The energy sector is a dwindling part of the S&P 500 — just 2.77% heading into today, good enough to be the second-smallest sector weight, only ahead of materials. Diminutive stature for the sector aside, stocks were roiled today as oil prices slipped into negative (yes, that’s right) territory in what was the worst collapse for the commodity’s price since data started being tracked more than seven decades ago.
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- The S&P 500 dipped 1.79%
- The Dow Jones Industrial Average slid 2.44%
- The Nasdaq Composite dropped 1.03%
- It would be reasonable to expect that the Dow’s oil constituents would be the worst performers today. Alas, that dubious distinction again belongs to Boeing (NYSE:BA), which slid plunged 6.71%.
In plain English, this is how bad things are getting in the oil market: with negative prices, producers are paying buyers to absorb product. The result is refiners not taking on any new crude, meaning producers are rapidly running out of places to store the stuff.
Monday’s oil drubbing comes after some buyers were offering as little as $2 per barrel in Texas last week and 13% of domestic rigs were taken offline due to collapsing prices. And yes, Exxon (NYSE:XOM) and Chevron Corporation (NYSE:CVX) were two of the worst-performing names in the Dow today.
In late trading, 26 of 30 Dow components were in the red.
Boeing Back At It
As noted above, Boeing is up to its old tricks again after the leasing arm of China Development Bank (CDB) canceled the delivery of 29 Boeing 737 Max jets.
“In light of evolving aviation market dynamics, we’ve been working together with Boeing over many months to re-calibrate our MAX orderbook to be in line with our long-term view of the market and related opportunities,” Xuedong Wang, chairman of CDB Financial unit CDB Aviation, said in a statement.
Adding to the Boeing woes, Citigroup analyst Jonathan Raviv lowered his rating on the name to “hold” from “buy,” though he raised his price target to $175 from $150. Go figure. That new target implies upside of about 22% from the Monday close.
Disney Decked Again
Disney (NYSE:DIS) is in the losers column again today, and it’s easy to see why. UBS analyst John Hodulik downgraded the stock, but it’s not so much the downgrade as what the analyst had to say. The analyst speculated that Disney theme parks could remain shuttered until early next year because of the novel coronavirus pandemic.
That’s on top of all the other headwinds Disney is facing, issues that prompted the furlough of 100,000 workers announced over the weekend.
“The Covid-19 outbreak and subsequent lockdown have closed theme parks, the box office, sports leagues and retail stores and as result is impacting every major segment at the company,” said Hodulik.
An Analyst’s Bold Call…
It’s not saying much, but Apple (NASDAQ:AAPL) was one of the least bad Dow names today, a theme that’s been prominent with the iPhone maker this year.
Apple losses were capped with some help from Evercore ISI analyst Amit Daryanani. The analyst reiterated an “outperform” rating on the stock with a $325 price target, but said there are avenues for the name to eventually trade up to $500.
To get to $325 from the Monday close would be a pretty impressive feat, but to get to $500, Apple would need to rally more than 80 percent from current levels.
Bottom Line on the Dow Jones Today
Clearly, this isn’t the best way to start the week, and this is a crucial five-day stretch as more than 20% of the Dow steps into the earnings confessional over the next several days. There are chances for surprises, but data say investors shouldn’t bet on much good news on the earnings front.
“To date, 9% of the companies in the S&P 500 have reported actual results for Q1 2020,”said John Butters of FactSet in a recent note. “In terms of earnings, the percentage of companies reporting actual EPS above estimates (66%) is below the five-year average. In aggregate, companies are reporting earnings that are 8.3% below the estimates, which is also below the five-year average. In terms of sales, the percentage of companies (70%) reporting actual sales above estimates is above the five-year average.”
Bottom line: earnings reports probably won’t be helping stocks this week.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.
