Update on the latest business

FINANCIAL MARKETS

Stocks rise as traders see hopeful signs on opening economy

NEW YORK (AP) — Stocks are moving higher on Wall Street as traders embrace early signs that the White House and a number of state governors are considering how to gradually reopen the economy. Big companies also started reporting their first-quarter earnings, giving investors an early peek into how the coronavirus outbreak was affecting their business.

Technology and health care stocks powered much of the broad rally. Johnson & Johnson rose after beating earnings estimates, even though the health care giant also had to slash its outlook.

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European markets were mostly higher after reopening following a holiday. Asian markets ended mostly higher. Bond prices rose. Oil prices fell.

IMF-GLOBAL ECONOMIC OUTLOOK

IMF: Global economy will suffer worst year since Depression

WASHINGTON (AP) — The International Monetary Fund says the world economy in 2020 will suffer its worst year since the Great Depression of the 1930s because of the coronavirus pandemic.

The IMF expects the global economy to shrink 3% this year before rebounding in 2021 with 5.8% growth. However, it cautions that prospects for a rebound next year are clouded by uncertainty.

The IMF’s assessment represents a breathtaking downgrade. In its previous forecast in January, before COVID-19 emerged as a grave threat, it had forecast moderate global growth of 3.3% this year. But measures to contain the pandemic have suddenly brought economic activity to a near-standstill across much of the world.

EARNS-WELLS FARGO

Wells Fargo takes 1Q earnings, revenue hit from virus

NEW YORK (AP) — Wells Fargo’s profits plunged nearly 90% in the first quarter as the bank had to set aside billions of dollars to cover potentially bad loans due to the coronavirus pandemic.

The company said Tuesday that it boosted its loan loss provisions — or the money set aside to cover potentially bad loans — to $3.83 billion from $845 million a year ago as borrowers face the possibility of going broke because the coronavirus has effectively shut down the U.S. economy and others around the world.

Wells reported first-quarter earnings of $653 million, or 1 cent per share, down 89% from a $5.9 billion profit in last year’s first quarter. The San Francisco-based bank said it had revenue of $17.1 billion in the quarter, down from $21.6 billion for the same period in 2019. The numbers fell well short of Wall Street expectations.

Like its competitors, Wells’ interest income declined as the Federal Reserve cut its benchmark interest rate to near zero because of the virus outbreak. Wells reported interest income of $11.3 billion for the quarter, down nearly $1 billion from 2019’s first quarter.

EARNS-JPMORGAN

JPMorgan 1Q profit drops 70% as it readies for loan defaults

NEW YORK (AP) — JPMorgan Chase said Tuesday that its first-quarter profit plunged nearly 70%, as the bank was forced to set aside billions of dollars to cover potential losses tied to the coronavirus pandemic.

The New York-based bank put $8.29 billion in reserve to cover potentially bad loans, up from $1.5 billion last year. JPMorgan Chase is facing billions of dollars in losses shut down businesses across the country and put millions of Americans out of work, as borrowers who were in fine shape just weeks ago — ranging from individuals with credit cards to oil and gas companies — are now at risk of running out of money and defaulting on loans.

The last time JPMorgan had to set aside that amount of money to cover potentially bad loans was the first quarter of 2009 — in the depths of the Great Recession.

Chase, the nation’s largest bank by assets, is among the first of the major U.S. companies to describe the financial impact of the coronavirus pandemic. Its profit fell to $2.87 billion from $9.18 billion in the same period a year earlier. Wells Fargo, the nation’s largest mortgage lender, said profit fell 95% as it boosted bad loan reserves by $3.1 billion.

JPMorgan is one of the nation’s largest credit card issuers. Millions of Americans who lost their jobs are now at risk of defaulting on their credit card accounts.

JOHNSON & JOHNSON-RESULTS

J&J slashes outlook, races to develop coronavirus vaccine

UNDATED (AP) — Johnson & Johnson has slashed its 2020 sales forecast by billions of dollars and cut its profit expectations by about 15%, anticipating significant impact from the COVID-19 pandemic,

It’s one of the first major U.S. corporations to report first-quarter earnings and likely a harbinger of things to come as the outbreak disrupts the global economy.

The world’s biggest health products maker on Tuesday said it now expects 2020 revenue of $77.5 billion to $80.5 billion, down from its January forecast of $85.4 billion to $86.2 billion. It also forecast adjusted earnings per share of $7.50 to $7.90, down from the January forecast of $9 to $9.15 per share.

Despite that, the company increased its quarterly stock dividend, for the 58th consecutive year, from 95 cents to $1.01 per share.

Investors seemed reassured, driving shares higher.

VIRUS OUTBREAK-DAIRY

Virus sours business for already-reeling dairy industry

MARSHFIELD, Vt. (AP) — This was supposed to be rebound year for dairy farmers embattled by at least four years of depressed milk prices — and then the coronavirus hit.

Schools, restaurants, institutions and universities closed to help slow the spread of the virus, wiping out much of the food service market that makes up for a big chunk of dairy farmers’ business. Now farmers and cooperatives from Florida to Wisconsin to Maine are dumping milk because there are no plants that will take it and the price paid to farmers has collapsed again.

Plants set up to make food service products — like large packages of mozzarella cheese — aren’t able to pivot quickly and start churning out gallons of milk. Retail milk sales were up when the virus first hit as consumers bulked up on groceries but have declined since then.

In the past five years, about 5,000 dairy farms have gone out of business across the country, and the ramifications of the virus outbreak will drive more to the brink, according to Cornell University agricultural economist Andrew Novakovic.

VIRUS OUTBREAK-FRANCE-AMAZON

French court orders Amazon to suspend non-essential sales

PARIS (AP) — A French court has ordered Amazon to stop selling non-essential goods for the next month to protect its employees from the virus. The emergency ruling Tuesday requires Amazon to evaluate health risks at all its facilities nationwide and negotiate new safety measures with worker representatives. That’s according to lawyers for unions that launched the legal proceedings. Sales of food, medicine and hygiene supplies are still allowed. Unions hailed the ruling, while Amazon did not immediately comment. The head of Amazon France has said that the company was doing everything it could to put in place safety measures.

GERMANY-ADIDAS-RESCUE LOAN

Adidas cleared for 3 billion euros in rescue loans

FRANKFURT, Germany (AP) — Sports gear and shoe company Adidas has been approved for a 3 billion-euro rescue loan by the German government. That amounts to $3.3 billion. The state owned development bank would contribute most of the loan and partner banks would come up with the rest. It’s to keep the company going during the interruption due to the virus outbreak.  Adidas, which is headquartered in Germany, says that as a condition of getting the money it is cancelling executive bonuses for this year. It also means no share buybacks or dividends. The company says that the impact of the virus has been so devastating that it cannot give any outlook for how its business will do this year. 

FIAT CHRYSLER RECALL

Fiat Chrysler recalls pickups, SUVs to fix windshield wipers

DETROIT (AP) — Fiat Chrysler is recalling more than 550,000 pickup trucks and SUVs worldwide because the windshield wiper arms can come loose and stop the wipers from working properly.

The recall covers certain 2019 and 2020 Ram 1500 pickups, 1500 Classic pickups and Jeep Compass SUVs. Documents posted Tuesday by the U.S. government’s National Highway Traffic Safety Administration say loose wiper arms can reduce a driver’s visibility.

Fiat Chrysler says in a statement that it has no reports of crashes or injuries from the problem. Most of the recalled vehicles are in the U.S. and Canada.

Owners will be notified later this month and dealers will tighten the wiper nuts to fix the problem.

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