Stock Market Today: China Concerns, Stalling Stimulus Muddy Markets
Beijing orders U.S. consulate closed and GOP senators go home without a stimulus proposal, fueling investor doubts Friday.
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Tensions with China seeped further into the market Friday as the U.S.-China trade deal returned to the picture, and deep losses for chipmaker Intel (INTC, -16.2%) didn't help, either.
In a Thursday coronavirus briefing, President Donald Trump said the pact "means less to me now than it did when I made it" as he continues to lay blame on China for the COVID-19 breakout. That, as well as China's demand that the U.S. close its Chengdu consulate – a retaliatory measure for a similar American order earlier this week – helped crack investor confidence.
Senate Republicans' fiscal stimulus proposal was delayed again, too, with a reveal now expected on Monday.
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Intel was a particular drag following its Thursday evening earnings report, when it admitted that its next-generation CPUs will be released six months later than expected.
"We believe the company’s delay of its 7nm roadmap will foster fears of competitive pressures persisting, if not accelerating over the next 2-3 years and thereby cap the valuation on its shares," wrote Deutsche Bank analyst Ross Seymore, who downgraded the stock from Buy to Hold. "While INTC has successfully proven that it can generate solid revenue and earnings growth despite being behind on Moore’s Law (a trend that likely persists into 2021), we believe fears of the announced 6-month 7nm delay extending to a 10nm-esque multi-year issue that eventually does impact fundamentals will likely keep INTC's shares range-bound until the company definitively proves otherwise."
The uncertainty was a boon for gold, which continued its breakout 2020. Futures contracts for the yellow metal closed up 0.4% to an all-time high $1,891.50, topping its August 2011 mark.
But the Dow Jones Industrial Average finished 0.7% lower to 26,469, the S&P 500 closed down 0.6% to 3,215 and the small-cap Russell 2000 slumped 1.5% to 1,467. More trouble in tech weighed down the Nasdaq Composite, which declined 0.9% to 10,363).
Will a Difficult Year for Dividends Continue?
The weight of COVID-19 and other economic pressures is being felt in more than just stock prices. Dividends face continued pressure, too.
Wells Fargo (WFC) recently joined a laundry list of stocks that have cut or reduced payouts in 2020, and other big names could follow suit. Several analysts believe beleaguered energy giant BP (BP) will be among the next big dividend cuts.
Interestingly, Jefferies analyst Jason Gammel recently upgraded BP from Hold to Buy despite seeing a "good chance" of a dividend reduction.
"(This is) the first time our team has ever upgraded a stock to Buy when the risk of an imminent dividend cut was possible, but we believe a cut of 65% is already priced into the stock," he writes, referencing BP's uber-high yield of almost 11%.
But it's not all bad news for equity income investors. A host of companies (including a number of Dividend Aristocrats) have pumped up their payouts throughout this difficult downturn. And perhaps more impressively, several stocks have made the bold move of offering cash distributions for the very first time in 2020.
Experts frequently view dividend payments as a sign of corporate financial quality, because, while earnings and even revenues can be tweaked, dividends have to be paid from cold, hard cash.
Here, we look at 20 of Wall Street's newest dividend stocks, including a bundle of brand-new payers that made their debuts in 2020.
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