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“The past year presented the most challenging market conditions Exxon Mobil has ever experienced,” said Darren W. Woods, the company’s chairman and chief executive.Credit…Brendan Mcdermid/Reuters
Exxon Mobil on Tuesday reported its fourth consecutive quarterly loss on Tuesday as the pandemic continued to weigh on energy demand and oil and natural gas prices.
In the worst year for the company in four decades, Exxon said it lost $22.4 billion in 2020, compared with a profit of $14.3 billion in 2019. A big chunk of the company’s losses came from $19.3 billion in write-downs in the last three months of the year as the company marked down the value of U.S. natural gas fields acquired when gas prices were far higher before fracking flooded the market a decade ago.
Exxon sharply cut spending on exploration and production by $21.4 billion, or 35 percent, last year because of the pandemic.
“The past year presented the most challenging market conditions Exxon Mobil has ever experienced,” said Darren W. Woods, the company’s chairman and chief executive. He added that the company ended the year as “a stronger company” with a “flexible capital program that is robust to a range of market scenarios and focused on our highest-return opportunities.”
There were some signs of recovery in the fourth quarter. Excluding its write-downs, Exxon made a small profit of $110 million in the quarter as commodity prices began to recover.
Exxon’s large chemical business earned $691 million, its best quarterly result since 2018. Oil production in the Permian basin straddling Texas and New Mexico increased by 42 percent in the quarter compared with the fourth quarter of 2019. After a slow start in 2019, oil production in the deep waters off the coast of Guyana ramped up to 120,000 barrels a day and is expected to increase significantly over the next five years.
Early in 2020, there were persistent concern among investors that the company would cut its dividend, but as oil prices surged above $50 a barrel in recent weeks, those fears have subsided. The company’s stock price has recovered by roughly 40 percent since November. Exxon was up about 2 percent in early trading on Tuesday.
Under pressure to show progress on curbing emissions, the company said on Monday that it was creating a new business called Low Carbon Solutions to develop carbon capture and sequestration projects around the world.
The company is expected to reorganize its board in the coming months and on Tuesday announced the election of a new member, Tan Sri Wan Zulkiflee Wan Ariffin, a former president of the Malaysian oil company Petronas.
BP’s chief executive, Bernard Looney, said that he welcomed the environmentally friendly approach of the Biden administration.Credit…Ben Stansall/Agence France-Presse — Getty Images
BP on Tuesday reported its first loss in at least a decade, taking a $5.7 billion loss for the year compared with a $10 billion profit for 2019. The company said it eked out a $115 million profit for the fourth quarter of 2020, representing a year-on-year decline of about 95 percent.
Oswald Clint, an analyst at Bernstein, a market research firm, called the quarterly results “terrible” in a note to clients.
BP blamed a host of factors including low demand for its refined products because of the economic slowdown brought on by the pandemic, as well as low prices for oil and natural gas.
Last year, BP’s chief executive, Bernard Looney, announced a shift away from oil and gas toward clean energy like wind, solar and hydrogen. On a call with analysts, though, Mr. Looney acknowledged that the payoff from some of these investments would not come until the 2030s and that the company would remain reliant on oil and gas for profit for the next few years.
BP, based in London, is a major oil and gas producer in the United States, but Mr. Looney said in an interview that he welcomed the environmentally friendly approach of the Biden administration.
President Biden’s new policies had raised questions about the impact on BP’s drilling for oil in the Gulf of Mexico, Mr. Looney said, but the administration’s interest in clean energy was likely to aid BP’s recent investment in offshore wind projects off the east coast of the United States.
“That is one of the good things about being a company in transition,” he said.
A 2021 Tesla Model X sport-utility vehicle. The company said it would recall Model S vehicles from 2012 to 2018 and Model X vehicles from 2016 to 2018.Credit…David Zalubowski/Associated Press
Tesla has agreed to recall nearly 135,000 vehicles after a federal regulator raised concerns about problems with the touch-screen displays in some of the company’s most expensive cars.
The company disagreed with a request made in January by the regulator, the National Highway Traffic Safety Administration, that it recall the cars, but it said that it would proceed “in the interests of efficiently resolving this matter and providing a better experience for the customer,” a Tesla executive said in a letter to the agency that was made public on Tuesday.
The recall affects Model S vehicles from 2012 to 2018 and Model X vehicles from 2016 to 2018. Those are the company’s flagship cars and can cost up to $100,000 or more.
At issue is a memory chip in the center display of the vehicles, which drivers use to control many aspects of their Teslas. The safety agency said when the chip wears out, it can cause the loss of certain functions, including turn signal lighting and the rearview camera display.
“As stated in our letter, the agency tentatively concluded that these vehicles contain a defect related to motor vehicle safety,” the regulator said in a statement. “Safety is NHTSA’s top priority, and timely recalls are crucial to ensuring the safety of drivers, passengers, and other road users.”
Tesla plans to notify owners of the affected vehicles and will replace the component for free, the regulator said. The recall is expected to begin on March 30.
Alibaba also said sales rose 37 percent n the latest quarter as China’s economy bounced back.Credit…Thomas Peter/Reuters
The Chinese e-commerce titan Alibaba said on Tuesday that it was conducting internal reviews of its business in response to an antitrust investigation by the Chinese government, which in recent months has begun scrutinizing the country’s big internet companies like never before.
For many years, the growth of giants like Alibaba was celebrated in China as the fruit of a thriving private sector. Now, regulators in Beijing are more concerned about how the companies’ size and influence are affecting the interests of their customers and competitors, echoing the scrutiny that Western tech giants like Google face in the United States and Europe.
“We approach this antimonopoly investigation with a cooperative, receptive and open mind set,” Alibaba’s chief executive, Daniel Zhang, said on a conference call announcing the company’s latest financial results. “We have a deep appreciation of the significant social and public responsibilities of operating our platform. Beyond complying with regulatory requirements, we will continue to do our best to fulfill our responsibilities to society.”
Mr. Zhang said Alibaba would say more when the investigation was complete. He gave no indication when that might be.
China’s market watchdog announced the inquiry in late December, amid a series of actions by the authorities to rein in tech giants. The month before, officials had abruptly halted plans by Ant Group, Alibaba’s financial-technology affiliate, to go public in Shanghai and Hong Kong, citing the need for new supervision of internet finance. Regulators later ordered Ant to revamp its business, a process that Mr. Zhang said was still ongoing.
Ant’s business prospects and fund-raising plans remain “subject to substantial uncertainties,” Mr. Zhang said.
Like other tech giants such as Amazon, Alibaba has enjoyed strong growth during the pandemic, as lockdowns lead people to depend more on digital services.
China’s resilient economy helped drive a 37 percent increase in Alibaba’s sales in the latest quarter, the company also said on Tuesday. Profits for the quarter were $12.2 billion and revenue was $33.9 billion, beating analysts’ forecasts. Cloud computing revenue grew 50 percent from a year ago, to $2.5 billion. Alibaba said that part of its business was profitable for the first time in the December quarter.
The city center in Milan during a lockdown in December. The eurozone economy fell in the October-December period, reflecting an economic malaise as European leaders struggle to vaccinate their citizens.Credit…Matteo Corner/EPA, via Shutterstock
The eurozone economy shrank in the last three months of 2020 as European countries closed shops and restaurants and restricted travel to try to contain the coronavirus.
Economic output in the 19 countries that belong to the eurozone fell 0.7 percent in the fourth quarter compared with the previous quarter, according to a preliminary estimate by the European Union’s official statistics agency said.
For the full year, overall output fell 5.1 percent.
Economists expect the economy to shrink again in the first quarter of 2021, leading to a double-dip recession. The bloc’s economy also shrank during the first half of 2020.
The decline capped a roller coaster year for the eurozone economy. In the second quarter, gross domestic product fell 11.7 percent as the pandemic took hold, then rebounded 12.4 percent in the third quarter as lockdowns eased and firms adjusted to the crisis.
The latest data reflects the malaise that has taken hold as European leaders struggle to vaccinate their citizens, a project that has moved more slowly on the continent than in Britain or the United States.
“The short-term prospects for the European economy remain clouded by a challenging health situation in several countries and an underwhelming start of the vaccination rollout,” Nicola Nobile, lead eurozone economist at Oxford Economics, said in a note to clients.
European factories have largely adapted to the pandemic and are operating almost normally, but stores, restaurants and hotels continue to suffer. More than half of Germans who work in hotels or restaurants, about 600,000 people, are on government-subsidized furloughs and effectively unemployed, according to the Ifo Institute in Munich, a research organization.
Growth figures for all the eurozone members are not yet available, but among the countries that have reported so far, Austria, Italy and France suffered declines in output in the quarter while Germany, Spain and most other countries managed modest growth.
Including countries like Poland, Hungary and Sweden that are members of the European Union but not the eurozone, output in the bloc fell 0.5 percent in the October-December period.
The price of silver futures reached an eight-year high on Monday, but has fallen since then.Credit…Peter Andrews/Reuters
Futures on Wall Street were set to open higher on Tuesday, following gains in Asian and European stock markets, as the retail trading frenzy that gripped market watchers for the past week appeared to die down and the price of silver dropped.
The S&P 500 was expected to extend gains from Monday ahead of a flurry of earnings reports. Among the companies reporting are Alibaba, Exxon Mobil, Amazon and Alphabet, Google’s parent company.
On Monday, the Congressional Budget Office said it expected the United States economy to return to its pre-pandemic size by the middle of this year, even if Congress does not approve any more federal money to aid the recovery. It was an encouraging signal on the economic outlook as the pandemic drags on. but could potentially complicate President Biden’s efforts to pass a large spending package.
GameStop and AMC
GameStop shares dropped more than 20 percent in premarket trading, after plummeting 31 percent on Monday. Still, the shares of the video game retailer were up 1,000 percent on the year. There were signs that efforts to squeeze funds that had bet against the stock were working. Short interest in the stock has fallen by more than half, and some hedge funds have reported losses.
Shares in AMC Entertainment declined 20 percent in premarket trading. It ended Monday unchanged after surging 18 percent earlier in the day.
Robinhood loosened its limits on the buying of securities of GameStop, AMC and six other companies. Trading volumes for both companies were lower on Monday than any day in the previous week.
Futures in silver fell 5 percent on Tuesday to $27.90 an ounce, pulling back from an eight-year high reached on Monday.
Over the weekend, online chatter encouraged retail investors to buy silver in an effort to create a “silver squeeze” as attention seemed to move away from the meme stocks of last week. After websites that sold silver coins and bars reported a surge in demand and the largest exchange-traded product tracking the metal reported record inflows, silver futures rose 9 percent on Monday.
In equity markets, the Stoxx Europe 600 rose 0.9 percent, the biggest single-day increase in nearly four weeks.
The eurozone economy contracted 0.7 percent in the fourth quarter, data published Tuesday showed, putting the region on track for a double-dip recession as it struggles to ramp up its vaccination program. That said, the economic decline at the end of last year was slightly smaller than economists forecast.
UPS has put in place a strategy aimed at improving profit over package volume.Credit…John Sommers Ii/Reuters
United Parcel Service reported a 21 percent increase in sales, to nearly $24.9 billion, in the final three months of last year, driven in part by a supercharged online holiday shopping season.
“Our financial performance in the fourth quarter exceeded our expectations, and I thank all UPS-ers for their extraordinary efforts to deliver industry-leading service through the holidays,” Carol Tomé, the company’s chief executive, said in a statement.
Ms. Tomé, who took the helm at the company just after the pandemic began, has been putting in place a “better, not bigger” strategy, aimed at improving profit over package volume. Excluding pension costs and a tax charge related to the sale of UPS Freight, the company’s profit per share rose to $2.66 in the fourth quarter from $1.94 a year earlier, far surpassing analyst estimates. The company’s share price was up more than 3.5 percent in premarket trading, but dipped after the market opened.
Despite causing early disruptions, the pandemic accelerated a shift to online shopping, helping to raise the company’s average daily package volume for the year to 24.6 million, a 13 percent increase from 2019. Excluding one-time costs, profit also rose 9.5 percent for 2020, to nearly $7.2 billion.
The company declined to provide a forecast for this year, citing uncertainty caused by the pandemic.
A restaurant was boarded up in Austin, Texas, last spring. Congress created the Paycheck Protection Program in March amid a surge in layoffs in the pandemic’s early weeks.Credit…Tamir Kalifa for The New York Times
Academic economists who have studied the Paycheck Protection Program have concluded that it has saved relatively few jobs and that, at a cost of more than half a trillion dollars, it has been far less efficient than other government efforts to help the economy.
David Autor, an M.I.T. economist, says the Paycheck Protection Program saved 1.4 million to 3.2 million jobs, Ben Casselman and Jim Tankersley report for The New York Times. Other researchers have offered broadly similar estimates, even as Treasury economists said in December that the program might have saved nearly 19 million jobs.
Given the program’s cost, saving jobs on the scale of a few million jobs doesn’t necessarily qualify as a success. Unemployment benefits also provide income, at far less expense, and programs like food assistance and aid to state and local governments pack a larger economic punch, according to many assessments.
“It’s just a really inefficient use of funds,” said Eric Zwick, an economist at the University of Chicago’s business school who has studied the program.
Many policy experts on Wall Street and in Washington say the program’s merits should be assessed instead on what it did to save businesses. On that basis, they say, it helped prevent a greater calamity and fostered economic healing.
“A major goal was to keep these businesses alive so that when the economy started to recover and then the economy reopened, there would be businesses around to hire unemployed workers,” said Michael R. Strain, an economist at the American Enterprise Institute, a conservative think tank. Preliminary evidence suggests that the program has succeeded by that metric, he said.
The debate over the program’s merits could shape the next round of aid. President Biden’s $1.9 trillion pandemic relief plan includes billions for small businesses, but no new money for the program. His aides are weighing what to do about funds already allocated.
A Bolt factory in Lake Orion, Mich., in 2018. G.M. plans to spend $27 billion to introduce 30 electric vehicle models by 2025.Credit…Rebecca Cook/Reuters
Automakers are searching for the right response to General Motors’s announcement that it will aim to sell only zero-emission cars and trucks by 2035.
The reaction from automakers and oil and gas companies has so far been muted. But Washington is abuzz with corporate lobbyists complaining in private about what they saw as a calculated move to burnish the reputations of G.M. and its chief executive, Mary T Barra, even as the industry negotiates a new fuel-economy deal with the Biden administration, Neal E. Boudette and Coral Davenport report for The New York Times.
No other large automakers have set a target date for selling only electric vehicles, but many have moved in that direction.
Ford is spending billions to introduce battery-powered models. Customer deliveries of the first of them, the Mustang Mach E sport utility vehicle, started last month.
Volkswagen said last year that it planned to spend 73 billion euros, or $88 billion, on electric vehicles over the next five years.
The industry is afraid of losing market share to Tesla, the dominant electric carmaker, which is growing rapidly. Wall Street values Tesla at about $752 billion, about 10 times as much as G.M. Several start-ups, like Rivian and Lucid Motors, are hoping to follow Tesla’s footsteps this year.
And China’s decision late last year to require that most vehicles sold there be electric by 2035 is also critical because G.M. sells more cars in that country through its joint ventures than in the United States. And Britain, Ireland and the Netherlands have said they will ban sales of new gasoline and diesel cars starting in 2030.
Broadly, of course, the industry had been quietly gearing up for months for a possible change in the White House. Representative Debbie Dingell, Democrat of Michigan and a former G.M. executive, said in an interview, “I had been saying to all the autos: ‘When Joe Biden gets elected, your world will turn upside down. You’ve got to be at the table or else this thing gets jammed down your throat.’”
A senior G.M. executive, Dane Parker, said the company was not seeking to curry favor with the new administration. Its decision, he said, was based on a fundamental, dollars-and-cents analysis of where the auto industry is headed and the cars that it expects to become best sellers in the future.
Robinhood decreased the number of companies with trading restrictions to eight from 50.Credit…Ian C. Bates for The New York Times
Silver briefly replaced GameStop as the breakout focus. Over the weekend, the precious metal experienced a surge of interest along with an uptick in online chatter about the chances for generating the kind of price increases that grabbed the world’s attention last week. On Monday, the price of silver jumped as much as 11.5 percent in early trading — to the highest level in eight years — but gave up some of its early gains, and ended the day at about $29 per ounce, a 7 percent increase. That was still around its highest level since early 2013. It fell on Tuesday.
Shares of GameStop fell about 31 percent on Monday, and was set to fall further on Tuesday. Short interest in GameStop, a measure of the volume of bets against the stock, fell by more than half last week, according to the market-data firm S3 Partners, suggesting that the gambit to inflict financial pain on Wall Street institutions by creating a so-called short squeeze may have worked. Robinhood decreased the number of companies with trading restrictions to eight from 50, according to an update on its website.
Robinhood raised an additional $2.4 billion over the weekend, adding to the $1 billion it had to seek from its investors earlier last week. On Thursday, an arm of the Depository Trust and Clearing Corporation, Wall Street’s main clearinghouse for stock trades, demanded $3 billion in additional collateral from Robinhood, to cover risky trades by its customers, according to Vladimir Tenev, the brokerage firm’s chief executive. That demand was later reduced to about $700 million.
Melvin Capital Management, one of the hedge funds pilloried on social media message boards for its short-selling bets that GameStop shares would fall, lost 53 percent on its portfolio in January, a person familiar with the matter said. A principal reason was the huge losses the firm suffered when small investors bid up the stock of GameStop.