Stocks drop as a world of worries bedevils investors.


Daily Business Briefing

Sept. 20, 2021, 11:09 a.m. ET

Sept. 20, 2021, 11:09 a.m. ET

Stocks on Wall Street slumped on Monday as indexes across Europe tumbled amid a string of concerns for investors — including the troubled Chinese property giant Evergrande, soaring energy prices in Europe and questions over how the Federal Reserve will manage its exit from its large bond-buying program.

The S&P 500 fell 1.7 percent in early trading, its sharpest decline yet this month. The index has dropped for two consecutive weeks, and before the decline on Monday, it was down more than 2 percent since it hit a record on Sept. 2.

In Europe, the Stoxx Europe 600 fell 2.1 percent, while the FTSE 100 in Britain was down 1.4 percent. The Hang Seng in Hong Kong dropped 3.3 percent, to its lowest in nearly a year. Most other Asian markets were closed for a holiday.

Investors pushed the Hong Kong-listed shares of some of China’s biggest property developers deep into the red amid worries that Evergrande’s spiraling debt woes could spill over, affecting the funding abilities of other developers at a time of heightened regulatory scrutiny. Hong Kong shares of the Chinese developer Sinic Holding fell by 87 percent after regulators in one Chinese province said they would punish certain sales practices by developers.

“These concerns around what’s going on with Evergrande and China and a possible default there are having spillover effects into the European markets,” said Mike Bell, a strategist at JPMorgan Asset Management in London. But he said it appeared the market was too worried.

“Could you get more volatility over the next month or two? Yes, that’s certainly possible,” Mr. Bell added. “But when we look at China at the moment, we still think the earnings outlook — outside of companies like Evergrande —  for the broader market remains very positive.”

High natural gas prices in Europe are sending energy bills soaring and causing factories, such as those that make fertilizer, to shut down in Britain. Smaller energy companies in Britain are seeking government bailouts. And the price of iron ore, the main raw material in steel, has dropped, sending the stocks of mining companies sharply lower.

This week, more than a dozen central banks, including those in Japan, Britain and Switzerland, will meet and set policy.

But most traders are likely to be focusing on the Federal Reserve, which is expected on Wednesday to discuss a timeline for when it will begin slowing bond purchases that are aimed at shoring up the economy. Some economists expect the Fed to signal that it will start winding down the bond purchases later this year. The central bank could then begin to raise interest rates the following year. But a slowdown in hiring, especially among hospitality and leisure workers, could weigh on the recovery and delay the central bank’s reduction of stimulus.

The Fed will also update its forecasts for economic growth and inflation.

Investors in the United States will have few other data points to guide them this week. The National Association of Realtors will publish data on home sales activity on Wednesday. Sales of existing homes are expected to have fallen slightly in July, economists surveyed by Bloomberg forecast, after two months of gains.

The S&P 500’s drop in September has signaled a clear shift in the market’s tone. Before this month, Wall Street had been enjoying a seven-month run that had lifted stocks more than 20 percent, as investors seemed to shrug off any bad news.

The slump has come as investors weigh the risks of the resurgence of the coronavirus. One measure of whether reported economic numbers are better or worse than analysts expected, the Citigroup U.S. Economic Surprise Index, is at its lowest level since the start of the pandemic last year. Analysts are also pointing to supply-chain disruptions, leading to shortages from computer chips to construction materials, as part of investor concerns.

Another factor looming over Wall Street is the plan to tax stock buybacks. Senate Democrats are coalescing around imposing a new tax on corporations that repurchase their shares, something that could potentially weaken a key source of demand for stocks.

This week, Democrats are also set to turn their focus to raising the federal borrowing limit. Analysts say that until the ceiling is raised, investor exuberance could be hard to find.

Alexandra Stevenson contributed reporting.

Credit…Noel Celis/Agence France-Presse — Getty Images

The troubled property giant Evergrande, once China’s most prolific developer, has become the country’s most indebted company, a position that means its default could ripple across the country’s economy.

The company, which was founded in 1996, rode China’s property boom that urbanized large swathes of the country and resulted in nearly three-quarters of household wealth being tied up in housing. This put Evergrande at the center of power in an economy that came to lean on the property market for supercharged economic growth.

But Chinese regulators are cracking down on the reckless borrowing habits of property developers. Adding to the company’s misery, China’s property market is slowing and there is less demand for new apartments.

Today, Evergrande is seen as a rickety threat to China’s biggest banks:

  • It owes money to lenders, suppliers and foreign investors.

  • It owes unfinished apartments to home buyers and has racked up more than $300 billion in unpaid bills.

  • It faces lawsuits from creditors and has seen its shares lose more than 80 percent of their value this year.

A failure on the scale of Evergrande would hit the economy, and spell financial ruin for ordinary households. The ratings agency Fitch said this month that default “appears probable.” Moody’s, another ratings agency, said Evergrande was out of cash and time.

Panic from investors could also shake global financial markets and make it harder for other Chinese companies to continue to finance their businesses with foreign investment.

On Monday, the company’s woes began to bleed into the broader market. Investors pushed the Hong Kong-listed shares of some of China’s biggest property developers deep into the red amid worries that Evergrande’s spiraling debt woes could affect the funding abilities of other developers at a time of heightened regulatory scrutiny.

Hong Kong shares of the Chinese developer Sinic Holding fell by 87 percent after regulators in one Chinese province said they would punish certain sales practices by developers.

Credit…Hilary Swift for The New York Times

While the Delta variant of the coronavirus has delayed plans by many U.S. companies to bring employees back to offices en masse, New York City workers who have been trickling into Midtown Manhattan are discovering that many of their favorite haunts for a quick cup of coffee and a muffin in the morning or sandwich or salad at lunchtime have disappeared. A number of those that are open are operating at reduced hours or with limited menus.

By the end of 2020, the number of chain stores in Manhattan — everything from drugstores to clothing retailers to restaurants — had fallen by more than 17 percent from 2019, according to the Center for an Urban Future, a nonprofit research and policy organization.

Across Manhattan, the number of available ground-floor stores, normally the domain of busy restaurants and clothing stores, has soared. A quarter of the ground-floor storefronts in Lower Manhattan are available for rent, while about a third are available in Herald Square, according to a report by the real-estate firm Cushman & Wakefield.

Starbucks has permanently closed 44 outlets in Manhattan since March of last year. Pret a Manger has reopened only half of the 60 locations it had in New York City before the pandemic. Numerous delicatessens, independent restaurants and smaller local chains have gone dark.

But in a city where one person’s downturn is someone else’s opportunity, some restaurant chains are taking advantage of the record-low retail rents to set up shop or expand their presence in New York City.

In the second quarter, food and beverage companies signed 23 new leases in Manhattan, leading apparel retailers, which signed 10 new leases, according to the commercial real estate services firm CBRE.

Shake Shack and Popeyes Louisiana Kitchen were among those signing new rental agreements this year. The burger chain Sonic signed a lease for its first New York City outpost. The Philippines-based chicken joint Jollibee, which enjoys a committed following, plans to open a huge flagship restaurant in Times Square.

Credit…Brandon Thibodeaux for The New York Times

Lanson Jones, an avid tennis player in Houston, did not want to spoil his streak of good health during the pandemic by getting a vaccine.

Then he contracted Covid. Still, he chose not to get vaccinated. Instead, he turned to another kind of treatment: monoclonal antibodies, a year-old, laboratory-created medicine no less experimental than the vaccine.

In a glass-walled enclosure at Houston Methodist Hospital this month, Mr. Jones, 65, became one of more than a million Covid patients, including Donald J. Trump and Joe Rogan, to receive an antibody infusion.

The federal government covers the cost of the treatment, currently about $2,100 per dose, and has told states to expect scaled-back shipments because of the looming shortages. Seven Southern states account for 70 percent of orders.

Amid the din of antivaccine falsehoods circulating in the United States, monoclonal antibodies have become the rare coronavirus medicine to achieve near-universal acceptance. Championed by mainstream doctors and conservative radio hosts alike, the infusions have kept the country’s death toll — nearly 2,000 per day and climbing at a rapid rate — from soaring even higher.

“The people you love, you trust, nobody said anything negative about it,” Mr. Jones said of the antibody treatment. “And I’ve heard nothing but negative things about the side effects of the vaccine and how quickly it was developed.”

But the treatment’s popularity is straining the U.S. healthcare system.

The infusions take about an hour and a half, including monitoring afterward, and require constant attention from nurses at a time when hard-hit states often cannot spare them.

“It’s clogging up resources, it’s hard to give, and a vaccine is $20 and could prevent almost all of that,” said Dr. Christian Ramers, an infectious disease specialist and the chief of population health at Family Health Centers of San Diego, a community-based provider. Pushing antibodies while playing down vaccines, he said, was “like investing in car insurance without investing in brakes.”

Credit…Stefani Reynolds for The New York Times

The largest U.S. accounting firms have perfected a remarkably effective behind-the-scenes system to promote their interests in Washington, Jesse Drucker and Danny Hakim report in The New York Times.

Their tax lawyers take senior jobs at the Treasury Department, where they write policies that are frequently favorable to their former corporate clients, often with the expectation that they will soon return to their old employers. The firms welcome them back with loftier titles and higher pay, according to public records reviewed by The Times and interviews with current and former government and industry officials.

From their government posts, many of the industry veterans approved loopholes long exploited by their former firms, gave tax breaks to former clients and rolled back efforts to rein in tax shelters — with enormous impact.

Even some former industry veterans said they viewed this so-called revolving door as a big part of the reason that tax policy had become so skewed in favor of the wealthy, at the expense of just about everyone else. President Biden and congressional Democrats are seeking to overhaul parts of the tax code that overwhelmingly benefit the richest Americans.

This revolving door, with people cycling between the public and private sectors, is nothing new. But the ability of the world’s largest accounting firms to embed their top lawyers inside the government’s most important tax-policy jobs has largely escaped public scrutiny.

“Lawyers who come from the private sector need to learn who their new client is, and it’s not their former clients. It’s the American public,” said Stephen Shay, a retired tax partner at Ropes & Gray who served in the Treasury during the Reagan and Obama administrations. “A certain percentage of people never make that switch. It’s really hard to make that switch when you know where you are going back in two years, and it’s to your old clients. The incentives are bad.”

  • Airlines sold tickets in June and July at prices on par with what they charged in 2019, but fares dropped in August and early September as the spread of the Delta variant of the coronavirus weighed on travel, according to the Adobe Digital Economy Index. In August, when holiday planning typically begins in earnest, flight sales for Thanksgiving were down about 18 percent in August compared with the same month in 2019.

Credit…Frederic J. Brown/Agence France-Presse — Getty Images

The Biden administration will lift travel restrictions starting in November on those from abroad who are fully vaccinated against the coronavirus, ending a travel ban implemented to limit the spread of disease and reopening the United States to relatives who have been separated from families and employees from businesses.

Foreign travelers who provide proof that they are fully vaccinated before boarding a flight will be able to fly to the United States starting in “early November,” Jeff Zients, the White House pandemic coordinator, said Monday.

“International travel is critical to connecting families and friends, to fueling small and large businesses, to promoting the open exchange ideas and culture,” Mr. Zients said. “That’s why, with science and public health as our guide, we have developed a new international air travel system that both enhances the safety of Americans here at home and enhances the safety of international air travel.”

The administration has restricted travel for foreigners looking to fly to the United States from a group of European countries, Iran and China for more than a year. Fully vaccinated travelers will also need to show proof of a negative test for the coronavirus within three days before coming to the United States, Mr. Zients said.

Unvaccinated Americans overseas aiming to travel home will have to clear stricter testing requirements. They will need to test negative for the coronavirus one day before traveling to the United States and will need to be tested again after arriving, Mr. Zients said. The Centers for Disease Control and Prevention will also soon issue an order directing airlines to collect phone numbers and email addresses of travelers for a new contact-tracing system. Authorities will then follow up with the travelers after arrival to ask whether they are experiencing symptoms of the virus.

The administration’s action came on the eve of a visit by Prime Minister Boris Johnson, who was expected to press Mr. Biden to lift the ban. British officials had hoped the president would announce a relaxation of restrictions when he came to Cornwall, England, in June for the Group of 7 summit meeting and were disappointed when he did not. Their frustration has only deepened since then.

British officials note that the United States had not imposed a similar ban on people from Caribbean nations, which had a higher rate of infection than Britain, or from Argentina, which had lower percentage of its population vaccinated. About 82 percent of people in Britain above the age of 16 have had two shots.

The European Union and Britain both allowed fully vaccinated people from the United States to travel without quarantining and officials there were annoyed when the United States did not reciprocate.

The ban, European officials point out, has kept families separated since March 2020, when former President Donald J. Trump first announced it, as the coronavirus was erupting across Europe. European countries have weathered a third wave of infections propelled by the Delta variant. But in several countries, including Britain, infection rates have begun to level off and even decline.

Stephen Castle contributed reporting from London.



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