Dow Jones Today: Rebounding Oil and Decent Earnings Lift Stocks

Oil prices, Apple and other marquee names lifted stocks on Wednesday, but how long crude rally lasts is questionable.

A desperately needed rebound in the oil patch coupled with some decent earnings reports helped the major equity indexes recoup some of the losses incurred on Monday and Tuesday, although data suggest the economic malaise is far from over.

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  • The S&P 500 jumped 2.29%
  • The Dow Jones Industrial Average soared 1.99%
  • The Nasdaq Composite rose 2.81%
  • Buoyed by a strong earnings report from rival Texas Instruments (NASDAQ:TXN) and ahead of its own report tomorrow after the close, Intel (NASDAQ:INTC) was the best performer in the Dow today, gaining 7%.

With oil prices rebounding, Exxon (NYSE:XOM) and Chevron Corporation (NYSE:CVX) were in the Dow winners column for what feels like the first time in an eternity. Aiding crude’s ascent were comments from President Trump implying the White House could consider some form of bailout assistance for smaller exploration and production companies gutted by the recent oil rout.

However, there’s a catch. The government is going to want equity in energy companies that take its assistance, a ploy previously resisted by the likes of Boeing (NYSE:BA).

“The Trump administration is considering offering federal stimulus funds to embattled oil-and-gas producers in exchange for government ownership stakes in the companies or their crude reserve,” according to Dow Jones Newswires.

The plan faces a long road to becoming reality, but in late trading, 27 of 30 Dow stocks were in the green.

Apple Cash

Apple (NASDAQ:AAPL) reports earnings on April 30, and while the impact of Covid-19 on the company’s supply chain and iPhone demand are sure to be in focus, so will Apple’s much-ballyhooed cash stockpile.

At the end of last year, Apple had $100 billion in cash and the company was actually looking to reduce that sum, in part through buybacks and dividends.

Some analysts are speculating that, given the company history of timely share buybacks, Apple likely scooped up a ton of stock amid the Covid-19 crisis.

Maybe Some Good Dividend News

S&P 500 dividends are under duress this year, with much of that negativity coming from energy, travel and leisure stocks, but there’s also plenty of concern that banks may be dividend offenders, too. The situation may not be as bad as previously believed.

Wells Fargo was out with a note today commenting on the dividend fortunes of big money center banks, including Dow component JPMorgan (NYSE:JPM). The crux of the matter is that JPMorgan and some rivals already scrapped share repurchase plans so they probably have the capital to, at the very least, sustain 2020 payouts. Dividend growth, however, may be a different matter.

Post-Earnings Value

As noted here yesterday, Coca-Cola (NYSE:KO) is feeling the impact of Covid-19, yanking its 2020 guidance as a result of the pandemic, but some analysts see value in the soft drink behemoth and that may be a catalyst behind the stock’s up day today.

“Nevertheless, we remain confident in the Coca-Cola system’s strategic advantage and believe the right tactical competencies are in place to allow the firm to navigate disparate dynamics across its territories,” according to Morningstar.

JNJ Jump

Johnson & Johnson (NYSE:JNJ) was in the middle of the Dow winners pack today, helped by some bullish commentary from Bank of America Merrill Lynch. The research house upgraded the pharmaceuticals stock to “buy” from “neutral” while moving its price target on the name to $175 from $150.

Bottom Line on the Dow Jones Today

Oil was overdue for a rebound and that was one obvious catalyst behind market strength today. However, that could be a short-lived spark simply because demand destruction is real and showing no signs of relenting anytime soon.

That puts a real burden on either economic data to improve or earning to impress as near-term drivers of equity upside and neither scenario seems probable at the moment.

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.

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