It was mostly a listless-to-negative day for U.S. stocks as the technology sector faltered, weighing on the major benchmarks. Another delay in the Brexit vote, seemingly a regular occurrence, and data indicating that sales of previously owned U.S. homes fell 2.2% last month were among the headlines hampering equities today.
Riskier assets were out of fashion today, but oil prices climbed, snapping a two-day losing streak. On a related note, Dow components Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) were two of the best-performing members of the blue chip index today.
In comments made at an energy conference in Texas earlier today, Steve Green, president of Chevron’s North American business, said the Permian Basin isn’t vulnerable to the boom-and-bust cycles that have been part of U.S. oil regions for generations.
“We see a long, healthy pace of activity in the Permian and Texas for decades to come,” said Green, reports Bloomberg.
Boosting shares of Exxon were reports that Democratic frontrunner Sen. Elizabeth Warren’s (D-MA) energy plan could lead to higher oil prices, benefiting Exxon in the process. Warren has previously said she will ban fracking if she is elected president.
Energy gains weren’t enough to prevent the Nasdaq Composite from falling 0.72% while the S&P 500 lost 0.36%. The Dow Jones Industrial Average dropped 0.15% as 22 of its 30 components were higher in late trading.
Leaders Incur Some Punishment
I’ve noted multiple times over the past several months that Travelers (NYSE:TRV) and McDonald’s (NYSE:MCD) have been two of the stronger Dow stocks this year, but that leadership, particularly in the case of Travelers, was dealt a significant blow Tuesday when earnings reports from both companies disappointed investors.
Insurance giant Travelers plunged 8.13%, by far the worst performance in the Dow today, after the company reported third-quarter earnings of $1.50 per share. That’s down from $2.62 a share a year earlier and well below the consensus estimate of $2.35 a share. Travelers revenue rose to $8.01 billion from $7.72 billion.
Shares of McDonald’s slid 4.57%, good for the second-worst showing in the Dow today behind Travelers. The McDonald’s loss was accrued on volume that was more than double the daily average.
McDonald’s said it earned $2.11 a share on sales of $5.43 billion. Wall Street was expecting earnings of $2.21 on revenue of $5.47 billion. The company did say same-store sales increased by 5.9% globally and 4.8% in the U.S.
Ongoing Leadership
While some Dow leaders dealt with weakness today, that was not the case for Procter & Gamble (NYSE:PG). The consumer products giant gained 2.57% after it extended its now lengthy strength of beating Wall Street earnings estimates.
In the most recently completed quarter, P&G posted earnings per share of $1.37 from revenue of $17.8 billion. Analysts expected $1.24 a share and $17.4 billion of revenue. The stock is now up nearly 30% year-to-date.
Industrial Interest
Shares of industrial conglomerate United Technologies (NYSE:UTX) were in the upper tier of Dow performers, gaining 2.16% on more than double the average daily volume, a gain that appears to have triggered an impressive upside technical breakout.
UTX earnings were decent, but today’s price action was more the result of bullish guidance.
“Our strong performance through the first three quarters gives us confidence in the improved adjusted EPS range of $8.05 to $8.15 and free cash flow range of $5.3 to $5.7 billion for the year,” said CEO Gregory Hayes in a statement.
Bottom Line on the Dow Jones Today
With 2019 drawing to a close, it’s safe to say this has been an eventful year and more of the same is likely in store in 2020 with an upcoming presidential election. For investors trying to get a handle on things, some specific investment styles may prove useful.
“To be clear, a weak and falling ISM need not lead to a recession,” according to BlackRock. “In fact, since the start of the recovery the ISM has dropped below 50 on 12 occasions, none of which culminated in a recession. That said, even in the absence of a formal recession slowing growth suggests over-weighting less volatile and higher quality companies.”
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
