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Stock Market Rally Undercut by Chaos in Capitol



By: Ella Koeze·Source: Refinitiv

  • A rally in financial markets faded quickly on Wednesday afternoon as protests in Washington turned violent and the Capitol building was placed on lockdown.

  • Despite the chaotic scenes, the S&P 500 ended the day up 0.6 percent.

  • Stocks had gained sharply earlier in the day, as the prospect that Democrats would take control of the Senate pushed investors to bet on a faster growing American economy, a sign that they expect larger government spending with unified Democratic control in Washington.

  • The Russell 2000 index of small capitalization stocks, which are closely tied to the outlook for domestic economic growth, rose 3.7 percent.

  • Those gains had come after the Rev. Raphael Warnock, a Democrat, was declared the winner over the Republican incumbent, Kelly Loeffler, in one of two runoff elections for the Senate in Georgia. Jon Ossoff, the other Democratic challenger in Georgia, held a slight lead over David Purdue, though that race remained too close to call.

  • If Democrats win both seats, they would effectively retake control of the upper chamber, drastically expanding the legislative possibilities available to the incoming Biden administration. Mr. Biden has promised to spend heavily as a response to the pandemic and to make long-sought upgrades to the nation’s infrastructure.

  • In the stock market, banks, building materials companies and energy stocks — companies that will benefit from a rebounding economy — led the gains. Zions Bancorp, the equipment-rental company United Rentals and Vulcan Materials, which makes construction materials, were among the best performing stocks in the S&P 500 with gains of 9 percent or more.

President-elect Joseph R. Biden Jr. on Wednesday.
Credit…Doug Mills/The New York Times

President-elect Joseph R. Biden Jr. set aside plans to deliver a speech on the economy on Wednesday afternoon, instead calling for an end to violent protests in Washington and calling on President Trump to stop what he called an “insurrection.”

Mr. Biden’s speech was expected to emphasize several of his economic priorities, including reiterating calls for another round of financial aid to help people, businesses and state and local governments weather ongoing economic pain from the virus. Mr. Biden was also expected to touch on his “Build Back Better” agenda, including new government spending on clean energy, infrastructure, health care and education.

The president-elect is still expected to deliver economic remarks in the coming days, and he will focus in particular on small businesses run by Black, Hispanic, Asian and Native Americans, “who need additional resources to reopen and rebuild,” a transition spokesman said.

The president-elect’s ability to push through many of the programs and polices he campaigned on appeared more likely on Wednesday, as Democrats edged closer to gaining two Senate seats after Tuesday’s runoff election in Georgia. The Rev. Raphael Warnock was declared the winner of one seat, defeating Republican Kelly Loeffler, and Jon Ossoff, another Democrat, was leading the race against David Perdue.

“Georgia’s voters delivered a resounding message yesterday: they want action on the crises we face and they want it right now,” Mr. Biden said in a written statement on Wednesday morning. “On Covid-19, on economic relief, on climate, on racial justice, on voting rights and so much more. They want us to move, but move together.”

Ford’s sales of F-series trucks — including the F-150 and larger versions — fell 12 percent last year.
Credit…Nic Antaya/Getty Images

Ford Motor Company said on Wednesday that it sold about two million cars and light trucks last year, a decline of 15 percent from 2019, roughly in line with the broader auto industry.

The coronavirus pandemic sharply slowed sales for automakers as people stayed away from dealerships and companies were forced to shut down factories for nearly two months last spring. Ford’s sales were also affected by company’s decision to phase out most sedans, including the Fusion and Fiesta, from its U.S. lineup.

Ford said sales in the fourth quarter fell 10 percent. Cars made up just 7 percent of total sales; the rest were trucks and sport-utility vehicles.

The company said its shift to focus on larger vehicles is paying off. Sales of sport utility vehicles, which generate much more profit for automakers than sedans, rose 4 percent in the fourth quarter.

Also in the fourth quarter, Ford began selling a redesigned version of its F-150 pickup truck, which has long been the top selling vehicle in the United States. The transition to the new model caused a temporary shortage of pickups that slowed sales.

Ford’s sales of F-series trucks — including the F-150 and larger versions — fell 12 percent in 2020.

Amazon’s Seattle campus. The company is pledging more than $2 billion to affordable housing in three regions where it has or is building a large corporate presence.
Credit…Grant Hindsley for The New York Times

Amazon said it was pledging more than $2 billion to affordable housing in three regions where it had or was building a large corporate presence, becoming the latest tech giant to make a large push into addressing housing costs in their hometowns.

The resources, which will largely be in the form of low-cost loans, look to preserve or create 20,000 housing units in the Seattle, Northern Virginia and Nashville areas, the company said in a release. The company said it would pair the loans with $125 million in grants for government agencies and nonprofit and other organizations working to address racial equity in housing.

As housing costs in tech hubs have skyrocketed in recent years, tech companies have put money into developing housing programs aimed at low- and middle-income families. Microsoft has pledged $750 million in the Seattle region since early 2019. In California, Apple, Facebook and Google have committed a combined $4.5 billion to efforts in the past two years.

In Seattle, Amazon has worked closely with Mary’s Place, an organization that provides shelter for women and families, including building a shelter in one of its new office buildings. But Amazon had also successfully opposed a city corporate tax to raise funds to address homeless and affordable housing

The first commitments in Amazon’s new Housing Equity Fund include about $382 million below-market loans and grants to the Washington Housing Conservancy, which buys and preserves affordable housing for moderate- to low-income residents near Arlington, Va., where Amazon is building a second headquarters. It also gave about $185.5 million below-market loan and grants to the King County Housing Authority, which works in the Puget Sound region, where Amazon’s Seattle and growing Bellevue campuses are based.

Construction is among the industries that may be affected by a Labor Department rule on criteria for employee status.
Credit…James Tensuan for The New York Times

The Labor Department on Wednesday released the final version of a rule that could classify millions of workers in industries like construction, cleaning and the gig economy as contractors rather than employees, another step under the Trump administration toward endorsing the business practices of companies like Uber and Lyft.

Companies don’t have to pay contractors a minimum wage or overtime and don’t have to pay a share of contractors’ Social Security taxes or contribute to unemployment insurance on their behalf.

By contrast, companies that hire employees must provide them with those benefits and protections, which can raise labor costs 20 to 30 percent, according to estimates from industry officials.

“This rule brings long-needed clarity for American workers and employers,” the labor secretary, Eugene Scalia, said in a statement, adding that the rule makes it easier to identify legitimate employees “while recognizing and respecting the entrepreneurial spirit of workers who choose to pursue the freedom associated with being an independent contractor.”

The rule is scheduled to take effect on March 8, which will allow the incoming Biden administration to postpone it and perhaps set it aside.

In addition, as a so-called interpretive rule, it does not have the same legal force as a regulation, and it applies only to the laws that the Labor Department enforces, such as the federal minimum wage and overtime.

States and other agencies, like the Internal Revenue Service, may come to different conclusions about who has employee status.

But the rule could still have a substantial impact because employers often base their labor practices on the department’s approach.

Determinations of employee status typically hinge on several factors, but the department’s rule elevates two: how much control an employer exerts over the worker, and the extent to which a worker can increase his or her hourly income through entrepreneurial savvy rather than earning a set wage.

Critics have argued that there is no legal basis for elevating these two factors above others, such as the degree of skill involved in the work or whether the work is indefinite or temporary, and that the approach will deny employee status to many who deserve it.

New Yorkers wait outside a store advertising to cash stimulus checks.
Credit…Sarah Blesener for The New York Times

The federal government has only just begun sending out a second round of stimulus payments, and many people are already waiting a little longer than expected for their money.

Many payments have been sent to inactive or temporary accounts that taxpayers don’t have access to. It’s not clear how many people are affected, but the tax preparation company Jackson Hewitt said the Internal Revenue Service had sent payments to more than 13 million bank accounts that were no longer open or valid.

“Because of the speed at which the law required the I.R.S. to issue the second round of Economic Impact Payments, some payments may have been sent to an account that may be closed or no longer active,” the agency said in a statement on Tuesday.

Companies like TurboTax, H&R Block and Jackson Hewitt sometimes set up temporary accounts for clients when they prepare returns. For example, clients who opts to have preparation fees deducted from their refund may be issued one of these accounts, allowing the tax firm to take its share and then pass on the rest. After that, the accounts are generally inactive — but may still be linked to the taxpayers in I.R.S. records. Payments that are sent to inactive accounts must be returned to the Treasury.

By law, the I.R.S. must issue payments by Jan. 15. People who don’t receive a payment can recover it on their 2020 tax return; the payment will become part of their regular refund, the I.R.S. said. (The Recovery Rebate Credit can be found on line 30 of the 2020 Form 1040 or 1040-SR.)

Taxpayers can check the status of their stimulus payments with the I.R.S.’s Get My Payment tool. If you don’t recognize the account number that received the payment, it may be one of these temporary accounts.

The tax preparation companies said they were working to get payments to customers.

H&R Block said it was already passing along stimulus payments to customers’ bank accounts and via prepaid debit card to certain customers. A spokeswoman for TurboTax said the company was working with the I.R.S. to help taxpayers receive their payments as soon as possible. And Jackson Hewitt suggested on its website that customers consider taking the rebate on their 2020 taxes.

Henry Paulson, the former Treasury secretary, in 2019. He will become the executive chairman of new fund run by the investment firm TPG.
Credit…Tiffany Hagler-Geard/Bloomberg, via Getty Images

Henry M. Paulson Jr., the former Goldman Sachs chief and Treasury secretary during the 2008 financial crisis, is rejoining the finance industry. He will become the executive chairman of TPG Rise Climate, a new fund run by the investment firm TPG.

The move brings Mr. Paulson, 74, back to the industry for the first time since he left Goldman to become Treasury secretary in 2006 under President George W. Bush. It may also signal a turning point for the weight and seriousness given to climate-related investments, already a focus for TPG. The firm’s co-founder, Jim Coulter, is planning to shift much of his focus to the new climate fund.

Mr. Paulson has spent the last 12 years since leaving his post at the Treasury away from the private sector, running his nonprofit institute and working on climate change initiatives. He was recruited to TPG, in part, by Bono, the musician and activist who helped found TPG’s $5 billion Rise funds focused on “impact investing.” He told Mr. Paulson that the investment firm wanted to create an even bigger platform to focus exclusively on combating climate change.

“I wasn’t looking to do this,” Mr. Paulson said. But he was persuaded by the success of TPG’s previous Rise funds — $2 billion of which are in climate-related investments. “At this stage in my career, I’m not looking to do a start-up. I’m in a hurry to make a difference,” he said.

Mr. Paulson and Mr. Coulter are looking to make investments in climate that are as profitable as any other kind of investment. Many other climate funds have a philanthropic stance or are willing to accept lower returns, “but the market will not scale for concessionary or subsidized returns,” Mr. Paulson said.

  • President Trump on Tuesday signed an executive order prohibiting transactions with eight Chinese software applications, including Alipay, the payment platform owned by Ant Group, and WeChat Pay, which is owned by Tencent. The move, two weeks before the end of Mr. Trump’s term, could help lock in his administration’s harsher stance toward China and is likely to further rankle Beijing. But defining the scope of the order and enforcing it would presumably fall to the incoming Biden administration.

  • OPEC, Russia and other oil major producers reached an unusual agreement on production quotas on Tuesday, with Saudi Arabia committing to reducing its oil production by one million barrels a day and Russia and Kazakhstan winning relatively modest production increases. The effect will be an overall reduction in oil production. The news pushed prices up more than 4 percent, reaching levels not seen since February.

  • The global economy faces a subdued recovery in 2021 as countries race to roll out coronavirus vaccines and businesses around the world try to emerge from pandemic lockdowns that have widened income inequality and piled on debt, the World Bank said on Tuesday. The global economy will expand 4 percent in 2021 after contracting 4.3 percent last year, the World Bank projected in its Global Economic Prospects report. The bank described the nascent recovery as “fragile” and said that its trajectory would depend on the success of widespread vaccine distribution.



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