The latest on stock market and business news during the coronavirus outbreak.
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Stocks on Wall Street rose Friday, rebounding from their steepest drop in months, in a day of unsteady trading.
The S&P 500 closed more than 1 percent higher, after earlier having climbed more than 3 percent. On Thursday, the index plunged by about 6 percent, its sharpest drop since mid-March.
Financial markets are suffering from a shift in sentiment this week, as investors have seemed to acknowledge the risks to the economy from pandemic-related shutdowns earlier this year and the prospect of a second-wave of coronavirus infections as government’s lift restrictions on activity, The New York Times’s Matt Phillips reports.
Confidence in a quick recovery and return to normal was rattled after the Federal Reserve chair, Jerome H. Powell, warned that the depth of the downturn and pace of the recovery remained “extraordinarily uncertain.”
The central bank repeated that warning on Friday. In a semiannual monetary policy report to Congress, its first since the pandemic took hold, the Fed said the nation’s gross domestic product would probably contract “at a rapid pace” in the second quarter after “tumbling” in the first.
“Chairman Powell threw a bucket of cold water on the thought that the economy is going to go back to where it was in 2019 any time soon,” said Matt Maley, chief market strategist at Miller Tabak, an asset management firm.
Analysts like Mr. Maley have also noted that the market was overdue a pullback, after a staggering rally — a gain of as much as 45 percent for the S&P 500 from March lows — had left stock prices somewhat disconnected from reality.
It was the fastest recovery off a market low for the benchmark index since 1933, and came even as tens of millions of Americans applied for unemployment benefits and the national unemployment rate surged to its highest level since the Great Depression.
Also worrying investors is data from some states that have eased quarantine restrictions, such as Texas and Arizona that shows a resurgence of the virus in those states.
“The idea that Covid is fully behind us, or that a V-shaped recovery is in front of us, were put on hold” said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn.
Even if the rise in cases doesn’t lead to another large-scale lockdown, analysts say it does dash hopes for a return to a more normal environment over the summer and makes a full rebound in particularly exposed industries less likely.
A bankruptcy court judge on Friday allowed Hertz to sell up to $1 billion in new stock, granting the car rental agency’s request as investors improbably bought up shares in recent days.
“The recent market prices of and the trading volumes in Hertz’s common stock potentially present a unique opportunity,” lawyers for the company argued in a bankruptcy court hearing on Thursday.
The judge, Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware, agreed, saying in her ruling that the stock sale “is in the best interests” of Hertz and its creditors.
The company’s stock price ended the day Friday at $2.83 per share, up from a low of 40 cents after it filed for bankruptcy last month. The stock briefly climbed above $5.50 on Monday, its highest level since mid-April.
Hertz did not immediately respond on Friday to a request for comment on when and whether it would proceed with such a sale.
The move is exceedingly rare for a bankrupt company, the DealBook newsletter notes, because most bankruptcy restructurings result in stockholders — who are last in line to recover financial assets — being wiped out. There are also precedents for investors coming out ahead. The hedge fund mogul William A. Ackman made a fortune from owning stock in the bankrupt real estate business General Growth Properties nearly a decade ago.
But in a sign of Hertz’s dire financial straits, the company has asked for permission to end leases for more than 144,000 vehicles that it says it can no longer afford.
A large Amazon fashion photo studio in Brooklyn, where models pose in clothing sold on the company’s site, sat shuttered for more than two months as the coronavirus spread in New York.
