After opening lower in dramatic fashion, stocks steadily recouped those losses and grind higher in Wednesday’s latter stages, providing short-term traders with the intraday volatility that they crave.
Wednesday’s action was very much a repeat of what investors have been dealing with in recent weeks: the trade war and speculation of another Federal Reserve rate cut prompted by, well, the trade war. Globally-inclined investors were treated to three rate cuts outside the U.S. today as India, New Zealand and Thailand joined the party.
While yields on 30-year Treasuries hit record lows, helping U.S. stocks close well off the lows of the day. The Nasdaq Composite and the S&P 500 added 0.38% and 0.08%, respectively, while the Dow Jones Industrial Average lost 0.09%.
Oil tumbled today as the Energy Information Administration said domestic crude inventories surprisingly rose by 2.39 billion barrels last week, putting Dow components Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) among the blue-chip indexes losers for the day. Wednesday is just one day, but it is another sign of mounting pressure on traditional energy stocks.
As I noted yesterday, Walt Disney (NYSE:DIS) is usually a weak performer immediately following its earnings reports. The entertainment giant unfortunately obliged today, sliding 4.92% to rank as the worst-performing Dow stock.
The company earned $1.35 a share in its fiscal third quarter, 22% below analyst estimates. It was expected that this report would be messy for Disney. Sell-side analysts were out in force today supporting the stock, so this may be the pullback in Disney shares investors have been waiting for.
Now, let’s look at some winners.
Quick Victory Lap
Admittedly, the stock is down 5% over the past month, but The Travelers (NYSE:TRV), a name I’ve previously mentioned in this space, was one of the better-performing Dow stocks today, adding about 1%. Why bring up shares of Travelers today? Easy answer: the company generates little-to-no revenue outside the U.S.
On a light news day, shares of Coca-Cola (NYSE:KO) jumped 1.74%, making the stock today’s top performer in the Dow. Bullishness in shares of the world’s largest soft drink maker today could be simply a symptom. The stock has it and 10-year Treasuries don’t have much of it. Earlier today, 10-year yields traded as low as 1.63%, well below Coca-Cola’s dividend yield of 3.06%.
I’m inclined to add Procter & Gamble (NYSE:PG) here because the stock rose 1.10% today. With a dividend yield of 2.61%, P&G isn’t a high yielder, but is a storied dividend grower. That 2.61% is nearly 100 basis points better than what you’ll get on 10-year Treasuries.
Bad News Is Good News
Big changes are afoot in the retail space and one of the cornerstones of that change is store closings. Such closures are not good news for the employees and the communities that depend on those locations, but Wall Street typically likes the news.
Hence, Walgreens (NASDAQ:WBA) jumped 2% today after announcing it will shutter 200 U.S. stores. That move is expected to save the company $1.5 billion by 2022.
Dow Jones Bottom Line
Thanks to the trade war, risk appetite is hibernating. Just look at the stocks mentioned above as Dow winners today. All defensive names.
What else is working? Gold, which is defensive. Silver because gold is soaring, though the white metal is more volatile. And how about this fun fact: the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT), one of the least risky ETFs out there, is on a nine-day winning streak.