an expert on global energy and vice chairman of IHS Markit, a research firm. “This was in no scenario.”
In the United States, where oil prices fell below zero this week for the first time on record — meaning sellers had to pay customers to take oil off their hands — the glut is threatening severe economic pain in what had been a thriving domestic industry. The oversupply also has forced the Trump administration to negotiate with Russia and Saudi Arabia to curtail production.
Catch up: Here’s what else is happening.
The French carmaker Renault plans to begin limited production at a plant outside Paris on Monday, joining carmakers like Volkswagen and Daimler that are gradually emerging from lockdown. Renault resumed production last week at factories in Portugal and Spain that make engines and gearboxes. Renault’s plant in Flins, about 25 miles west of Paris, will be the first vehicle assembly plant in France to reopen. Initially only about one-quarter of the work force will report for duty to reduce the risk of infection, a spokeswoman said.
General Motors said on Tuesday that it was shutting down its four-year-old car-sharing service, Maven, the latest such venture to close its doors. Maven, which allows customers to rent cars by the hour, has struggled to build a substantial following. It was forced to suspend services in March because of the coronavirus outbreak.
Reporting was contributed by Isabella Kwai, Noam Scheiber, Sapna Maheshwari, David Yaffe-Bellany, Niraj Chokshi, Rick Gladstone, Keith Bradsher, Edmund Lee, Clifford Krauss, Vindu Goel, Kate Conger, Neal E. Boudette, Jack Ewing, Mohammed Hadi, Alan Rappeport, Carlos Tejada, Mike Ives, Katie Robertson and Kevin Granville.