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Business news: Wall Street rallies, WeWork skips rent payment

The American market has been steadily climbing as investors focus on the recovery; insurance companies are speeding up payments to help hospitals: A roundup of business news from around the world

By The New York Times
Published: Apr 9, 2020

Business news: Wall Street rallies, WeWork skips rent paymentA nearly deserted public square in the center of Berlin, April 4, 2020, during the coronavirus pandemic. As governments around the world look ahead to lifting the lockdown orders now in place to halt the spread of the coronavirus, mobile apps are seen as playing an essential role in tracking the movements of those who are infected. (Emile Ducke/The New York Times)

Wall Street resumed its rally on Wednesday. With a more than 3% gain, the S&P 500 is now up about 23% from its March 23 low.

The market has been steadily climbing since it hit that bottom, a rebound that began after the Federal Reserve and lawmakers in Washington took steps to protect the U.S. economy from a collapse amid the coronavirus pandemic. Stocks are still down about 19% from their late February high.

More recently, the gains have reflected hope that the peak of the pandemic in many cities is near, or already past. The growth rate of hospitalizations in hot spots like New York is slowing, China has lifted its lockdown of Wuhan, the city where the virus emerged, and governments in parts of Europe are making plans to do the same.

To some extent, the recent gains also reflect Wall Street’s fear of missing out on the rebound that many analysts predicted would eventually come.

“If you wait until the coast is clear you will have missed a huge part of the gains,” said Matt Maley, chief market strategist at Miller Tabak a trading and asset management firm. “And professional investors can’t afford to do that.”

For now, though, it is big money managers — not mom-and-pop retail investors — who are in on the action. Hedge fund traders and mutual fund managers have swooped into the market, driving sharp gains for blue-chip shares that have been battered by the market sell-off.

Still, the market’s recent optimism is set against a grim backdrop of economic and human catastrophe that continues to play out — and which threatens to undercut any rally at a moment’s notice.

In Europe, data released on Wednesday showed that Germany and France, the largest economies in the region, were heading toward their sharpest downturns since World War II.

There’s more data to come. A new report on weekly jobless claims Thursday is certain to show millions more Americans are out of work. The two prior reports recorded more than 10 million claims for unemployment in late March.

With hospitals in dire straits, insurance companies are speeding up payments.

In a sign of just how desperate hospitals and doctors are for cash during the coronavirus pandemic, insurance companies, notorious for slow-walking their payments to health care providers, are now speeding up how quickly they pay.

“There was a universal cry for cash,” said Paul Markovich, the chief executive of Blue Shield of California, which said it would advance up to $200 million in payments to hospitals and doctors.

With revenues down for surgeries and other care not viewed as essential, providers are scrambling for money to pay for protective equipment and other supplies. “The pressure on the entire health care ecosystem is something I’ve never seen before,” said Markovich, who hopes to get out the first payments as soon as this week.

“We’re effectively advancing payment now and collecting later,” he said, even as it is also working with customers about letting them delay paying premiums.

UnitedHealth, which owns one of the nation’s largest insurance companies, said it would also take a series of steps, like waiving the need for pre-authorization when patients see a new doctor or go to a skilled nursing facility, that should result in nearly $2 billion in payments getting in the hands of providers more quickly. Providers could be paid in a matter of days rather than several weeks.

United also announced it would be making $125 million available in small-business loans to medical groups that work with its Optum unit, which provides consulting and other services.

Highmark, a Blue Cross plan in Pittsburgh, said it was advancing more than $30 million to primary care doctors, who have been particularly hard hit as many patients have decided to forgo face-to-face doctors’ visits.

WeWork skips rent payments as it seeks to renegotiate better deals.

WeWork has not made scheduled rent payments to the landlords of some of the buildings where it operates its coworking spaces, according to a person briefed on the situation.

The decision to hold back rent is part of WeWork’s efforts to renegotiate better deals with building owners as the company tries to cut costs and limit its losses. WeWork’s executive chairman, Marcelo Claure, said in December that the company would try to get better terms from landlords, but the economic swoon caused by the coronavirus pandemic has made the task more urgent.

“Rather than implementing a company-wide policy on rent payments, we are individually reaching out to our more than 600 global landlord partners to work in good faith towards finding asset-specific solutions that benefit all parties involved,” WeWork said in a statement.

The person briefed on the situation said WeWork was seeking to renegotiate leases around the world, not just in the United States.

The Wall Street Journal first reported that WeWork was skipping rent payments.

The virus outbreak has emptied many of WeWork’s locations and may reduce demand for its space over the longer terms. Seeing the empty spaces, landlords might be persuaded to reduce WeWork’s lease payments, but they also know that SoftBank, the company’s dominant shareholder, committed billions of dollars to finance WeWork’s expansion.

Catch up: Here’s what else is happening.

— The used-car retailer CarMax said on its website Wednesday that it would furlough 15,500 employees, effective April 18. The company’s president and chief executive, Bill Nash, will forgo half of his salary, and the company’s senior leadership will take an unspecified reduction in pay.

— Nordstrom, one of the country’s best-performing department stores, said in a Wednesday filing that it did not have a “firm date” on when its stores would reopen. Most of the company’s workforce — about 69,000 people, according to a separate filing — has been furloughed “or assigned zero hours of work.” Nordstrom has also temporarily closed its headquarters in Seattle.

— Amazon said it planned to pause a pilot program that shipped products for sellers on its marketplace in a bid to ease the pressures on its logistics operations, which are stretched thin by the surge in online shopping. The program, called Amazon Shipping, picked up packages that were already packed and labeled from a seller’s warehouse and then delivered them using Amazon’s delivery network. It competed with UPS and FedEx’s ground service.

— Airbus, the European aerospace giant, said it was cutting production by about a third in response to the reshaping of the aircraft market. “Our airline customers are heavily impacted by the COVID-19 crisis,” Guillaume Faury, Airbus’ chief executive, said in a statement. “We are actively adapting our production to their new situation.”

— The London-based Jewish Chronicle, one of the oldest Jewish newspapers in the world, said on Wednesday that it would cease publication after being crushed by the financial impact of the coronavirus pandemic. Founded in 1841, The Chronicle claims to be the oldest continuously published Jewish paper in the world.

©2019 New York Times News Service

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