China trade data lifts stocks, but earnings could squelch optimism.
Global markets rose on Tuesday after China reported a smaller-than-expected hit to trade, though investors remained nervous heading into what could be a rough corporate earnings season.
European markets opened modestly higher, paced by German stocks, while Japan led a broad rise across the Asia-Pacific region, shrugging off a glum Monday on Wall Street. Futures markets were predicting a positive opening later on Tuesday in the United States.
Stocks were helped by better-than-expected trade data for March from Chinese customs officials. But the optimism may not linger, as China’s reopening could be a long and painful process, worsened by slumping demand for its goods in countries dealing with the coronavirus outbreak.
Investors could also be tested by a slew of corporate earnings results set to come out beginning this week for the first three months of the year, as China and then other countries battled the global outbreak. FactSet, a data provider, estimated the profits for the companies that comprise the S&P 500 stock index could fall by one-tenth during the quarter compared with a year ago, the biggest decline in more than a decade.
For now, investors appeared to be looking on the bright side. Prices for U.S. Treasury bonds, often seen as a safe place to park money, fell in Asia trading. Oil prices rose in futures markets.
Japan’s Nikkei 225 index rose 3.1 percent. In Hong Kong, the Hang Seng index was up 0.7 percent. The Shanghai Composite index in mainland China rose 1.6 percent. South Korea’s Kospi was up 1.7 percent.
In Europe, where major markets have been closed since Friday for holidays, London’s FTSE 100 index opened higher, then lost early gains and was down 0.2 percent in early trading.
France’s CAC 40 index was up 0.4 percent. In Germany, the DAX was up 1.3 percent.
Amazon fires two workers who questioned its labor policies.
Amazon has fired two employees and asked a third not to return to work, after the group organized a virtual event for warehouse employees to speak to tech workers at the company about its workplace conditions and coronavirus response.
The two employees who were fired on Friday, Maren Costa and Emily Cunningham, had in late March circulated a petition on internal email lists that called on Amazon to expand sick leave, hazard pay and child care for warehouse workers. The petition also asked Amazon to temporarily shut down facilities where workers were confirmed to have the virus so the facilities could be sterilized.
The third employee, Chris Hayes, had resigned from Amazon because he objected to its treatment of warehouse workers and had given the company notice that he would leave his job by April 17. On Friday, a few hours after he sent out an invitation to co-workers asking them to attend the virtual discussion with warehouse workers, a human resources representative contacted him and told him that he would no longer be allowed to work, Mr. Hayes said.
Ms. Costa and Ms. Cunningham had previously pressured the company to reduce its carbon footprint and had been warned not to speak to the news media about topics related to Amazon.
Amazon told the employees that they violated its policy against solicitation, which forbids Amazon workers from asking their coworkers to donate to causes or sign petitions. “We support every employee’s right to criticize their employer’s working conditions, but that does not come with blanket immunity against any and all internal policies,” said Drew Herdener, an Amazon spokesman. “We terminated these employees for repeatedly violating internal policies.”
The American stock market has been on a roller-coaster ride for weeks as investors have flipped between optimism and despair.
Over the next few days, we will get the first hard look at how badly the coronavirus pandemic has devastated revenue and profits as companies begin reporting earnings for the first three months of the year and offer their outlook on what’s coming next.
Two megabanks, JPMorgan Chase and Wells Fargo, will post their results on Tuesday morning, as will the health care products giant Johnson & Johnson. Later in the week, investors will hear from Goldman Sachs and Bank of America, the health insurer United Healthcare, the home goods retailer Bed Bath & Beyond, the industrial products maker Honeywell, and Abbott Laboratories, which has developed a rapid test for the novel coronavirus.
Corporate executives, always reluctant to discuss problems, may be even less forthcoming about them now. But with millions of jobs on the line and businesses shuttering every day, this deluge of company information, and any light it sheds, will take on a new importance.
If earnings disappoint investors and management’s forecasts are worse than expected or disconcertingly vague, share prices could plunge back toward their recent lows. But some investors believe earnings season could also provide evidence that a swift recovery is possible.
China’s exports fell in March, but by a margin that was far smaller than economists had predicted — the most encouraging sign yet that the country’s economy is beginning to recover from an almost complete shutdown in February.
China’s exports were down 6.6 percent in dollar terms in March compared with a year ago, the General Administration of Customs announced on Tuesday. That was considerably better than the 15.7 percent drop forecast by economists surveyed at Chinese and foreign institutions by Caixin, a Chinese news organization.
In another promising sign, China’s imports fell 0.9 percent in March from a year earlier, much better than a forecast by economists for a drop of 10.2 percent. That appeared to indicate that Chinese factories were loading up on materials to process as their overseas competitors began to shut down because of the coronavirus pandemic.
The modest fall in imports was also striking because China — the world’s largest importer of oil, iron ore and other raw materials — has been the biggest winner from recent plunges in global oil prices.
Still, lockdowns in response to the pandemic have led to the closing of stores and factories around the world, hurting orders for Chinese exporters. Surveys of purchasing managers in China suggest that the exporters may reduce their shipments in the months ahead.
“We have made major progress in the resumption of business,” said Li Kuiwen, the director general of the department of statistics and analysis at China’s customs agency. But with economies slowing elsewhere, he added, “the difficulties facing our foreign trade cannot be underestimated.”
But it will not be enough to solve the energy industry’s bigger problem: Customers are not buying.
Demand for oil has tumbled in recent weeks as an untold numbers of commutes, plane trips and cargo shipments have been eliminated.
Experts estimate that demand has fallen by somewhere between 25 million barrels and 35 million barrels a day — or up to three and a half times as much as what the oil nations are promising to cut.
Kirk Edwards, chief executive of Latigo Petroleum, a Texas producer, predicted that 40,000 workers would be laid off in the West Texas Permian Basin alone. “There is no reason to drill or complete any more wells this year because there is nowhere to take the production,” he said.
The spread of the virus through the food and grocery industry is expected to cause disruptions in production and distribution of certain products as panicked shoppers test supply networks as never before.
Industry leaders acknowledge shortages could increase, but they insist it is more of an inconvenience than a major problem. People will have enough to eat; they just may not have the usual variety. The food supply remains robust, they say, with hundreds of millions of pounds of meat in cold storage.
“You might not get what you want when you want it,” said Christine McCracken, a meat industry analyst at Rabobank in New York. “Consumers like to have a lot of different choices, and the reality is in the short term, we just don’t have the labor to make that happen.”
Several meat manufacturers have had to shut down after outbreaks. Smithfield Foods on Sunday shut down a plant that produces about 5 percent of the country’s pork after the plant saw hundreds of coronavirus cases.
The food-processing industry is uniquely vulnerable to an outbreak. Employees often work shoulder to shoulder, and many companies have granted sick leave only to employees who test positive for the coronavirus. That potentially leaves on the job thousands of other infected workers who haven’t been tested, hastening the infection’s spread.
“Labor is going to be the biggest thing that can break,” said Karan Girotra, a supply-chain expert at Cornell University. “If large numbers of people start getting sick in rural America, all bets are off.”
At the other end of the supply chain, grocery stores are also dealing with increasing illnesses among workers, as well as absences by those afraid to go in to work.
Workers are concerned about new C.D.C. guidelines that loosen quarantine rules.
Laborers who were once considered unskilled are now “essential employees,” even heroes to some, because they are providing the nation with food and other crucial supplies. How employers and public health officials protect these workers has become a critical issue.
New guidelines from the Centers for Disease Control and Prevention state that essential workers who may have been exposed to the coronavirus may continue to work provided they are asymptomatic, wear a mask at all times for 14 days after their last exposure and have their temperature taken before entering the workplace.
Labor advocates like Marcy Goldstein-Gelb, the co-executive director of the National Council for Occupational Safety and Health, say the new guidelines may encourage employers to pressure workers to return to their jobs too soon, often without adequate protection or pay.
“It’s a complete reversal of the policy that the C.D.C. has for the public,” Ms. Goldstein-Gelb said. “It disregards the fact that, right now, workers are dying every day needlessly in unconscionable numbers.”
Nearly 3,000 workers of the 1.3 million people represented by the United Food and Commercial Workers International Union have been directly affected by the virus as of Monday — whether through infection, quarantine, hospitalizations and those awaiting test results — and 30 had died, according to the union’s research.
Grocery stores are among the remaining high-risk transmission points for the disease now that many other commercial businesses have been closed, but many workers and customers do not have masks and people can remain in close contact with one another. Workers are imploring customers to take more care while in stores. They say many have been throwing used gloves and wipes in carts and on floors for employees to pick up. Many customers are still browsing with their hands and not their eyes and blaming workers for lack of goods on shelves.
Reporting was contributed by Keith Bradsher, Kate Conger, David Gelles, Clifford Krauss, Peter Eavis, Matt Phillips, Carlos Tejada and Daniel Victor.