Broader equity benchmarks didn’t do much of anything Wednesday, meandering between modest gains and losses, indicating traders may be waiting on the ugly April jobs report due out Friday before the open of U.S. markets.
- The S&P 500 lost 0.7%.
- The Dow Jones Industrial Average fell 0.91%
- The Nasdaq Composite added 0.51%
- On a day when risk taking was mostly out of style, Dow Chemical (NYSE:DOW) was the worst-performing member of its namesake index.
Oil’s winning streak was snapped today amid concerns that the supply glut will create storage issues (it probably will). As a result, Dow components Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) were in the losers column.
Underscoring the risk off tenor to Wednesday’s action, the U.S. dollar hit its highest levels in three weeks, confirming that today was a day when traders preferred the ultimate safe-haven asset.
As such, 22 of 30 Dow stocks were lower in late trading.
In what may be a case of markets being efficient and pricing bad news into a stock before it’s confirmed, Disney (NYSE:DIS) traded slightly higher today after delivering a fiscal second-quarter earnings report that was about as bad as expected.
The Dow Jones member posted earnings per share (EPS) of 60 cents a share, well below the Wall Street forecast of 88 cents. The company also said it’s suspending its dividend for the first half of this year, joining a growing list of S&P 500 payout offenders.
In brighter news, Disney’s Shanghai theme park is expected to have a limited reopening next week, which some investors believe could serve as a template for getting its California and Florida parks up and running again before the end of 2020.
These days, it feels as though tech and, to a lesser extent, communication services are the only sector really standing out. To that end, all five of the Dow’s tech names were in the green today, led by Apple (NASDAQ:AAPL).
There’s a valid reason for Apple’s Wednesday leadership: App store revenue boomed last month. That’s not surprising as America was shutdown for April and folks need stimulation, be it from books, games or music.
Morgan Stanley analyst Katy Huberty estimates Apple’s App Store posted net revenue of $1.7 billion last month, good for its best monthly showing in almost three years.
Not Much Impact
Home Depot (NYSE:HD) traded modestly lower today despite some bullish commentary from Bank of America. Interestingly, the bank maintains a “neutral” rating on the stock while boosting earnings and same-store sales estimates.
“Home improvement has proven to be the most resilient category of hardline retail throughout the spread of COVID-19,” said the bank.
Potential for More Bad Dividend News
This is shaping up to be a rough year on the dividend front, but so far, several Dow Jones stocks boosted payouts and, perhaps miraculously, Chevron and Exxon defended their dividends.
Morgan Stanley thinks a dozen S&P 500 companies could be near-term dividend offenders and Dow component Caterpillar (NYSE:CAT) is on that list. At 3.8%, Caterpillar is the highest-yielding name on the list.
Bottom Line on the Dow Jones Today
Obviously, today’s market action wasn’t awe inspiring, but investors looking for inspiration and glimmers of hope may want to acknowledge small caps, a group that’s notoriously sensitive to gyrations in the broader economy.
Over the past month, the Russell 2000 Index, one of the most widely followed small-cap benchmarks, is higher by 21%.
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.