Stocks edged higher on Wednesday, as investors basked in the news that scientists were making progress toward a coronavirus vaccine.
The S&P 500 was up more than half a percent, and the Nasdaq was 1.5 percent higher, led by a rebound in tech stocks. Amazon was up about 2.5 percent, Facebook rose nearly 1 percent, and Apple was trading 2 percent higher.
Pharmaceutical stocks were among the big gainers on Wednesday, with the Swiss firm Roche and Sanofi, based in France, both trading higher. Shares in Pfizer, which on Monday announced that its potential coronavirus vaccine was more than 90 percent effective according to early data, was down slightly.
The benchmark Stoxx Europe 600 gained 1 percent, and other major European indexes were all slightly higher. In Japan, the Nikkei closed up 1.8 percent, and the Kospi in South Korea gained 1.4 percent. But the Shanghai Composite in China fell 0.5 percent.
Oil futures continued a steady climb, gaining about 2 percent on Wednesday, and they are up 25 percent since Nov. 1. The momentum this week reflects both the positive sentiment about an economic turnaround fueled by the vaccine news and an American Petroleum Institute report showing a drop in U.S. crude inventories.
Brent crude reached $45 a barrel for the first time since early September, and West Texas Intermediate climbed to nearly $43 a barrel.
The big British pub company J.D. Wetherspoon reported disappointing earnings, no surprise because the country has imposed curfews and other restrictions on pubs and restaurants to curb a surge in coronavirus cases. Sales were down more than 27 percent for the 15 weeks through Nov. 8. The company’s 756 pubs in England, Scotland and Northern Ireland are all closed because of lockdowns.
The “constantly changing national and local regulations” were “baffling and confusing,” said the Wetherspoon chairman, Tim Martin. “The entire regulatory situation is a complete muddle,” he said.
Bond markets in the United States are closed on Wednesday for Veterans Day.
California voters have rejected Proposition 15, an initiative to roll back a four-decade-old limit on property tax increases. Approval would have been a significant victory for labor and progressive groups by undoing a portion of Proposition 13, a landmark 1978 law that has long been considered politically untouchable.
The Associated Press called the result of the Nov. 3 vote on the measure on Tuesday night, when the count was 51.8 percent to 48.2 percent against it.
Proposition 15 would have amended the state’s Constitution to retain the tax shield for residential owners but remove it for commercial properties, like offices and industrial parks. A nonpartisan state agency estimated that the measure would yield $6.5 billion to $11.5 billion a year for public schools, community colleges and city and county governments.
The initiative was backed by a number of public employees’ unions and the Chan Zuckerberg Initiative, the philanthropic organization founded by Mark Zuckerberg, the Facebook chief executive, and his wife, Priscilla Chan. They pitched it as a tax on large corporations and a needed investment in public services when the economy and budgets are under stress.
The measure’s opponents included a number of business associations and large property owners like the Blackstone Group. They said the proposition would hurt small businesses and open the door to raising taxes on residential properties as well.
Both sides spent heavily. Proponents raised $67 million and opponents raised $75 million.
Proposition 13 was a reaction to the rising property values — and by extension rising taxes — in the inflationary 1970s. It limited tax increases to 2 percent a year, unless the property was sold.
The law remains popular with homeowners, but it has created a wildly unequal system in which it is not uncommon for someone to pay two or three times as much in property tax as a neighbor with a similar home.
The 1978 initiative, which is widely credited with fomenting a nationwide tax revolt, was heralded as relief for homeowners, with little mention of the benefits for corporate property owners. In the decades since, however, some of its biggest beneficiaries have been corporations like the Walt Disney Company and Chevron, whose properties are assessed at valuations set decades ago.
The downturn caused by the pandemic “has posed exceptionally high risks,” hitting the young and the poor hardest and potentially leaving lasting economic scars, Christine Lagarde, the president of the European Central Bank, said Wednesday.
“The coronavirus has produced a highly unusual recession and is likely to give rise to a similarly unsteady recovery,” Ms. Lagarde said during the ECB Forum on Central Banking, which is normally held at a golf resort in Portugal but this year took place online.
Unlike many recessions, this one has struck service businesses like restaurants, stores, hotels and airlines more severely than factories, Ms. Lagarde said.
People in these industries tend to earn less than other sectors, and are often younger. They account for half of the people who have lost their jobs, even though services account for one-fifth of economic output in the eurozone, Ms. Lagarde said.
Joblessness among young people “can have a variety of long-lasting effects, including lower earnings 10 to 15 years later, and worse future health conditions,” Ms. Lagarde said.
The economic recovery, when it comes, she said, will be “unsteady, stop-start and contingent on the pace of vaccine rollout.”
Separately, the German Council of Economic Experts said Wednesday that the country’s economy would fall by 5.1 percent this year, then grow 3.7 percent next year. The council, which advises the German government on economic policy, cautioned that the relatively optimistic forecast was contingent on the course of the pandemic.
The Biden-Harris team announced its “agency review teams” on Tuesday, naming 500 people responsible for guiding the new administration’s transition in key departments. The group of mostly volunteers reflect the “values and priorities of the incoming administration,” the transition team said, and is being scrutinized for hints about President-elect Joseph R. Biden’s ideological leanings.
Well-known corporate and Wall Street figures are few, the DealBook newsletter notes. Instead, the list is packed with academics and Obama-era staff members — Georgetown University, the Urban Institute and the Brookings Institution are among the top employers of review team members. Nearly 50 people are described as self-employed.
Here are the review leaders at agencies of particular interest to business:
The review team for the Commerce Department is led by Geovette Washington of the University of Pittsburgh, who previously served as general counsel and senior policy adviser at the Office of Management and Budget.
Leading the Treasury Department team is Don Graves, who heads corporate responsibility at KeyBank, a regional lender based in Cleveland, and previously worked as director of domestic and economic policy for Mr. Biden.
For the Federal Reserve and other financial regulators, Gary Gensler is taking the helm. Mr. Gensler, now a professor at the MIT Sloan School of Management, served in financial oversight roles in the Clinton and Obama administrations following a spell at Goldman Sachs.
The Council of Economic Advisers is led by Martha Gimbel, an economist and labor market expert at Schmidt Futures, a philanthropic initiative.
These teams are formed to assess the state of federal agencies, and aren’t necessarily the same people who will eventually be tapped to staff the departments. Being left off the list also doesn’t preclude having the team’s ear. Mr. Biden, who was vice president when progressives felt shut out of the Obama administration, is also well aware of Wall Street’s concerns, given the tense relationship between banks and his former boss during the financial crisis.
The Trump administration may be in its final days, but its efforts to force a sale of TikTok in the United States remain unresolved, the DealBook newsletter explains.
Ahead of a Nov. 12 deadline, the Chinese-owned social network has not yet struck an agreement with the agency investigating concerns about national security risks associated with the app. Barring an agreement, TikTok’s parent company, ByteDance, must divest the business. In a court challenge to the divestment order, ByteDance is asking for a 30-day extension, an option granted in its original ruling.
“In the nearly two months since the president gave his preliminary approval to our proposal to satisfy those concerns, we have offered detailed solutions to finalize that agreement — but have received no substantive feedback on our extensive data privacy and security framework,” a TikTok representative said.
Among other issues, the filing questioned the U.S. government’s legal authority over the social network. It says it submitted a proposal last week that would restructure TikTok U.S. by creating a new entity, wholly owned by Oracle, Walmart and existing U.S. investors in ByteDance, and asked for more time to work out the details. The filing also disputed President Trump’s claim that the Oracle deal would include a $5 billion education fund.
TikTok’s ultimate goal may be to push the process into next year, whatever the short-term penalties, in hopes that a Biden administration would be easier to negotiate with. President-elect Joseph R. Biden Jr.’s foreign policy is expected to be more predictable than under Mr. Trump, though not necessarily warmer toward China.
Dave McCabe contributed reporting
Chipotle said on Wednesday that it would open its first “digital-only” restaurant to meet growing demand as more customers order online in the pandemic. The new restaurant, called the Chipotle Digital Kitchen, will open Saturday in Highland, N.Y., outside the U.S. Military Academy, for pick up and delivery only. It will not have a dining room or a service line.
Lyft said on Tuesday that people remained hesitant about using its ride-hailing service during the pandemic, though riders have been slowly returning. The company reported that its revenue for the third quarter dropped 48 percent from a year earlier to $499.7 million, while its net loss totaled $459.5 million, narrower than $463.5 million from a year ago. Ridership was down 44 percent from last year to 12.5 million passengers, the company said.
Two critical unemployment programs are set to expire at the end of the year, potentially leaving millions of Americans vulnerable to eviction and hunger and threatening to short-circuit an economic recovery that has already lost momentum, writes The New York Times’ Ben Casselman.
Here’s a breakdown of what’s at stake:
As many as 13 million people are receiving payments under the programs, which Congress created last spring to expand and extend the regular unemployment system during the pandemic.
Leaders of both major parties have expressed support for renewing the programs in some form, but Congress has been unable to reach a deal to do so. It remains unclear how the results of Tuesday’s election will affect prospects for an agreement.
The programs are some of the last vestiges of the trillions of dollars in aid that included direct checks to most U.S. households, $600 a week in supplemental unemployment benefits and hundreds of billions of dollars in support for small businesses.
Much of that assistance expired over the summer, however. Economic gains have slowed significantly since then, and studies have found that millions of Americans fell into poverty as aid dried up.
The year-end benefits cliff could be even more damaging. Many families have depleted any savings they built when the $600 supplement was available. A partial federal eviction moratorium is scheduled to expire at the end of the year, although it could be extended. And benefits checks won’t just shrink, as they did over the summer — they will disappear.
“The safety net still has kind of held up until now, and I think we have been maybe lulled into a sense of complacency,” said Andrew Stettner, an expert on unemployment benefits at the Century Foundation, a progressive policy research group.
Lael Brainard, a leading contender to be President-elect Joseph R. Biden Jr.’s Treasury secretary, has opposed the Federal Reserve’s regulatory changes 20 times since 2018. As the sole Democrat on the Fed’s Board of Governors in Washington, Ms. Brainard has used her position to draw attention to efforts to chisel away at bank rules.
But her quiet persistence — and her data-driven approach to policy — have helped her to do that while winning respect (and sometimes buy-in) from her Republican counterparts, The New York Times’s Jeanna Smialek reports. That skill could make her an attractive pick for the Treasury’s top job.
Others rumored to be under consideration include Sarah Bloom Raskin, a former Fed governor who served as deputy Treasury secretary during the Obama administration; Janet L. Yellen, the former Fed chair; Roger Ferguson, the president and chief executive of the retirement financial manager TIAA, who was the first Black vice chair of the Fed; Mellody Hobson, the co-head of Ariel Investments, an asset manager; and Raphael Bostic, the president of the Federal Reserve Bank of Atlanta.
Any of those choices would bring a significant change to the Treasury Department, which has been run by a white man throughout its 231-year history. But Ms. Brainard has long been seen as a leading contender for the job.
Here are a few highlights from Ms. Brainard’s career.
The daughter of a Foreign Service officer during the Cold War, Ms. Brainard, 58, was raised in Communist Poland and Germany before reunification. She studied at Wesleyan University, and then went on to an economics doctorate at Harvard University.
In the 1990s, she worked for the National Economic Council during the Clinton administration. She then served as the Treasury’s under secretary for international affairs during the Obama administration.
Mr. Obama nominated Ms. Brainard to the Fed in 2014. Some saw her as a likely contender for Treasury secretary had Democrats won the 2016 election.