Sept. 17, 2021, 1:23 p.m. ET
Sept. 17, 2021, 1:23 p.m. ET
Stocks on Wall Street tumbled again on Friday, with the S&P 500 heading for a second consecutive weekly drop and extending a slow decline that has been weighing on the stock market all month.
The index fell about 0.8 percent by midday, on track for its eighth daily drop since it hit a record on Sept. 2. The Nasdaq composite fell 0.9 percent, while stocks in Europe were also broadly lower.
Mining, chemical and resources companies led the declines, and oil prices also slipped, moves that usually reflect concerns about global growth. Also lower on Friday were the largest technology stocks — Apple, Alphabet, Facebook and Microsoft — which make up more than 20 percent of the market value of the S&P 500 and have an extraordinary amount of pull over the direction of the stock market. All four were down by 1.5 percent or more.
The decline of S&P 500 since its record, about 2 percent in total, hasn’t been dramatic, but it marks a clear shift in the market’s tone. Before this month, Wall Street had been enjoying a seven-month run that had lifted stocks more than 20 percent, as investors seemed to shrug off any bad news.
Analysts have struggled point to any single reason for the September funk, but they do point to several factors that could be worrying investors as they consider what to do next. Here are a few.
The Fed’s decision on bond buying: The central bank is holding its next policy meeting next week, and it is expected to send a clear signal on when it plans to start winding down its purchases of government bonds. That program, an emergency response to the pandemic, is meant to keep cash flowing through the economy.
Changing expectations about the economy: Even if the U.S. economy seems to be weathering the resurgence of Covid, the latest data has fallen short of analysts’ expectations. One measure of whether reported economic numbers are better or worse than analysts expected, the Citigroup U.S. Economic Surprise Index, is at its most-negative level since the start of the pandemic last year.
Supply chain trouble: The outbreak of the highly contagious Delta variant of the coronavirus was particularly serious in Asia, and it delayed the rebuilding of supply lines from manufacturers to American companies. In some cases it made the snarls worse.
China’s changing regulations: Investors have grown wary of a wave of new restrictions from Beijing on subjects like online gaming and data sharing by tech companies. The latest blow came to American casino operators that count on Macau, a special administrative region of China and a gambling haven for Chinese high rollers, for their profits. After the local government there signaled that it would begin to tighten restrictions, shares of companies like Wynn Resorts and Las Vegas Sands plunged.
A plan to tax buybacks: Senate Democrats seem to be coalescing around a new tax on stock buybacks by companies, something that could potentially weaken a key source of demand for stocks.
The debt ceiling: Not raising the U.S. debt limit would effectively amount to a default on the U.S. government’s debts, and yet wrangling and rhetoric around it are likely to worsen in coming weeks. Almost no one expects that the government will actually default, but past debt-ceiling fights, such as a particularly noisy one in 2011, have proved unsettling to investors sending stocks sharply lower. Analysts say that until the ceiling is raised, investor exuberance could be hard to find.
Virgin Voyages, a joint venture between Bain Capital and Richard Branson’s Virgin Group, made its United States debut this week, more than a year later than scheduled.
Ryan Cotton, the head of the consumer and retail group at Bain, spoke with the DealBook newsletter about the venture and the prospects for the cruise industry, which has been upended by the pandemic.
The industry has been desperate to get operations rolling again. Three of the world’s largest cruise operators — Carnival, Royal Caribbean and Norwegian Cruise Line — together lost nearly $900 million a month during the pandemic, the credit rating agency Moody’s reported.
Some companies, like Norwegian, have staged battles with government officials in states like Florida, a hub for the industry, over legislation barring businesses from requiring proof of vaccinations from customers.
The industry’s pandemic woes have not dissuaded Mr. Branson, who has wanted to start a cruise line for about 25 years, Mr. Cotton said. (He still has his original sketches.) Seven years ago, he got serious about it and brought in Bain to help with financing a Virgin-branded cruise ship. The idea was to bring to cruises the same sensibility that Branson brought to his airlines: younger and slightly edgy. (There is a tattoo parlor onboard.)
The venture’s first ship, the Scarlet Lady, has been cruising around Britain this summer on short trips open only to British residents. It was originally supposed to begin operations from the United States early last year, just as everything shut down. Some cruise ships were hit hard by Covid outbreaks early in the pandemic, which decimated the industry. But demand among aficionados has proved resilient, giving cruise lines hope.
“The Covid situation has not gone the way any of us expected,” Mr. Cotton said. But the vaccine rollout has given the new venture confidence in going ahead with a soft launch of the adults-only cruises in the United States.
The cruises are for vaccinated passengers only, and travelers need to be tested before they board. Onboard precautions include grab-and-go food options, capacity restrictions and an air ionization system. Activities on the adults-only cruises include yoga, meditation classes and late-night cabaret shows.
United Airlines briefly paused flights nationwide on Friday morning amid reports of a system outage.
The airline issued a ground stop on all its traffic in the United States and Canada, according to the Federal Aviation Administration’s website.
In a statement before 8 a.m., the airline said it had “experienced technical system issues” and that all systems were working normally again.
“We are aware of the issue and are working to resolve it as quickly as possible,” the company wrote on Twitter, addressing consumer complaints. “We’re sorry for the inconvenience.”
Airlines occasionally pause flights, known as a ground stop, for technical reasons. Often, the stops are temporary and service resumes quickly after, though not without causing delays and possibly even some cancellations. Sometimes, a ground stop can be part of a more lasting disruption.
The investment banking giant Goldman Sachs planted its flag far from any of the world’s major financial centers this week, opening a new office in Birmingham, Britain’s second-largest city after London. So far, about 100 people have been hired or moved there.
At the office’s opening, Richard Gnodde, the head of Goldman Sachs International, spoke about Goldman’s future in Britain after Brexit and how the investment bank’s return-to-office plans were progressing. The conversation was condensed and edited for clarity.
Post-Brexit agreements between Britain and the European Union aren’t forthcoming, so British regulators are reviewing a lot of their financial rules. Is there anything you want to see changed?
Where we would want change is redundant, unnecessary regulation, which pushes up our cost of production because we are filing reports that no one ever looks at.
There’s a set of rules that right now is identical given that we were all joined up 12 months ago. If, on the margin, either side starts tinkering with those rules so there’s just a marginal difference, but no real benefit, we can’t then apply one set of processes across the board. Let’s not make changes for changes’ sake.
Do you expect to move more staff out of London?
We are done with the work that we needed to do for Brexit. But our teams will continue to evolve. And so there will be movement from here into Europe.
Are you planning more acquisitions in Europe?
To the extent that we saw further interesting acquisition opportunities across the asset management space, we’d be interested in that. And something potentially in the consumer space.
You removed social distancing in your British offices, returned them to full occupancy and encouraged staff to return. Did you feel something was lost when most people were working from home?
Every year, we bring a lot of people into the firm. And how do you integrate, how do you train those people? Memories fade. The office is our center of gravity, absolutely crystal clear. People should be spending the majority of their time in the office, but around that there can be flexibility.
Why did you choose Birmingham for the new office?
We looked up and down the U.K. One, there is proximity to London, which is helpful. But the talent base is deep and it’s broad and it’s diverse. And there’s an efficiency, a cost advantage. Both of those things are obviously important. We opened our office in London just over 50 years ago. It’s taken us 50 years to go to the next step in the U.K.
Erin Griffith (@eringriffith) and Erin Woo (@erinkwoo), two of our tech reporters, are covering the trial of Elizabeth Holmes, who dropped out of Stanford University to create the blood testing start-up Theranos at age 19 and built it to a $9 billion valuation and herself into the world’s youngest self-made female billionaire — only to flame out in disgrace after Theranos’s technology was revealed to have problems.
Follow along here or on Twitter as she is tried on 12 counts of wire fraud and conspiracy to commit wire fraud. The trial is generally held Tuesdays, Wednesdays and Fridays.
Holmes’s lawyer is asking Cheung a lot of questions about quality control checks that occurred on the Theranos devices. “There is a recognition that some errors would happen and this was the policy on how to deal with those errors,” he said.
Erika Cheung is now taking the stand as cross-examination continues.
The update you’ve all been waiting for: The judge is STILL pronouncing it ther-AH-nos.
In the courthouse now for another day of the Elizabeth Holmes trial. We’re expecting to wrap up testimony today from Erika Cheung, one of the key whistleblowers in the case.
That’s it for today.🩸💉⚖️
So far the theme of the cross-exam of Cheung seems to be using excruciatingly arcane details about the processes and procedures of the Theranos lab to show that its work was very complicated, involving lots of smart, pedigreed people.
Cheung testified that in meetings about quality control failures, Theranos’s lab directors ignored the most obvious possible reason for the failures: “The Edison devices didn’t work.”
Trial gear alert: A reporter brought their own binoculars to see the exhibits on the TV screens.
Erika Cheung is back on the stand.
She described Theranos’s practice of demoing blood tests for V.I.P.s, where some of the results came from Theranos machines and others from Siemens analyzers.
At this point we have heard lawyers and witnesses pronounce “Theranos” hundreds of times, making me start to wonder whether judge is trying to mess with us by sticking to his “ther-AHHHHH-nos” pronunciation.
I should note the woman who clapped and yelled “you’re a good mom!” at Holmes yesterday suddenly stormed out of the courtroom after Judge Davila warned everyone that yelling stuff like that in front of any jurors could cause a mistrial. I don’t see her here today!
Elizabeth Holmes’s entourage is down to just her mom today.
Erin Woo📍Reporting from San Jose, Calif.
Erin Woo📍Reporting from San Jose, Calif.
Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
Here are some of the key figures in the case →
Reporters at The New York Times are chronicling the prosecution of Elizabeth Holmes and her company, Theranos, which promised an innovation in blood testing that prosecutors say was too good to be true. The trial is expected to last four months.
To go deeper into our coverage, here are some of the stories — and a podcast — we recommend.
Schemer or Naïf? Elizabeth Holmes Is Going to Trial.
The trial for the founder of Theranos, the once high-flying blood testing start-up, will cap a saga of Silicon Valley hubris, ambition and deception.
More than 20 years ago, the internet drove an upheaval in the advertising industry. It eviscerated newspapers and magazines that had relied on selling classified and print ads, and threatened to dethrone television advertising as the prime way for marketers to reach large audiences.
Now the push for privacy is upending the ad industry again and disrupting the internet’s lifeblood.
The struggle has entangled tech titans, upended Madison Avenue and disrupted small businesses. And it heralds a profound shift in how people’s personal information may be used online, with sweeping implications for the ways that businesses make money digitally.
The fallout may hurt brands that relied on targeted ads to get people to buy their goods. It may also initially hurt tech giants like Facebook — but not for long. Instead, businesses that can no longer track people but still need to advertise are likely to spend more with the largest tech platforms, which still have the most data on consumers.
Brian X. Chen, our lead consumer technology writer, looks at how the internet is changing and what that means for you.
The game show “Jeopardy!” announced on Thursday that its host, Mayim Bialik, would split hosting duties with Ken Jennings, a former contestant, through the end of the year.
It was the latest twist in the game show’s drawn-out struggle to find a replacement for Alex Trebek, the popular longtime host whose death in November started a fraught succession battle.
“Jeopardy!” began by cycling through a series of guest hosts. Then it announced that the job would go to Mike Richards, who had been its executive producer. After a reporter unearthed a series of offensive and sexist comments that he had made on a podcast, he stepped down as host, and shortly after that left the program entirely.
Ms. Bialik, who had initially been tapped alongside Mr. Richards to host a series of prime-time “Jeopardy!” specials, was enlisted to begin hosting weeknight programs as well.
An investigation into manipulation of an annual World Bank report has found that Kristalina Georgieva, the bank’s former chief executive, who now leads the International Monetary Fund, directed staff to alter data to placate China.
The investigation focused on accusations that top bank officials pressured the team that conducts the Doing Business survey to inflate China’s standing in its 2018 report. There also were accusations that the 2020 report was manipulated to artificially bolster Saudi Arabia’s ranking.
At the time of the reported manipulation, World Bank officials were concerned about negotiations with members over a capital increase and were under pressure not to anger China, which was ranked 78th on the list of countries in 2017 and was set to decline in the 2018 report.
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