Tech Stocks Pull Markets Off Near-Record Highs: Live Business Updates


By: Ella Koeze·Data delayed at least 15 minutes·Source: FactSet

The S&P 500 retreated from near-record territory on Tuesday, led by a decline in big technology companies, but recovered its worst losses to end the day down 0.7 percent.

Apple, the largest company in the index, fell 3.5 percent, and several other large companies — Microsoft, Amazon, Alphabet and Tesla — dropped by more than 1.5 percent. The tech-heavy Nasdaq composite fell 1.9 percent.

Adding to the volatility on Tuesday were comments by Treasury Secretary Janet L. Yellen, who said higher interest rates might be needed to keep the economy from overheating as the Biden administration ramps up spending. Stock investors are wary of higher interest rates that would make equities less attractive and also could dampen corporate profits as the economy recovers from the pandemic.

Although the Treasury secretary has no role in interest rate setting and yields on government bonds, which tend to rise when interest rates are hiked, were little changed on Tuesday, the publication of Ms. Yellen’s comments helped pushed stock indexes lower.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” Ms. Yellen said in prerecorded comments at an event hosted by The Atlantic when asked if the economy could handle the kind of robust spending that the Biden administration is proposing.

Analysts stressed that the market was due for breather. The S&P 500 rose more than 5.2 percent last month, notching a series of record highs, and even after Tuesday’s decline it remained up more than 10 percent in 2021.

The Stoxx Europe 600 fell 1.4 percent, while the FTSE 100 in Britain gave up earlier gains to drop about 0.7 percent.

Oil prices bucked the trend. Brent crude gained 2 percent, to $68.88 a barrel. It has not closed above $70 barrel since late 2018. West Texas Intermediate also rose sharply.

  • Infineon, a big producer of semiconductors in Germany, reported “booming” demand for chips as it posted strong quarterly results. But the company warned of continuing supply chain problems and its shares fell.

  • “Demand greatly exceeds supply for the majority of applications,” said the chief executive, Reinhard Ploss, in a statement. Even though its plants are running at “full speed,” he continued, the company still faced supply chain bottlenecks. “We are doing everything we can to provide our customers with the best possible support in this situation.”

  • The world’s largest oil producer, Saudi Aramco, reported a 30 percent rise in net income in the first quarter compared with the same period a year ago.

  • The company is joining other energy producers that reported strong earnings this quarter as oil prices continued their recovery from last year’s collapse.

  • “The momentum provided by the global economic recovery has strengthened energy markets,” Aramco’s chief executive, Amin H. Nasser, said in a statement. “Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming.”

Credit…Clay Enos/Netflix

In the clearest sign yet that theaters are softening their stance toward Netflix, Cinemark, the country’s third-largest chain, announced on Tuesday that it would show the streaming service’s upcoming zombie flick, “Army of the Dead” from director Zack Snyder, in more than 250 of its theaters on May 14, a week before the film will become available online.

The movie will also open in a smattering of regional chains like Harkins Theatres, Landmark Theatres and Alamo Drafthouse, bringing its total theater count to about 600 — the largest theatrical release yet for a Netflix film.

Last year, when the pandemic was raging and the majority of theater chains were closed, Netflix and Cinemark tested the release strategy in a handful of theaters with three Netflix films: “Ma Rainey’s Black Bottom,” “Midnight Sky” and “The Christmas Chronicles 2.” The results were encouraging enough for them to try a wider release at a time when the majority of the country’s theaters have reopened.

“Zack Snyder fans will love seeing the action in an immersive, cinematic environment with larger-than-life sight and sound technology,” Justin McDaniel, Cinemark’s senior vice president of global content strategy, said in a statement.

“We are thrilled to offer consumers the opportunity to watch this highly anticipated film in theaters and on Netflix,” Netflix’s head of distribution, Spencer Klein, said in a statement.

“Army of the Dead” stars Dave Bautista (“Guardians of the Galaxy”) and centers on a group of mercenaries who travel to Las Vegas to pull off a casino heist in the middle of a zombie apocalypse.

While neither company would say whether this was part of a larger agreement involving more films, the two did say they “anticipate there will be more to come.”

The pandemic forced theaters and studios to re-evaluate how movies are distributed in theaters and on streaming platforms. Traditionally, theaters pushed for an exclusive 72-day window between when a film was released and when it could become available for at-home viewing, whether through streaming or video-on-demand services. But so many movies debuted in the home because of the pandemic, and audiences have become used to having that option, forcing Hollywood to adjust to a new reality.

Gap bought Intermix in 2012 with plans to expand it, but the brand had one fewer store by the time it was sold.
Credit…Chang W. Lee/The New York Times

Gap Inc., the retailer that owns its namesake chain, Banana Republic and Old Navy, said on Tuesday that it would sell its high-end Intermix string of stores and website to a private-equity firm as it focuses on its core brands.

Intermix, which has 31 stores, will be purchased by Altamont Capital Partners for an undisclosed price, according to a statement. Gap, which is based in San Francisco, acquired Intermix for $130 million at the end of 2012 with plans to expand it, though the chain stood apart from the rest of the retailer’s chains with its mix of established and emerging designer goods. Intermix had 32 boutiques at the time of the 2012 acquisition.

The exit follows Gap’s sale in April of Janie and Jack, an expensive children’s retailer with more than 100 locations, to Go Global Retail. Gap acquired Janie and Jack in 2019.

Sally Gilligan, head of strategy for Gap, said in the Tuesday release that the sales “demonstrate how we are prioritizing our strategic focus and resources behind the growth and potential of Old Navy, Gap, Banana Republic and Athleta.”

Protesters at the State Capitol in Austin, Texas, demonstrated against Republicans’ proposed bills to restrict voting in the state.
Credit…Eric Gay/Associated Press

Two broad coalitions of companies and executives released letters on Tuesday calling for expanded voting access in Texas, wading into the debate over Republican legislators’ proposed new restrictions on balloting after weeks of relative silence.

One letter came from a group of large corporations, including Hewlett-Packard, Microsoft, Unilever, Salesforce, Patagonia and Sodexo, as well as local companies and chambers of commerce, and represents the first major coordinated effort among businesses in Texas to take action against the voting proposals.

The letter, under the banner of a new group called Fair Elections Texas, stops short of criticizing the two voting bills that are now advancing through the state’s Republican-controlled Legislature, but opposes “any changes that would restrict eligible voters’ access to the ballot.”

A separate letter, organized by a breakway faction of 100 executives from the Greater Houston Partnership, and also released on Tuesday , goes further. It directly criticizes the proposed legislation and equates the efforts with “voter suppression.”

Together, the letters signify a sudden shift in how the business community approaches the voting bills in Texas.

Corporations across the country find themselves at the center of a swirling partisan debate over voting rights. With Republicans in almost every state advancing legislation that would make it harder for some people to vote, companies are under pressure from both sides. Democratic activists, along with many mainstream business leaders, are calling on corporations to oppose the new laws. At the same time, a growing chorus of senior Republicans is telling corporate America to keep quiet.

Pandora is looking to address ethical concerns held by consumers about the jewelry business.
Credit…Ints Kalnins/Reuters

Pandora, the world’s biggest jeweler by volume, said on Tuesday that it will no longer use mined diamonds for any new designs, and is switching to man-made stones produced in laboratories instead.

The Copenhagen-based company said it would release its first collection to use synthetic stones in Britain this year before turning to other markets in 2022. The range of rings, bangles and earrings will feature stones from 0.15 to 1 carat in size. Pandora’s chief executive, Alexander Lacik, said in a statement Tuesday that diamonds should be affordable as well as sustainable.

Lab-grown diamonds are physically, chemically and optically identical to mined diamonds, and proponents say that their production results in less environmental damage than traditional mining practices, and also doesn’t have the same associations with human rights abuses. Prices of man-made diamonds have fallen over the past two years after the miner De Beers started offering synthetic stones in 2018, and they are now up to 10 times cheaper than mined diamonds, according to a report by Bain & Company.

While mined diamonds went into about 50,000 Pandora pieces of jewelry out of a total of 85 million items made last year, meaning the shift required within the company supply chain will be negligible, the announcement by Pandora is the latest by a major industry player looking to address growing ethical concerns held by consumers about the jewelry business. The jeweler has already said it will only use recycled gold and silver beginning 2025.

Twitter has begun to add paid subscriptions, and announced plans to introduce other subscriber features in the future.
Credit…Laura Morton for The New York Times

Twitter plans to acquire the subscription service Scroll, the social media company announced on Tuesday, as it expands its plans for subscription offerings. The two companies declined to disclose the deal terms.

Scroll charges its users a fee to block advertising on participating news websites, then distributes a cut of its earnings to its partner publishers, which include USA Today, Vox and The Atlantic. Publishers can earn up to 50 percent more from the service than they do from advertising, Scroll contends. Twitter plans to integrate the service into its platform, and use its technology to build other subscription services.

“People come to Twitter every day to discover and read about what’s happening,” Mike Park, Twitter’s vice president for product, said in a blog post announcing the deal. “If Twitter is where so much of this conversation lives, it should be easier and simpler to read the content that drives it.”

In recent months, Twitter has begun to add paid subscriptions, and announced plans to introduce other subscriber features in the future.

In January, Twitter acquired Revue, a newsletter provider, and said it would take a 5 percent cut of subscription revenue. In February, the company revealed plans to introduce “Super Follows,” a feature that would allow Twitter users to place some of their content behind a pay wall. And this week, Twitter said it planned to add a ticketing feature to its audio chat, Spaces, so that hosts can charge listeners for entry into their discussions.

Twitter plans to supplement its advertising revenue with revenue from subscriptions, and has raced to add content like newsletters and audio chats that it thinks audiences will pay for. Its acquisition of Scroll will add journalism to that list.

“For every other platform, journalism is dispensable. If journalism were to disappear tomorrow their business would carry on much as before,” Tony Haile, Scroll’s chief executive, wrote in a blog post. “Twitter is the only large platform whose success is deeply intertwined with a sustainable journalism ecosystem.”

Tim Sweeney, the chief executive of Epic Games, said that the company wanted to build “a phenomenon that transcends gaming.”
Credit…Jim Wilson/The New York Times

The chief executive of Epic Games offered a granular explanation of the popular game Fortnite to paint an expansive portrait of his company’s world on the first day of what is expected to be a three-week trial, pitting Epic against Apple in a fight over Apple’s App Store fees and other rules that could reshape the $100 billion app economy.

Fortnite, Tim Sweeney said, “is a phenomenon that transcends gaming,” Erin Griffith reports for The New York Times.

“Our aim of Fortnite is to build something like a metaverse from science fiction,” he said.

Metaverse? A court reporter needed clarification. It’s a virtual world for socializing and entertainment, Mr. Sweeney said.

In a mostly empty courtroom in Oakland, Katherine Forrest of the law firm Cravath, Swaine & Moore opened Epic’s case by previewing a series of emails between Apple’s top executives. The emails were evidence, Ms. Forrest argued, that the tech giant purposely created a “walled garden” that locks consumers and developers inside. That forces them to use Apple’s payment system, she said.

Once Apple lured users and developers into its walled garden, “the garden gate was closed, the lock turned,” Ms. Forrest said. She compared Apple’s fees on in-app purchases for subscription services to a car dealership that takes a commission on gas sales.

Apple’s lawyers described, in their opening statement, a thriving market for app distribution that includes gaming consoles, desktop computer gaming and the mobile web. Karen Dunn of Paul, Weiss argued that the 30 percent commission was in line with industry standards and that Epic’s requests, if granted, would make iPhones less secure, while unlawfully forcing Apple to do business with a competitor.

Ms. Dunn added that Epic’s case was a self-serving way to avoid paying fees it owed Apple and was on shaky legal footing.

Pfizer’s vaccine is disproportionately reaching the world’s rich.
Credit…Dado Ruvic/Reuters

On Tuesday, Pfizer announced that its Covid vaccine brought in $3.5 billion in revenue in the first three months of this year, nearly a quarter of its total revenue. The vaccine was, far and away, Pfizer’s biggest source of revenue, report Rebecca Robbins and Peter S. Goodman of The New York Times.

The company did not disclose the profits it derived from the vaccine, but it reiterated its previous prediction that its profit margins on the vaccine would be in the high 20 percent range. That would translate into roughly $900 million in pretax vaccine profits in the first quarter.

Pfizer has been widely credited with developing an unproven technology that has saved an untold number of lives.

But the company’s vaccine is disproportionately reaching the world’s rich — an outcome, so far at least, at odds with its chief executive’s pledge to ensure that poorer countries “have the same access as the rest of the world” to a vaccine that is highly effective at preventing Covid-19.

As of mid-April, wealthy countries had secured more than 87 percent of the more than 700 million doses of Covid-19 vaccines dispensed worldwide, while poor countries had received only 0.2 percent, according to the World Health Organization. In wealthy countries, roughly one in four people has received a vaccine. In poor countries, the figure is one in 500.

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CreditCredit…By Irene Suosalo

Today in the On Tech newsletter, Shira Ovide writes that nearly four years after Amazon agreed to a huge deal to buy Whole Foods and a year into a pandemic that played into the tech giant’s strengths, it’s worth asking two questions: Is Amazon losing in groceries? And why has one of the world’s most ambitious and inventive companies mostly been a follower rather than a leader in one of the biggest spending categories for Americans?

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