Wall Street hits the brakes after strong, weekslong rally
Wall Street slowed Tuesday, a day after its remarkable, weekslong rally brought the S&P 500 back to positive for the year and the Nasdaq to a record high.
The benchmark index fell 0.8%, its largest loss in almost three weeks, as traders cashed in on some of the market’s recent gains. Financial, industrial and health care stocks led the slide. Technology companies were among the gainers, helping to push the Nasdaq to another all-time high.
Skeptics have been saying for weeks that Wall Street’s huge rally, which reached 44.5% between late March and Monday, may have been overdone. The economy has given glimmers of hope that the recession could end relatively quickly as governments lift their lockdown orders, but the strength and speed of the stock market’s rebound easily has outpaced expectations for a recovery in the broader economy and corporate profits.
The S&P 500 lost 25.21 points to 3,207.18. The index is now back in the red for the year and remains 5.3% below its all-time high set in February. The Dow Jones Industrial Average dropped 300.14 points, or 1.1%, to 27,272.30. The Nasdaq composite rose 29.01 points, or 0.3%, to 9,953.75.
US employers laid off 7.7 million workers in April
U.S. employers laid-off 7.7 million workers in April, a deep economic hole created by the closure of thousands of offices, restaurants, stores and schools during the pandemic.
The Labor Department also said in a Tuesday report that job openings plummeted and hiring all but disappeared in April. The number of available jobs fell 16% from March, to 5 million. Hires declined 31% to 3.5 million.
The grim April – which followed an even bleaker March with 11.5 million layoffs – suggests that the economy could take time to recover the nearly decade’s worth of gains that vanished in about 60 days. Hiring did rebound in May as 2.5 million jobs were added on net, the government said in a separate report Friday. But those gains appeared to reflect temporarily laid-off employees returning to work and increases in people with part-time jobs, rather than an economy at full throttle.
The next several months could be a challenge as monthly hiring was only at 60% of 2019’s average. There are 4.6 job openings for each unemployed worker, meaning it will likely take time for the economy to return to its pre-coronavirus health.
IBM quits facial recognition, joins call for police reforms
IBM says it will leave the facial recognition business over concern about how it can be used for mass surveillance and racial profiling.
A letter to U.S. lawmakers Monday from new IBM CEO Arvind Krishna said the tech giant “has sunset its general purpose facial recognition and analysis software products.”
Krishna was addressing Democrats who have been working on police reform legislation in Congress in response to the death of George Floyd and others in law enforcement interactions that have sparked a worldwide reckoning over racial injustice. The sweeping reform package could include restrictions on police use of facial recognition.
IBM had previously tested its facial recognition software with the NYPD but it’s not clear if it has existing contracts with other governments.
Krishna’s letter called for police reforms and said “IBM firmly opposes and will not condone uses of any technology, including facial recognition technology offered by other vendors, for mass surveillance, racial profiling” and human rights violations.
Macy’s says reopened stores luring back customers
Macy’s said Tuesday that roughly several hundred stores that have reopened are performing better than anticipated as it disclosed an update on its fiscal first-quarter results.
Like many department stores and other non-essential retailers, Macy’s was forced to close its roughly 800 stores in mid-march and saw its sales evaporate.
The New York-based company said Tuesday that it will likely report sales of $3.02 billion for the three-month period ended May 2. That would mark a 45% drop from the $5.5 billion in the yearago period and is in line with its previous estimates released late last month.
Macy’s is also estimating a quarterly net loss of $652 million, or $2.10 per share, for the first fiscal quarter. That compares with net earnings of $136 million, or 44 cents per share, in the yearago period.
Insurance telemarketers fined $225M for a billion robocalls
The U.S. communications regulator on Tuesday proposed a $225 million fine, its largest ever, against two health insurance telemarketers for spamming people with 1 billion robocalls using fake phone numbers.
The Federal Communications Commission said John Spiller and Jakob Mears made the calls through two businesses. State attorneys general of Arkansas, Indiana, Michigan, Missouri, North Carolina, Ohio and Texas also sued the two men and their companies, Rising Eagle and Jsquared Telecom, in federal court in Texas, where both men live, for violating the federal law governing telemarketing, the Telephone Consumer Protection Act.
The FCC said the robocalls offered plans from major insurers like Aetna and Unitedhealth with an automated message. If consumers pressed a button for more information, however, they were transferred to a call center that sold plans not connected to those companies. The FCC said the Missouri attorney general sued Rising Eagle’s largest client, Health Advisors of America, for telemarketing violations last year.
Over more than four months in early 2019, the FCC said, these telemarketers faked the number their calls displayed in caller ID with intent to deceive consumers; purposefully called people who are on the Do Not Call list; and called people’s mobile phones without getting permission first. The fine is not a final decision. Spiller and Mears will have a chance to respond.