European markets lower as worries persist over the outbreak.
European stocks opened lower on Tuesday, with London outpacing other markets, as the coronavirus outbreak has continued to spread in the United States and has proved stubbornly persistent elsewhere.
The FTSE 100 stock index was down 0.7 percent at midmorning, after Britain reported worse-than-expected revised economic data for the first three months of this year. Investors were awaiting more details from Boris Johnson, the British prime minister, on his plan to spend on public works and other projects to get the economy back on track.
Other major European markets were modestly lower. The muted opening occurred despite a strong day in the Asia-Pacific region, where markets in Japan, mainland China and Australia ended more than 1 percent higher.
Futures markets were predicting Wall Street would open slightly lower later on Tuesday. In other signs of waning optimism, prices for U.S. Treasury bonds rose, while oil prices were down slightly on futures markets.
Investors awaited developments as states like Florida and Arizona extended their outbreak containment steps and other efforts, signaling that the coronavirus could continue to hold back the United States, home of the world’s largest economy.
They were also watching tense relations between the United States and China, after Beijing imposed a new national security law on the Asian financial capital of Hong Kong without releasing the text or details. American officials on Monday outlined new restrictions on selling technology to Hong Kong, citing Beijing’s growing meddling in the affairs of the semiautonomous territory.
The Federal Reserve chair says the economy has entered an ‘important new phase.’
Jerome H. Powell, the Federal Reserve chair, planned to tell lawmakers on Tuesday that the U.S. economy was bouncing back but that the path ahead remained dependent on the virus and the action of policymakers.
“We have entered an important new phase and have done so sooner than expected,” Mr. Powell said in remarks prepared for delivery to the House financial services committee. He will note that consumer spending rebounded “strongly,” but will warn that the outlook is “extraordinarily uncertain” and hinges on whether efforts to contain the pandemic succeed.
“The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed,” Mr. Powell planned to say.
The Fed has worked to shore up markets and the economy as the pandemic tossed millions out of work and starved businesses of revenue. The agency has cut interest rates to near zero, bought huge quantities of government-backed debt and rolled out a series of emergency lending programs.
Mr. Powell’s testimony on Tuesday is meant to focus on those emergency efforts, which are backed by funding Congress earmarked as part of its coronavirus economic response package. Mr. Powell will describe the programs, most of which have seen fairly limited uptake as financial conditions have calmed, and as the private market or other government programs have met credit demand.
One notable exception is the Fed’s Paycheck Protection Program loan facility, which takes the government’s small-business loans off banks’ balance sheets to give the institutions room to continue lending. That program holds about $65 billion in outstanding loans, he is set to say, a sign that banks and other lenders have made use of the facility. — Jeanna Smialek
Uber has made an offer to take over Postmates.
Uber has made a takeover offer to buy Postmates, the upstart delivery service, according to three people familiar with the matter, as the on-demand food delivery market consolidates and Uber looks for new ways to make money.
The two companies could reach a deal as early as Monday evening, according to the people, who spoke on the condition of anonymity because they were not authorized to do so publicly. The talks are still going on, the people cautioned, and any potential for a deal could fall apart.
Representatives of Uber and Postmates declined to comment.
Uber held merger talks this year with Grubhub, a food delivery competitor. But those talks fell apart after the two companies could not come to agreement on a price, two people familiar with the matter said. Grubhub was eventually bought by Just Eats, a European food delivery service, for $7.3 billion in June.
Shortly after the Grubhub deal fell through, Uber began to piece together a potential offer for Postmates, one of the few stand-alone American companies in food delivery.
Postmates also held sale talks with DoorDash and Grubhub over the past year, according to two people with knowledge of the situation, who declined to be identified because the talks were private. — Mike Isaac and Erin Griffith
Wells Fargo said its shareholders will get a smaller dividend from the company in the third quarter after the Federal Reserve told the bank it had to hang on to additional capital to protect itself from uncertainties caused by the pandemic.
Last week, the Fed warned the country’s biggest banks not to increase cash payouts to shareholders for the third quarter, which begins next month, citing instability created by the coronavirus outbreak. On Monday, Wells Fargo said it expected to reduce its dividend from its current level, $0.51 per share, when it reports second-quarter results on July 14. It was the only big bank to announce a reduced dividend; the others, including Citigroup, Bank of America and JPMorgan Chase, are leaving theirs unchanged.
The Fed’s warning of looming uncertainty was reiterated by another regulator, the Office of the Comptroller of the Currency, which warned in a report on Monday that the pandemic had created so much extra work for banks that they were at risk of falling down on basic requirements like reporting customer activity to credit bureaus and rooting out fraud.
The regulator, which oversees the country’s largest banks, released the report as part of its routine assessments of the industry. It said programs created by Congress to try to prop up the economy, including a $650 billion aid package for small businesses that was structured as a series of forgivable loans, put special stresses on banks just as they were grappling with volatile financial market conditions and widespread lockdowns that forced many of their employees to work from home.
“This could cause breakdowns in controls related to account management, servicing management, flood insurance coverage, credit bureau reporting and complying with applicable laws and regulations,” the report said.
The regulator also warned banks to keep a close eye on loans to homes and businesses that could be in jeopardy because of the economic shutdown caused by the pandemic, and to watch out for fraudsters looking to take advantage of the sudden shift to working from home to find weaknesses in banks’ security systems. — Emily Flitter
Catch up: Here’s what else is happening.
Norwegian Air, the once-fast-growing low-cost carrier, said on Monday it had canceled orders with Boeing for 92 737 Max jets and five 787 Dreamliners, adding to mounting cancellations for the aerospace giant. Norwegian, which temporarily laid off 90 percent of its staff in March, also said it was seeking compensation for the losses it incurred from the grounding of the Max and from engine troubles associated with the Dreamliners.
Broadway will remain dark for at least the rest of this year, and many shows are signaling that they do not expect a return to the stage until late winter or early spring. The Broadway League said on Monday that theater owners and producers were ready to refund or exchange tickets purchased for shows through Jan. 3. But the league said it was not ready to specify a date when shows would reopen.