U.S. board urges helicopter manufacturers to add crash-data recorders

WASHINGTON (Reuters) – The National Transportation Safety Board (NTSB) on Tuesday urged six major manufacturers to equip turbine-powered helicopters with crash-resistant systems to record data, audio and images, after former NBA star Kobe Bryant and eight others were killed in a helicopter crash in January.

The NTSB asked Airbus Helicopters (AIR.PA), Bell – a unit of Textron Inc (TXT.N) Leonardo, MD Helicopters, Robinson Helicopter Co and Sikorsky, a unit of Lockheed Martin Corp (LMT.N) – to act after U.S. regulators have not backed mandating the equipment despite a series of recommendations since 2013.

Bryant, 41, his 13-year-old daughter Gianna and seven other people died when a twin-engine Sikorsky S-76B helicopter slammed into a hillside outside Los Angeles in heavy fog on Jan. 26. The helicopter did not have a flight data recorder or cockpit voice recorder.

The safety board found that a “lack of recorded data hindered their understanding of several crashes that could have serious flight safety implications.”

The manufacturers did not immediately respond to requests for comment or declined immediate comment. The Federal Aviation Administration did not immediately comment.

Some helicopters are required by the FAA to have crash-resistant systems to record flight data and cockpit audio but none are required to have image-recording capability. Some operators have voluntarily equipped their helicopters with recording systems, including image-recording capability.

The NTSB cited seven helicopter investigations between 2011 and 2017, in which the lack of access to recorded data impeded their ability to identify and address potential safety issues.

The NTSB said 86% of 185 turbine-powered helicopter accidents it investigated between 2005 and 2017 had no recording equipment installed. The NTSB also asked manufacturers to provide a way to retrofit existing helicopters with recording systems.

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U.S. Senate leader hopes for quick passage of House coronavirus small business bill

WASHINGTON (Reuters) – U.S. Senate Majority Leader Mitch McConnell said on Monday he hoped the Senate would soon pass legislation already passed by the Democratic-controlled House of Representatives easing terms of the coronavirus small-business loan program.

“I hope and anticipate the Senate will soon take up and pass legislation that just passed the House, by an overwhelming vote of 417 to one, to further strengthen the Paycheck Protection Program so it continues working for small businesses that need our help,” McConnell, a Republican, said.

Under the House-passed bill, businesses receiving forgivable loans under this new program would have 24 weeks, instead of the current eight weeks, to utilize the loans intended to help keep businesses operating and retain employees.

The legislation also contains other changes to provide more flexibility to the program as small businesses try to reopen following months of closures or curtailed operations during the coronavirus pandemic.

Restaurants and hotels are among the largest beneficiaries of the Paycheck Protection Program created in late March.

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Wall Street closes higher as recovery signs soothe protest, pandemic worries

NEW YORK (Reuters) – U.S. stocks posted gains on Monday as signs of U.S. economic recovery helped offset jitters over increasingly violent social unrest amid an ongoing pandemic and rising U.S.-China tensions.

All three major stock indexes began the month with gains of less than 1% on the heels of a strong May rally.

Market leaders Facebook Inc (FB.O), Apple Inc (AAPL.O) and Amazon.com (AMZN.O) provided the biggest lift to the S&P 500 and the Nasdaq, while Boeing Co (BA.N) gave the Dow its biggest boost.

“Certainly the pace of the stock market recovery can’t continue at the pace it has been,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “I’m stunned at how well the market’s been doing.”

The White House called for “law and order” after six nights of widespread, violent demonstrations triggered by the death of George Floyd at the hands of police, even as the country reels from the economic effects of pandemic-related lockdowns.

“Most investors are saying (the protests) aren’t going to destroy the economy,” Nolte added. “It’s a roadblock but it’s not as big as a pandemic.”

The unrest has prompted retailers such as Target Corp (TGT.N) and Walmart Inc (WMT.N) to shutter a portion of their stores, while Amazon.com (AMZN.O) has scaled back deliveries.

Further weighing on sentiment, China ordered state-owned firms to halt purchases of U.S. soybeans and pork, in retaliation for President Donald Trump’s announcement that he would end special treatment for Hong Kong following China’s move to tighten security measures in the territory.

But economic data boosted investor sentiment, with the Institute for Supply Management’s (ISM) purchasing managers’ index (PMI) showing the contraction of factory activity was slowing.

A fuller picture of the economic damage wrought by pandemic-related lockdowns is expected on Friday, when the Labor Department’s jobs report is expected to show unemployment skyrocketing to 19.7%.

The Dow Jones Industrial Average .DJI rose 91.91 points, or 0.36%, to 25,475.02, the S&P 500 .SPX gained 11.42 points, or 0.38%, to 3,055.73 and the Nasdaq Composite .IXIC added 62.18 points, or 0.66%, to 9,552.05.

Of the 11 major sectors in the S&P 500, all but healthcare .SPXHC ended the session in positive territory.

Pfizer Inc (PFE.N) fell 7.1% after the drugmaker’s breast cancer treatment was deemed unlikely to meet the main goal of a late-stage study.

Gilead Sciences Inc (GILD.O) slid 3.4% following mixed results in a late-stage study of its COVID-19 drug candidate, remdesivir.

Meanwhile, rivals firms CTI Biopharma Corp (CTIC.O) and Proteostasis Therapeutics Inc (PTI.O) advanced 16.7% and 8.4%, respectively following reports that their potential COVID-19 treatments showed promise.

Shares in cosmetics company Coty Inc (COTY.N) jumped 20.9% after the appointment of Chairman Peter Harf as its new chief executive officer.

Advancing issues outnumbered declining ones on the NYSE by a 3.26-to-1 ratio; on Nasdaq, a 1.58-to-1 ratio favored advancers.

The S&P 500 posted 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 98 new highs and 10 new lows.

Volume on U.S. exchanges was 9.95 billion shares, compared with the 11.30 billion average for the full session over the last 20 trading days.

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U.S. lawmakers to unveil bill banning investment in firms tied to China's military

WASHINGTON (Reuters) – A group of Republican lawmakers plans to unveil legislation this week to keep Americans from investing in foreign defense companies with ties to China’s military, according to a document seen by Reuters, the latest in a string of measures aimed at curbing U.S. funding for China-based firms.

Representatives Mike Gallagher, Jim Banks and Doug LaMalfa plan to introduce the bill, which would require Treasury Secretary Steve Mnuchin to submit a report to Congress listing foreign defense companies that have “substantial contracts with, ties to, or support from” the Chinese military.

Six months after the report is issued, American companies and citizens would be required to divest from those firms and would be banned from making new investments in them.

“On one hand, Congress is asking taxpayers to help grow our military so we can compete with China. On the other hand, large U.S. investment funds are dumping U.S. dollars into China’s military industrial base,” Banks said in a statement. “We need to end our cognitive dissonance and stop funding the rise of our chief global adversary.”

The move comes as the U.S. government has begun extending its trade and technology battle with Beijing to capital markets, as ties between the rival nations have soured over the origins of the deadly coronavirus.

While it was not immediately clear if Democrats or other Republicans would support the bill, anti-China sentiment is running high in the Capitol after China moved to curb Hong Kong’s independence. Both the Democratically-led House of Representatives and the Republican-controlled Senate approved legislation to punish top Chinese official for human rights abuses against Uighur Muslims.

On Friday, President Donald Trump said his administration will study ways to safeguard Americans from the risks of investing in Chinese companies, ratcheting up pressure on the firms to comply with U.S. accounting and disclosure rules.

Earlier this month, an independent board tasked with administering federal worker and military pension funds halted plans to allow one of its funds to track an index that includes controversial Chinese companies, under pressure from the White House.

Those moves came after China’s Luckin Coffee, which trades on the Nasdaq stock exchange, said in April that as much as 2.2 billion yuan ($310 million) in sales last year had been fabricated.

The revelation strengthened the position of China hawks in the Trump administration who argue that investors in Chinese companies are vulnerable to unforeseen risks because they are not subject to the same auditing and disclosure rules as U.S. companies.

The Senate passed legislation earlier this month that could prevent some Chinese companies from listing their shares on U.S. exchanges unless they follow standards for U.S. audits and regulations.

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House Democrats launch inquiry into Medicare stimulus payouts

WASHINGTON (Reuters) – Two U.S. House of Representatives Democrats on Friday launched an inquiry into whether the Health and Human Services Department misdirected billions of dollars in coronavirus stimulus money to healthcare providers facing criminal or civil fraud investigations.

In a letter to Secretary Alexander Azar, Representatives Lloyd Doggett and Katie Porter accused the department of evading questions about how it decided to dole out $50 billion for its provider relief fund and demanded answers about how the funds will be clawed back from possible fraudsters.

Reuters reported exclusively this month that HHS had sent Medicare providers under criminal and civil investigations stimulus money, after it direct-deposited $30 billion into the bank accounts of any medical provider who billed Medicare for services in 2019.

Doggett and Porter cited Reuters’ reporting in their letter.

“Funds meant for frontliners went to hospitals previously closed, mega-corporations, and possible fraudsters,” Doggett said in a statement. “The Trump Administration should immediately provide a full accounting of how these millions landed, as they so often do with this Administration, in the pockets of corporate interests and those under investigation for fraud.”

An HHS spokesperson did not immediately respond to a request for comment on the letter.

Reuters could not determine what portion of the recipients are facing such inquiries.

After sending the funds, HHS asked all the providers to sign a lengthy attestation that stipulates they have been or will be treating patients suffering from COVID-19, the disease caused by the new coronavirus.

Those who do not respond by HHS’ deadline will be assumed to have accepted the terms and conditions.

HHS previously told Reuters it has mechanisms in place to recoup the funds and address fraud.

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Wall Street ends mostly up; Trump comments on China but takes no action on trade

(Reuters) – U.S. stocks finished mostly higher on Friday after President Donald Trump announced measures against China in response to new security legislation that were less threatening to the U.S. economy than investors had feared.

The Dow ended the session slightly lower, but all three indexes registered gains for the month and the week.

The S&P 500 initially extended losses after Trump said he was directing his administration to begin the process of eliminating special treatment for Hong Kong in response to China’s plans to impose new security legislation in the semi-autonomous territory.

But Trump made no mention of any action that could undermine the Phase One trade deal that Washington and Beijing struck early this year, a concern that had cast a cloud over the market throughout the week.

“He began speaking in a very tough tone,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. “The market was worried he was going to announce something substantial, something detrimental to the U.S. economy. Then, as he spoke, it became clear the actions being taken were not going to be as dramatic as originally feared.”

Trump also said the United States is terminating its relationship with the World Health Organization, something he had threatened to do earlier this month.

S&P 500 technology shares .SPLRCT gave the index its biggest boost, while financials .SPSY were the biggest drag.

The latest confrontation between the U.S. and China has fueled concern that worsening tensions between the two world’s largest economies could derail the recent sharp gains in the stock market.

Expectations of a quick economic recovery from the coronavirus pandemic have driven the S&P 500 .SPX up more than 30% from its March lows.

The Dow Jones Industrial Average .DJI fell 17.53 points, or 0.07%, to 25,383.11, the S&P 500 .SPX gained 14.58 points, or 0.48%, to 3,044.31, and the Nasdaq Composite .IXIC added 120.88 points, or 1.29%, to 9,489.87.

For the month, the Dow added 3.9%, the S&P 500 gained 4.5%, and the Nasdaq rose 6.8%. For the week, the Dow and S&P 500 each rose more than 3%, and the Nasdaq gained 1.8%.

New York Governor Andrew Cuomo said Friday that New York City is “on track” to enter phase one of reopening on June 8, and he said five upstate regions will now transition to phase two.

Federal Reserve Chair Jerome Powell, speaking in a webcast organized by Princeton University Friday, reiterated the U.S. central bank’s promise to use its tools to shore up the economy amid the coronavirus pandemic.

Twitter (TWTR.N) was down 2% and Facebook Inc (FB.O) shares slipped 0.2%, a day after Trump signed an order threatening social media firms with new regulations over free speech.

Upscale department store chain Nordstrom Inc (JWN.N) slumped 11% after it reported a near 40% fall in quarterly sales due to pandemic-led store closures.

Salesforce.com Inc (CRM.N) slipped 3.5% as the cloud-based business software maker cut its annual revenue and profit forecasts.

Declining issues outnumbered advancing ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq Composite recorded 60 new highs and 14 new lows.

Volume on U.S. exchanges was 13.62 billion shares, compared to the 11.3 billion average for the full session over the last 20 trading days.

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Wall Street Week Ahead: Investors eye consumer discretionary stocks as U.S. reopens

NEW YORK (Reuters) – Investors are taking a closer look at the market’s consumer discretionary companies as a reopening U.S. economy fuels hopes of a turnaround for some of the sector’s hardest-hit names.

Many companies in the sector have been battered by the country-wide coronavirus-fueled lockdowns that have weighed on growth and damaged retail spending over the last several months, though the stocks of a few, like Amazon, have soared.

A gradual lifting of lockdowns in some states has stirred hopes for a bounce back for the retailers that make up much of the sector.

Some investors, however, say it may be months before consumers return to their previous shopping habits, making it unlikely that the companies will see a pickup in revenues in the near term.

Firms ranging from middle-income retailers such as Gap Inc (GPS)N> and American Eagle Outfitters Inc (AEO.N) to high-end destinations like Tiffany & Co (TIF.N) and Vail Resorts Inc (MTN.N) are expected to report results in the week ahead.

“This particular group is full of landmines,” said Jamie Cox, managing partner for Harris Financial Group. “There is not going to be a lot of investor follow-through until we get some certainty with what future revenue prospects are going to be.”

Shares of the Gap, for instance, are down 43% for the year to date. A recession that persists through the fourth quarter of this year would reduce the company’s revenues by 40%, according to a note by research firm Trefis.

Next Friday’s U.S. jobs report is expected to show that the unemployment rate rose to 19.8% in May, smashing April’s record 14.7%, according to a Reuters poll. Non-farm payrolls are expected to drop by 7.4 million, adding to the 20.5 million jobs lost the previous month.

Cox is focusing on dominant players such as Amazon.com Inc (AMZN.O), Walmart Inc (WMT.N) and Target Corp (TGT.N), which have a mix of essential items such as groceries as well as electronics and games that can appeal to customers who may face extended lockdowns during a potential second wave of the virus.

Overall, retail companies in the S&P 500 are up 12.9% for the year to date, a gain powered largely by Amazon’s 31% rally. Apparel companies, by comparison, are down 16.2% over the same time.

Brian Jacobsen, senior investment strategist for the Wells Fargo Asset Management Multi-Asset Solutions team, says retail companies will likely show rising expenses over the next several quarters due to items like more frequent sanitation of stores and technology purchases aimed at increasing the productivity of employees working from home.

“It’s really going to be a challenge to get a clear read of the direction for quite a while,” he said.

Despite those headwinds, investors may still gravitate toward companies that are able either to tap the capital markets for funds or draw from their financial reserves, said Randy Frederick, vice president of trading and derivatives with the Schwab Center for Financial Research.

Retailers such as J. Crew and J.C. Penney have already filed for bankruptcy due in part to the coronavirus pandemic, leaving more opportunity for companies that are able to survive and grab market share, said Frederick.

“You’re getting set up for potential upside surprises,” he said. “You may take a step back and look at this and say, ‘No matter how awful these numbers may be, at least they’re still in business.’”

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Fed's Kaplan says U.S. economy has bottomed, ties rebound to testing

(Reuters) – The U.S. economy has likely bottomed, Dallas Federal Reserve Bank President Robert Kaplan said on Thursday, but a healthy rebound depends on a massive increase in testing so that people feel comfortable resuming traveling, dining out and other pre-crisis activities.

“We need to dramatically increase testing and contact tracing…so that we can grow the economy faster and work down this unemployment rate,” Kaplan told Reuters in a phone interview.

Doing so nationally, he said, would cost a fraction of the nearly $3 trillion the U.S. Congress has already committed to the economic rescue in loans to big businesses, grants to smaller ones, and extra unemployment insurance to the tens of millions who have lost their jobs so far.

“Why not spent the tens of billions of dollars …to make sure …we get the most benefit from the trillions we have spent,” Kaplan said, adding that health experts say the U.S. needs about 3 million to 5 million tests a day, compared with 350,000 today. Small businesses are facing more obstacles on testing than bigger firms, he said.

Assuming ramped up testing, extensions of fiscal support for workers, and new rescue money for cities and states reeling from a drop in tax revenue, the U.S. economy could grow at about a 17% annual pace in both the third and fourth quarters, he said.

Those gains would still leave the U.S. economy about 4.5% smaller by year’s end than it was at the beginning, he said, and unemployment would likely still be at 10% or 11%, down from an expected peak of more than 20%.

Continued growth in 2021 should drive it to below 7% by the end of next year, he said, though without the investment in testing that could enable broad reengagement, there is “more downside.”

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Wall Street rises with economic hopes; bank stocks jump

(Reuters) – U.S. stocks rose on Wednesday, with the S&P 500 closing above 3,000 for the first time since March 5, as the further easing of lockdowns lifted optimism for an economic recovery.

Bank stocks powered the day’s advance, with the S&P 500 financial index .SPSY leading gains among major sectors. The index rose nearly 10% over the past two sessions for its biggest two-day increase since April 8-9.

JPMorgan Chase & Co (JPM.N) was the leading point gainer in the financial index, rising 5.8% as the stock surged for a second day in a row. The bank’s chief executive, Jamie Dimon, said Tuesday he expects JPMorgan will boost its credit reserves again in the second quarter, but said there are signs the economy is regaining its footing.

After-the-bell on Wednesday, the head of JPMorgan’s corporate and investment banking division said second-quarter revenues are on track to be more than 50% higher than the same period last year.

Continued easing of lockdowns, optimism about an eventual COVID-19 vaccine and massive U.S. stimulus have been driving the market’s recent gains. On Wednesday, Walt Disney Co (DIS.N) announced plans to begin reopening its Walt Disney World resort in Florida, the world’s largest theme park, in phases beginning July 11, and MGM Resorts (MGM.N) said it would reopen its four Las Vegas casinos on June 4.

“It’s all about liquidity and the hopes that the economy will eventually do well,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“The rally will continue, but I don’t think it will continue without pullbacks,” he said, noting that weak second-quarter earnings could give investors a “reality check.”

Tech-related shares underperformed the broader market on Wednesday after leading the recent rally.

The Dow Jones Industrial Average .DJI rose 553.16 points, or 2.21%, to 25,548.27, the S&P 500 .SPX gained 44.36 points, or 1.48%, to 3,036.13, and the Nasdaq Composite .IXIC added 72.14 points, or 0.77%, to 9,412.36.

Amid the recent gains, U.S. tensions with China have cast a cloud on markets.

President Donald Trump said Tuesday that Washington would announce its response to China’s planned national security legislation on Hong Kong before the end of the week. Secretary of State Mike Pompeo said Wednesday that Hong Kong no longer warrants special treatment under U.S. law as it did when it was under British rule, potentially a big blow to its status as a major financial hub.

Tech-related shares are among the most sensitive to Chinese growth, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in St. Louis.

“If the market is going to go higher from here, you’re going to have to have broader participation, but you are going to need those large-cap tech companies to be along for the ride because they make up such a large portion of the benchmark,” Samana said.

Also on Wednesday, the Federal Reserve’s Beige Book report showed that U.S. businesses continued to be hammered by the effects of the novel coronavirus epidemic into the middle of May.

Advancing issues outnumbered declining ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 2.21-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 41 new highs and 10 new lows.

Volume on U.S. exchanges was 12.86 billion shares, compared to the 11.33 billion average for the full session over the last 20 trading days.

(This story has been refiled to delete extraneous words in 3rd paragraph)

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U.S. businesses slammed by pandemic but see some green shoots, Fed says

(Reuters) – U.S. businesses continued to be hammered by the effects of the novel coronavirus epidemic in the United States into the middle of May, a Federal Reserve report showed on Wednesday, and few expected a swift recovery despite some signs of hope.

The sharp plunge in economic activity recounted in the U.S. central bank’s latest temperature check of business activity across its 12 districts shed light on the depth of the economic pain generated by the virus, which has led to an unprecedented downturn and a U.S. death toll approaching 100,000.

The Fed’s survey, known as the “Beige Book,” was completed mostly in April, when non-essential businesses were shut down in much of the country, through May 18, when some states had started to loosen restrictions.

“Economic activity declined in all districts – falling sharply in most,” the Fed said in its report. “Although many contacts expressed hope that overall activity would pick up as businesses reopened, the outlook remained highly uncertain and most contacts were pessimistic about the potential pace of recovery.”

The Fed has acted aggressively to bolster the economy to try to mitigate the effects of the widespread business closures and a surge in job losses. The central bank cut its key overnight interest rate to near zero in March, launched a round of open-ended asset purchases and announced a slate of emergency lending tools to support businesses and households.

Congress has also passed nearly $3 trillion in economic relief to funnel funds to individuals and businesses hurt by the pandemic. But uncertainty remains about how scarred businesses will be, despite an easing in lockdown restrictions.

More than 38 million Americans have filed for unemployment benefits over the past two months, and the U.S. unemployment rate soared to 14.7% in April.

The collection of anecdotes from the Fed’s districts showed many firms felt the worst of the crisis was behind them, and the hard-hit New York district said there were scattered reports of a nascent pickup in economic activity in early May.

But the report also made clear most businesses were still grappling with the fallout, even with an easing of restrictions.

“Contacts cited challenges in bringing employees back to work, including workers’ health concerns, limited access to childcare, and generous unemployment insurance benefits,” the Fed said.

Some of those jobs in the most affected industries such as leisure, travel and hospitality are unlikely to swiftly return and other businesses are navigating how to accommodate social distancing requirements, which could mean fewer customers. Consumer confidence also remains low.

“Contacts are uncertain how fearful consumers will be while the COVID-19 threat remains and how freely consumers will spend after the threat lifts,” the Fed’s contacts in the Philadelphia district noted, referring to the respiratory disease caused by the novel coronavirus.

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