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Social Security is projected to be insolvent a year earlier than previously forecast.

Daily Business Briefing

Aug. 31, 2021, 5:18 p.m. ET

Aug. 31, 2021, 5:18 p.m. ET

Credit…Joshua Bright for The New York Times

The financial outlook for Social Security is eroding more quickly than previously expected, as the coronavirus pandemic has drained government revenues and put additional strain on one of the nation’s most important social safety net programs. The overall finances for Medicare, however, are expected to hold steady, though the health program is still forecast to face financial pressure in the coming years.

Annual government reports released on Tuesday on the solvency of the programs underscored the questions about their long-term viability at a time when a wave of baby boomers are retiring and the economy faces ongoing uncertainty as variants of the coronavirus surge. The United States economy already faces soaring federal debt levels in the coming decades, but both Democrats and Republicans have been wary of making significant structural reforms to the popular programs.

“Having strong Social Security and Medicare programs is essential in order to ensure a secure retirement for all Americans, especially for our most vulnerable populations,” Treasury Secretary Janet L. Yellen said in a statement. “The Biden-Harris administration is committed to safeguarding these programs and ensuring they continue to deliver economic security and health care to older Americans.”

Senior administration officials said that the long-term effects of the pandemic on the programs are unclear. The actuaries were forced to make assumptions about how long Covid would continue to cause unusual patterns of hospitalizations and deaths and whether it would contribute to long-term disabilities among survivors.

The Social Security Old-Age and Survivors Insurance Trust Fund will now be depleted in 2033, a year earlier than previously projected, according to the report. At that time, the trust fund will run out of reserves and the program will be insolvent, with new tax revenues failing to cover scheduled payments. The report estimated that 76 percent of scheduled benefits will be able to be paid out unless Congress changes the rules to allow full payouts.

The Disability Insurance Trust Fund is now expected to be depleted by 2057, which is eight years earlier than previously thought, at which time 91 percent of benefits will be paid.

Medicare’s finances are effectively holding steady. While tax revenue for the Medicare program did decline as a result of the Covid-related recession, Medicare also ended up spending less money than usual last year, as people avoided elective care.

Medicare’s hospital trust fund is projected to be unable to pay all of its bills beginning in 2026. This estimate is similar to those from Medicare’s trustees in recent years. Fixing that gap now could be achieved by increasing the Medicare payroll tax rate from 2.9 percent to 3.67 percent or by reducing Medicare spending by 16 percent each year, the report notes.

But the report highlighted that the official estimate may be unrealistically optimistic. If certain policies set to expire in the next 10 years are extended, or if other expected policy changes occur, the projections would look substantially more worrying.

Long term, the actuaries said they did not think Covid-19 itself would have substantial influence on Medicare spending on hospital care. On the one hand, the death of many vulnerable, older Americans from the virus may reduce future spending they would otherwise have received. On the other, the actuaries expect that some people may have additional health care needs from the syndrome known as long Covid.

The actuaries declined to make any estimates on the effect of Aduhelm, a very expensive Alzheimer’s treatment that was recently approved by the Food and Drug Administration. The report said that officials were waiting for Medicare to issue guidance on how the drug will be covered before making any calculations. The drug could represent tens of billions of dollars in spending each year.

Democrats in Congress are considering a host of changes to the Medicare program, such as adding new benefits, including coverage for dental, hearing and vision care. While these changes are expected to influence Medicare’s overall finances, none of them are likely to have major effects on the trust fund, which covers only hospital care.

“Medicare trust fund solvency is an incredibly important, longstanding issue, and we are committed to working with Congress to continue building a vibrant, equitable, and sustainable Medicare program,” said Chiquita Brooks-LaSure, the administrator for the Centers for Medicare and Medicaid Services.

Google’s campus in Mountain View, Calif.
Credit…Laura Morton for The New York Times

Google is pushing back its return-to-office date by three months, to Jan. 10, in a decision that reflects the spread of the highly contagious Delta variant of the coronavirus.

Sundar Pichai, the chief executive of Alphabet, Google’s parent company, informed employees of the plans in an email on Tuesday. He said that after Jan. 10, offices in different countries and locations will determine for themselves when to return based on local conditions, and that employees will get 30-days notice.

Like other companies, Google has repeatedly postponed the date when it expects its employees to return to work at its offices. Last month, Google pushed back its return date from September to October and announced that it would require employees who returned to the company’s offices to be vaccinated against the coronavirus.

If Google employees return to the office in January, it will be nearly two years since the company asked its staff to work from home in the early days of the pandemic. The extended period of working from home has forced the company to rethink the future of its workplace and what is the best way to balance remote work with in-person collaboration.

Elizabeth Holmes arrives for a court hearing in May. Jury selection in her trail starts on Tuesday.
Credit…Kate Munsch/Reuters

Jury selection began on Tuesday in the long-awaited trial of Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos who faces a dozen counts of fraud and conspiracy to commit wire fraud.

Ms. Holmes, wearing a medical mask and navy blue skirt suit, with lawyers at her side, was immediately swarmed by a scrum of photographers on her arrival at the federal courthouse in San Jose, Calif. Inside the courtroom, she watched as lawyers questioned the panel of potential jurors, who were winnowed down from a list of more than 200 to around 50. The jurors sat in assigned seats that were spaced apart for the pandemic.

At the heart of the trial are questions of what exactly Ms. Holmes, 37, knew of the problems with Theranos’s blood-testing devices and whether she intentionally misled investors over the company’s technology. If convicted, she could serve up to 20 years in prison.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo

Erin Woo📍Reporting from San Jose, Calif.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo

Erin Woo📍Reporting from San Jose, Calif.

Carlos Chavarria for The New York Times

Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial soon 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 →

Item 1 of 9

The case has captured public attention as another example of a Silicon Valley start-up gone wrong. But Theranos was unusual in that it was led by a female entrepreneur. Ms. Holmes exploited that difference, using it to build attention. She often wore a Steve Jobs-esque uniform of a black turtleneck and spoke in an unusually deep voice. Before Theranos fell from grace, Ms. Holmes was crowned the world’s youngest billionaire and regularly posed for magazine covers.

Her high profile may pose a challenge for jury selection. Prosecutors and her defense lawyers may find it difficult to pick jurors who have not already made up their minds about the case.

Potential jurors have filled out a 28-page questionnaire asking them about their media consumption habits, medical history and knowledge of more than 200 possible witnesses. An even more extensive questionnaire put forth by Ms. Holmes’s legal team included more than 100 questions. In June, it was rejected by Judge Edward Davila of U.S. District Court for the Northern District of California, who is overseeing the case.

On Tuesday, around half of the potential jurors raised their hand when asked if they had heard of media coverage of the case.

Jury selection is expected to extend into Wednesday, when another 50 or so potential jurors will be questioned, and could run longer. Opening statements start next week.

Erin Griffith contributed reporting.

Downed lines in Houma, in southeast Louisiana, on Monday. The financial costs of storms are piling up for Entergy.
Credit…Callaghan O’Hare for The New York Times

Entergy, the largest electric utility in New Orleans, is struggling to restore service to hundreds of thousands of customers who have been without electricity since Sunday because Hurricane Ida brought down or damaged many of its power lines.

The utility company said it had shut down a natural gas plant that began operation last year, the New Orleans Power Station, because of damage to large transmission lines and some of the smaller distribution lines that carry power to homes and businesses. That plant, which was meant to provide electricity during periods of high demand and in emergencies, was not heavily damaged in the storm, the company said.

Several other plants near the city also are ready to produce electricity when workers complete enough repairs to power lines. They include Ninemile 6 in Westwego, La., and the J. Wayne Leonard Power Station in Montz, La.

“Teams are assessing the transmission system and working to develop a plan for restoration of power,” Jerry Nappi, a spokesman for Entergy, said in an email on Tuesday. “They expect to have first light within the city by end of day Wednesday.”

The company said on Monday that Ida, a Category 4 storm, had put 216 substations and more than 2,000 miles of transmission lines out of service.

Gov. John Bel Edwards, who has praised Entergy for building the J. Wayne Leonard plant, expressed some frustration on Tuesday with the pace at which the company was restoring power to New Orleans and a wide stretch of southern Louisiana, where heat and humidity have made the air feel hotter than 100 degrees. Some residents have been told that they could be without electricity for weeks.

“I’m not satisfied with 30 days, the Entergy people aren’t satisfied with 30 days, nobody who’s out there needing power is satisfied with that,” Mr. Edwards said. “But I am mindful that we just had the strongest hurricane — at least tied for the strongest — that the state has ever experienced.”

Entergy provides power to three million customers in Louisiana, Arkansas, Mississippi and Texas. The company, which employs more than 13,000 people, brought in $10.1 billion in revenue in 2020.

The financial costs of storms are piling up for Entergy. In addition to the repairs it is making because of Ida, the company’s equipment was damaged in three hurricanes in 2020 and a winter storm this year. Entergy told Louisiana regulators that restoration costs in the state relating to the earlier storms would total $2.1 billion. The company is seeking permission to charge customers higher electricity rates to cover those costs. Regulators typically end up approving such requests, but ratepayers may object to frequent rate increases.

In its request to recoup the costs, Entergy detailed the scale of the wreckage of the most damaging of last year’s storms — Hurricane Laura. The company said 1,822 transmission structures, 12,453 distribution poles and roughly 770 miles of distribution wires were destroyed or damaged.

In February, Entergy said in a securities filing that hurricanes last year damaged several transmission lines, including an unspecified one in southeastern Louisiana. The company said that the line had not been repaired because it could cost a lot to do so. “The restoration plan for this transmission line and the related cost estimate is still being evaluated,” Entergy said in a filing to the Securities and Exchange Commission.

Entergy did not immediately respond to questions about the transmission line damaged in last year’s hurricanes.

Sophie Kasakove contributed reporting.

Customers lined up outside a gas station in southeast Louisiana on Monday. Hurricane Ida will almost certainly exacerbate shipping and material shortages.
Credit…Callaghan O’Hare for The New York Times

In normal times, the devastation of a massive hurricane like Ida tends to be followed by an aggressive rebuilding effort, as carpenters, roofers and other skilled workers descend on affected communities to repair the damage.

These are not normal times.

With the global supply chain besieged by trouble — extreme shipping delays, persistent product shortages and soaring costs — construction teams are likely to struggle to secure needed goods. At the same time, the hurricane’s damage to critical industries in the Gulf Coast area and the urgent need to rebuild are expected to cascade through the country’s already strained shipping infrastructure.

“The supply was already terrible,” said Eric Byer, the president of the National Association of Chemical Distributors, a trade association representing 400 companies that make and sell raw materials used in a vast array of industries, including construction and pharmaceuticals. “Now, it’s going to be worse.”

For months, a surge of trade from Asia to the United States has exhausted the supply of shipping containers, forcing buyers to pay 10 times the usual rate on popular routes like Shanghai to Los Angeles.

As dockworkers have contracted Covid-19 or have landed in quarantine, loading and unloading at ports has been constrained. The pandemic has sidelined truck drivers, limiting the availability of vehicles that can carry products from ports to warehouses to customers.

Hurricane Ida will almost certainly make this situation worse, as available trucks are diverted en masse toward affected communities to deliver relief supplies. No one questions the merits of this course, but it will leave even fewer trucks available to carry goods everywhere else, intensifying already-profound shortages.

“The domestic trucking situation has been bad for some time, and the hurricane will add to that,” said Megan Gluth-Bohan, the chief executive of TRInternational, an importer and distributor of chemicals just outside Seattle. “You’re going to see more logjams at the ports.”

Her company relies on a supplier in Taiwan for hydrocarbon resins, selling them to American manufacturers of paints, varnishes and other coatings. She brings in chemicals from Thailand that are included in industrial cleaning products and imports glycols, which are used in food products, makeup and industrial coatings.

“These are the raw materials that make everything,” Ms. Gluth-Bohan said.

Ms. Gluth-Bohan was still assessing the impact of Ida on her industry, but it seemed obvious that the rebuilding effort would face challenges as the availability of necessary supplies became even tighter.

“It’s going to have a significant impact,” she said. “Companies that make coatings, paint, shingles or treated lumber — a lot of these companies are going to have to slow down.”

Part of the impact is a result of where the storm landed. The Gulf Coast is home to refineries and plants that make all manner of industrial chemicals — a fact brought home last winter, when an intense freeze in the region knocked factories out of commission, causing product shortages that still endure.

In Ida’s wake, the plastics industry was girding for another jump in prices that were already at record highs.

The Royale Group, which manufactures and distributes chemicals from its base near Wilmington, Del., buys only a small percentage of its supplies from plants on the Gulf of Mexico. But that is no comfort, said the company’s chief executive, John Logue, because shortages of a single ingredient can be enough to halt production of many items.

The auto industry has been severely constrained by a persistent shortage of computer chips. Similarly, Mr. Logue’s company, which relies heavily on suppliers in China and India, has for weeks been unable to complete an order for a pharmaceutical company because it is waiting for one raw material.

“Any hiccup in the supply chain right now just adds fuel to the disaster,” Mr. Logue said. “We are not manufacturing what we want to manufacture. We are manufacturing what we are able to manufacture.”

A garment worker working at a textile factory in Dhaka, Bangladesh, earlier this month.
Credit…Monirul Alam/EPA, via Shutterstock

Days after international brands and labor unions unveiled an extension of a groundbreaking safety agreement intended to protect garment workers in Bangladesh, the powerful trade body representing local factory owners has responded by questioning the legal jurisdiction of the pact.

The Bangladesh Garment Manufacturers and Exporters Association released a terse statement on Tuesday calling the announcement of a new agreement last week “confusing to many.”

The statement added that any claims that the new agreement would be put in place in Bangladesh with the trade group’s endorsement were “misleading,” reigniting whispers of a longstanding power struggle over who should be responsible for garment worker safety: foreign entities or local groups.

The new agreement, called the International Accord for Health and Safety in the Textile and Garment Industry, is intended to reflect the fact that apparel brands have now committed to expanding the new accord to at least one other country beyond Bangladesh. It will be overseen in Amsterdam and is scheduled to come into effect on Wednesday.

As part of the original five-year accord, signed in 2013 following the Rana Plaza disaster, almost 200 international brands — including H&M, PVH and Primark — agreed for the first time to legally binding safety commitments, independent inspections at the factories, and contributions for safety training and factory improvements.

A replacement was forged in 2019, establishing the Ready Made Garments Sustainability Council, known as the R.S.C., which was intended to pass oversight back to Bangladeshis. All inspections, training and complaints previously overseen by the accord were absorbed into the new council, with a board made up of factory owners, international brand representatives and labor groups.

But in recent months, protracted negotiations have also been underway between unions as well as fashion brands like H&M, Inditex and PVH to pen a successor to the original accord that would continue to make retailers liable to legal action unless supplier factories meet certain labor safety standards and to negotiate funding for remediation programs. The agreement would also broaden its scope to cover general health and safety.

“The latest announcement regards a separate, necessary and overarching agreement that monitors these brands’ commitments and extends them into another country — and hopefully more in the future,” said Christy Hoffman, the general secretary of the UNI Global Union, a Swiss-based federation of unions across 150 countries and a signatory of the agreements.

She added that she hoped for a “cooperative and productive” relationship with the Bangladeshi trade group.

But the trade group was not part of those discussions, union leaders said, given that the scope was intended to go beyond Bangladesh and its 4.5 million garment workers.

Factory owner representatives, who have long criticized the degree to which Bangladeshi manufacturers shoulder the cost of remediations, appeared unhappy with the new initiative, in which the R.S.C. determines funding needed for factory remediations and the accord foundation then creates a budget based on those claims and the funds available.

“It should be clear to all constituents and stakeholders that there is no licensed entity apart from the R.S.C. working in this sector,” the president of the Bangladesh trade group, Faruque Hassan, said in the group’s statement on Tuesday.

“The former accord and the proposed International Accord for Health & Safety in the Textile and Garment Industry are separate entities to the R.S.C. and will not have any function in Bangladesh, directly or indirectly, unless expressly permitted by the government of Bangladesh,” the news release read. “Clauses and sub clauses of any agreement signed outside Bangladesh, which are directly contradictory to the dictates of the laws of Bangladesh, must stand as null and void and have no scope of being implemented.”

The new agreement and a full list of participating brands is still expected to be formally signed Wednesday and will be valid for 26 months. Brands that had already confirmed inclusion like H&M and Inditex could not be reached for comment.

An Allbirds store display in Boston in 2020. The company had 27 physical locations as of June 30.
Credit…M. Scott Brauer for The New York Times

Allbirds, the maker of wool sneakers, offered a long-awaited peek at its earnings when its filing for an initial public offering was made public on Tuesday, revealing strong digital sales in 2020 despite an annual loss.

The company, which was valued at around $1.7 billion in 2020, brought in about $219 million in revenue last year, with almost 90 percent of that coming from digital sales, according to the filing. But the company, which filed confidentially for an I.P.O. this summer, lost money for the past two years, and it expects losses to continue.

Allbirds, which is based in San Francisco and was founded in 2015, is often compared to other venture-backed consumer companies like Warby Parker and Glossier, which also built cult followings around one or a handful of products sold online before expanding into physical retail. They are often held up as examples of a new type of retail model in the e-commerce age.

More recently, Allbirds has moved beyond casual shoes and into performance running shoes and clothing.

The company has grand ambitions despite its relatively small sales compared with athletic apparel behemoths. It is betting that it will expand rapidly through hundreds of new stores and by appealing to a new generation of consumers who are concerned about climate change and are shifting their purchasing habits accordingly.

Allbirds said in its filing that a pair of its shoes had a carbon footprint that was roughly 30 percent less on average than its estimated carbon footprint for a standard pair of sneakers, citing its use of renewable, natural materials and its manufacturing process.

It is using old-fashioned retailing tactics to accelerate its growth. The company said that although its stores were disrupted by the pandemic, it had “just scratched the surface of our store potential” with 27 locations as of June 30, and that it had also recently expanded into television advertising.

Allbirds’s wool sneakers became a hit product after appearing on the feet of Silicon Valley luminaries including Larry Page, the Google co-founder, and venture capitalists like Mary Meeker. The company was founded by Tim Brown, a former soccer player in New Zealand, and Joey Zwillinger, a former clean-tech entrepreneur. After Mr. Brown secured a research grant from New Zealand’s wool industry and started a Kickstarter campaign to make wool shoes, the two were introduced by their wives, who were roommates at Dartmouth College.

The company is a B Corp, a status certified by a nonprofit organization called the B Lab for companies that commit to uphold high social and environmental standards. Other prominent B Corp companies include Ben & Jerry’s and Patagonia.

Allbirds said in the filing that it planned to complete the first “Sustainable Public Equity Offering,” or SPO, saying that it “is an expression of our belief and commitment that our environmental credentials are not in conflict with phenomenal financial outcomes.”

Apple and Google control more than 85 percent of South Korea’s app market, lawmakers say.
Credit…Patrick Semansky/Associated Press

South Korea legislators on Tuesday approved the first law in the world that requires app stores to let users pay for in-app purchases through multiple payment systems, a blow to the market dominance of Apple and Google, which opposed the bill.

South Korea’s National Assembly passed amendments to the country’s Telecommunications Business Act that prevent app marketers like Google and Apple from forcing certain payment methods, unfairly delaying the review of mobile content and unfairly deleting mobile content from the app market.

The app-store revenue is lucrative for the tech giants. Apple takes a cut of up to 30 percent through in-app purchases; last year, Google indicated that it intends to follow suit by applying a 30 percent cut to more purchases than it had in the past. The legislation will be a blow to the profit they make in South Korea, where the two control more than 85 percent of the app market, according to lawmakers.

The measures were proposed last year and faced strong resistance from Apple and Google. Two South Korean lawmakers, Jo Seoung Lae and Park Sungjoong, said Google representatives were in direct contact with the National Assembly and its staff.

“Google is a company that wants to maximize their profits,” Mr. Park said in an earlier interview. “Of course they are against people like us ministers who are trying to pass this law.”

Mr. Jo revealed that Apple “provided their feedback” opposing the legislation. Both lawmakers are members of the Science, ICT, Broadcasting and Communications Committee at the National Assembly.

The law is not expected to cause trade tensions between Seoul and Washington, but the Biden administration has expressed concern over that possibility, according to the director of the Asia Internet Coalition, which has Apple and Google listed among its members.

Sarah Bartlett in 2019. She will step down as dean of the City University of New York’s journalism school next June.
Credit…Ivan Armando Flores for The New York Times

The dean of the City University of New York’s journalism school announced Monday that she would step down next June, ending a nine-year tenure during which enrollment increased more than 40 percent while the percentage of students of color rose above 50 percent.

Sarah Bartlett became the dean in 2014, after joining the school as a professor in 2006, the year of its founding. Before that, she worked as a reporter and editor at Business Week, The New York Times and Fortune.

As dean, Ms. Bartlett created a foundation that raised nearly $70 million for the school, CUNY said in a statement. The gifts included $20 million from Craig Newmark, the founder of the classified ads website Craigslist, a donation that let the school to change its name from the CUNY Graduate School of Journalism to the Craig Newmark Graduate School of Journalism. (Arthur Sulzberger Jr., the chairman emeritus of The New York Times Company, is the foundation’s vice chairman.)

In a brief interview Monday, Ms. Bartlett — who spent the day at the school’s Midtown Manhattan building, where last week students returned to in-person classes for the first time since the pandemic’s onset — said she was proud to have increased enrollment while keeping costs relatively low.

“We need to find a way to make newsrooms more inclusive, and more committed to engaging with more broadly based communities,” she said. “All J schools need to be working on solving that problem.”

Tuition and fees for a New York resident’s three semesters at the school come to approximately $18,000, compared with $70,000 or more at several peer institutions.

Ms. Bartlett also cited among her main accomplishments the school’s development of a bilingual program for Spanish-English speakers, the country’s first; a new master’s program in audience engagement; and an online-only certificate program in entrepreneurial journalism, for journalists who wish to strike out on their own with a newsletter or podcast. There will be a nationwide search for Ms. Bartlett’s successor.

Gary Gensler, the chair of the Securities and Exchange Commission. He called a key way that free brokerages make money “an inherent conflict of interest.”
Credit…Jonathan Ernst/Reuters

Gary Gensler, the chair of the Securities and Exchange Commission, said on Monday that a ban was “on the table” for a practice that underpins some of the most popular free stock-trading apps.

Mr. Gensler told Barron’s in an interview that he would consider banning “payment for order flow” — the practice in which large trading operations pay to execute trades for clients of retail brokerage firms, such as Robinhood.

The arrangement is central to the way Robinhood and some of its competitors, including E-Trade and Charles Schwab, have organized their businesses to offer commission-free trades — a crucial factor in the rush of millions of everyday people into the stock market.

The big trading operations, including Citadel Securities and Virtu Financial, that execute the orders make tiny profits on such trades, and the enormous user base of commission-free brokerage firms means those tiny profits can quickly add up.

Mr. Gensler told Barron’s that the practice has “an inherent conflict of interest” because the firms that execute the trades can benefit from that information.

“They get the data, they get the first look, they get to match off buyers and sellers out of that order flow,” he said.

Over the past several months, Mr. Gensler has made a series of statements saying he was closely examining the practice and was open to a wide range of regulatory options. He ordered the agency to look into the matter shortly after he was confirmed; the review is still ongoing.

Robinhood pointed to comments its chief financial officer, Jason Warnick, made as the company prepared for its initial public offering this year. “We think payment for order flow is a better deal for our customers versus the old commission structure,” he said at the time. In a call with investors earlier this month to discuss quarterly earnings, Robinhood officials said that they did not anticipate an outright ban of payment for order flow, but their sources of revenue were diverse and could easily withstand such a move.

Citadel had no immediate comment. Virtu declined to comment.

Consumer advocates and others have criticized the practice, complaining that it can give the large trading operations an advantage.

Banning it would be a welcome development, said David Lauer, the chief executive of the data analytics firm and a former high-frequency stock trader.

“It is an intractable conflict of interest,” he said. “The brokers cannot get around it.”

But, he said, ending the practice wouldn’t necessarily spell the end of free stock trades: Firms such as Fidelity already offer free trading without employing the payment-for-order-flow system.

Robinhood’s shares finished the day down nearly 7 percent. Shares of Virtu Financial also moved lower after Mr. Gensler’s comments were published, finishing the day down almost 4 percent.

Matthew Goldstein, Kate Kelly and Tara Siegel Bernard contributed reporting.

  • U.S. stocks fell on Tuesday after indexes started the week by climbing to a record. The S&P 500 fell 0.2 percent and the Nasdaq composite ticked down less than 0.1 percent.

  • For the month of August, the S&P 500 gained around 2.9 percent, its seventh straight month of gains.

  • European stocks were lower, with the Stoxx Europe 600 slipping 0.4 percent.

  • Oil fell, with futures for West Texas Intermediate crude, the United States benchmark, down 1 percent to $68.50 a barrel. The Organization of the Petroleum Exporting Countries and other producers like Russia are set to meet on Wednesday.

  • Shares of the stock-trading app Robinhood rebounded on Tuesday after falling earlier in the day. Gary Gensler, the chair of the Securities and Exchange Commission, said on Monday that a possible ban could take place for “payment for order flow” — the practice in which large trading operations pay to execute trades for clients of retail brokerage firms.

  • Zoom shares fell more than 16 percent after the video communications company reported on Monday a slowdown in growth during the quarter ending July 31. Customers increased by 36 percent during the quarter, compared with 458 percent during the same period last year.

Credit…Edgard Garrido/Reuters

Two Canadian railroads — Canadian National Railway and Canadian Pacific — have for months been jockeying to acquire Kansas City Southern, which would allow them to become the first Canadian company with tracks through Canada, the United States and Mexico. On Tuesday, the Surface Transportation Board, a U.S. agency that approves freight mergers, dealt a blow to Canadian National’s attempt to get that done.

The board, in an unanimous decision, declined to approve a voting trust, which would have allowed shareholders of both Canadian National and Kansas City Southern to reap the benefits of a deal while the companies wait for regulatory approval to complete their merger. The decision complicates the already complex situation and threatens to derail Canadian National’s $30 billion bid, which had trumped an earlier bid by Canadian Pacific.

Voting trusts have a long history in railroad deals, and the board had approved such a trust for Canadian Pacific’s proposed takeover before it was outbid by Canadian National. The denial of the voting trust for the Canadian National deal indicates that regulators could have concerns and that it may not be approved. It could also send Kansas City Southern back to Canadian Pacific.

In a May letter to the board, the Justice Department wrote that its concerns about use of a voting trust in the proposed Canadian Pacific transaction “apply with greater force to Canadian National’s proposed acquisition of Kansas City Southern because it raises additional potential competitive concerns.”

The Surface Transportation Board wrote that it found “that using a voting trust, in the context of the impending control application, would give rise to potential public interest harms relating to both competition and divestiture.”

Kansas City Southern, for its part, may consider itself lucky for having options. In a 2016 paper on voting trusts in railroad mergers, Russell Pittman, an economist at the Department of Justice’s antitrust division, wrote that these trusts serve a purpose, protecting the interests of the acquired and acquiring parties. When the board rejects a trust proposal it can make it harder for the target company to find a new acquirer, but with Canadian Pacific waiting and watching to see what happens, getting another offer may not be a problem.

Canadian Pacific last offered $27 billion for the American railroad earlier this month. That number may be more appealing to Kansas City Southern now.

Kansas City Southern shares fell on the denial, while Canadian National shares rose and Canadian Pacific shares fell.

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