S&P reaches near record high same day it reports corporate bankruptcies on track to reach 10-year high
By Bethany Blankley | The Center Square
(Worthy News) – The S&P 500 opened near a new record high Tuesday morning, the same day the S&P Global Market Intelligence report projected that corporate bankruptcies will reach a 10-year high in 2020.
The index opened with a 0.5 percent gain, rising to roughly 3,377 points. Gains were driven by investor confidence in the development of a coronavirus vaccine, analysts note. The highest value recorded at the end of a trading day, by comparison, is 3,386.15 points.
The Dow Jones Industrial Average was also up, opening with a gain of more than 320 points or 1.2 percent.
However, according to the S&P Global Market Intelligence report released on Tuesday, corporate bankruptcies are projected to reach a 10-year high in 2020.
State governors’ executive orders shutting down economies resulting in more than 40 million U.S. workers losing their jobs is cited as the reason for the high level of bankruptcies.
As of Aug. 9, a total of 424 companies filed for bankruptcy in the U.S., more than any year since 2010. By comparison, after the Great Recession, 546 companies had declared bankruptcy as of Aug.9, followed by another 273.
In the first eight months of 2020, 35 companies with more than $1 billion in liabilities have filed for bankruptcy. They include some of the largest retailers in the U.S.: J.C. Penney Co. Inc., J. Crew Group Inc., Lord & Taylor LLC, and Neiman Marcus Group Inc.
Oil-and-gas producer Chesapeake Energy Corp. and small-engine maker, Briggs & Stratton Corp. also fell into this category.
The analysis includes public companies with at least $2 million in assets or liabilities at the time of filing and private companies with public debt of at least $10 million.
Bankruptcies impacted a wide variety of sectors, but consumer-focused companies were hit hard, representing more than 100 of the companies that filed, as were 100 energy and industrials sector companies cited by S&P.