Reopening jitters weigh on US markets
NEW YORK - Worries about the downside of reopening the economy too soon are weighing on markets, and Wall Street fell Tuesday to its biggest loss since the start of the month.
The S&P 500 dropped more than 2 percent after spending much of the day drifting between small gains and losses, as investors debate whether the lifting of lockdowns across U.S. states and the world will drive an economic rebound or just more coronavirus infections.
The concerns were summed up in straightforward testimony from the top U.S. infectious diseases expert. Dr. Anthony Fauci told Congress that if the country reopens too soon, it could not only cause "some suffering and death that could be avoided, but could even set you back on the road to try to get economic recovery."
"What we're dealing with, both today and the last couple of weeks, is the optimism behind the reopening and asking: Are we going to be reopening too soon?" said Bill Northey of U.S. Bank Wealth Management. "We're in an unknowable scenario at this point in time."
Report: Uber eyes Grubhub purchase
NEW YORK - Uber is considering acquiring Grubhub in a deal that would give the companies control over a majority of the U.S. food delivery business, according to published reports.
Ride-sharing and food delivery giant Uber Technologies Inc. approached Grubhub Inc. earlier this year with an all-stock takeover offer, The Wall Street Journal reported Tuesday, citing sources. The two companies are continuing to discuss the combination, and Uber's board will consider it in the coming days.
Uber and Grubhub declined to comment on the report.
Combined, Uber Eats and Grubhub would control 55 percent of the U.S. food delivery market, according to Dan Ives, an analyst with Wedbush Securities. DoorDash, their chief competitor, controls around 35 percent of the market.
"Clearly this would be an aggressive move by Uber to take out a major competitor on the Uber Eats front and further consolidate its market share position, especially as the COVID-19 pandemic continues to shift more of a focus to deliveries versus ride-sharing in the near term," Ives wrote in a note to investors.
Food delivery companies have had difficulty turning a profit despite rising demand for their service, partly because fierce competition has forced them to offer deals and keep prices low. The companies have also waived fees for struggling restaurants during the pandemic.
Consumer prices off by most since '08
WASHINGTON - The economic paralysis caused by the coronavirus led in April to the steepest month-to-month fall in U.S. consumer prices since the 2008 financial crisis - a 0.8 percent drop that was driven by a plunge in gasoline prices.
And excluding the normally volatile categories of food and energy, so-called core prices tumbled 0.4 percent last month, the Labor Department said Tuesday in its monthly report on consumer inflation. That was the sharpest such drop on records dating to 1957.
The absence of any inflation pressures has given the Federal Reserve leeway to keep interest rates ultra-low as it seeks to help restart the economy. But Tuesday's report also raises the prospect of deflation, a prolonged drop in prices and wages that typically makes people and companies reluctant to spend and can prolong a recession. Not since the Great Depression of the 1930s has deflation posed a serious economic threat in the United States.
"If deflation becomes embedded in the economy, it can be difficult to uproot," said Gus Faucher, chief economist at PNC Financial Services. "Aggressive Fed actions can help prevent deflation from taking hold, supporting a stronger economy over the longer run."
Over the past 12 months, overall prices have now risen a scant 0.3 percent, the smallest year-over-year increase since 2015. Core inflation has increased 1.4 percent. That is the lowest such increase since 2011. Both measures are far below the 2 percent annual inflation target that the Fed seeks to achieve.
Fed to name bailout borrowers
WASHINGTON - The Federal Reserve said Tuesday that each month it will publish the names of borrowers from two of the programs it has established to support the economy during the coronavirus pandemic.
The Fed said it will disclose details on the amounts of support being provided for its Term Asset-Backed Securities Loan Facility and its Paycheck Protection Liquidity Facility.
The central bank said it would disclose the name of each borrower in both facilities, the amounts borrowed, the interest rate charged and the value of pledged collateral. In addition, the Fed said it would provide data on the overall costs, revenues and fees for each program.
The Fed has rolled out a number of programs in the past two months designed to keep credit flowing in the financial system as the economy is hit by millions of job losses and widespread shutdowns.
Ryanair set to fly more in July
LONDON - European budget airline Ryanair says it will begin operating nearly 1,000 daily flights starting in July, assuming government restrictions on flights within Europe are lifted after the shutdown due to the COVID-19 outbreak.
The carrier, which was Europe's busiest airline before the pandemic, said Tuesday it will restore 90 percent of its pre-COVID-19 route network, though with less frequency. The airline has been operating with a skeleton schedule since mid-March, with some 30 flights daily between Ireland, the U.K. and Europe.
The strategy is not without risk. Health Secretary Matt Hancock warned Tuesday that people were unlikely to be able to go on foreign holidays this summer. Asked whether "summer was canceled," Hancock told ITV: "I think that's likely to be the case."
China lifts penalties on more US goods
BEIJING - China suspended punitive tariffs on more U.S. goods including radar equipment for aviation Tuesday amid pressure from President Donald Trump to buy more imports as part of a truce in their trade war.
The Ministry of Finance said tariff increases on 79 types of goods including radar sets, disinfectant and rare earths minerals would be suspended for one year starting May 19.
Washington agreed in January to cancel additional tariff hikes and Beijing committed to buy more American farm exports. U.S. officials said China agreed to address complaints about its technology policies.
Trump threatened May 3 to terminate the agreement if China fails to buy more American goods.
Trump said earlier that Beijing agreed to buy $200 billion of American farm goods and other exports. China resumed purchases of American soybeans but has yet to confirm the size of its commitment.
Bat maker says loan helped workers
LOUISVILLE, Ky. - The manufacturer of Louisville Slugger bats says it put 171 furloughed employees back on the payroll after receiving a loan from a government program aimed at helping small businesses.
Hillerich & Bradsby Co. resumed production at its wood bat factory in Louisville on Monday as parts of Kentucky's economy reopened after weeks of shutdowns because of the coronavirus outbreak. The bat factory had been idled for nearly two months amid the global pandemic.
The company did not disclose the amount of the loan it received under the Paycheck Protection Program. But it said the cash infusion was instrumental in restoring all 171 furloughed employees - or about 90 percent of its work force - to the payroll last week.