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Aug. 13, 2020, 9:52 a.m. EDT

The Dow Jones – The Dark Side of COVID-19

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Aug 13, 2020 (IAM Newswire via COMTEX) -- Throughout their history, the Dow and S&P 500 have been used inter-changeably to describe the overall stock market. For a long time, the Dow was the market to nearly all investors. It is easier to analyze 30 as opposed to 500 stocks. But these days, the S&P 500 is more quoted, largely because the financial services industry has endorsed it.

The Dow Jones Industrial Average highlights the good and bad of today's markets. On the other hand, you cannot track some large stock giants that don't pay a dividend. Facebook /zigman2/quotes/205064656/composite FB +0.20% , Google /zigman2/quotes/202490156/composite GOOGL +0.96% and Amazon /zigman2/quotes/210331248/composite AMZN +0.66% , along with a few other NASDAQ giants, skyrocketed during the past decade. But they are not in the Dow. Moreover, they are practically an asset class by themselves. As for everyone else, the Dow should do the job.

The latest earnings report of 3M /zigman2/quotes/205029460/composite MMM +0.57% was disappointing to say the least. Its organic sales declined 13.1% in the second quarter. 3M’s disappointing sales performance is a consequence of it being exposed to badly hit markets. Safety and industrial were hit by the slowdown in the automotive and aerospace markets. Transportation and electronic boarded that same train. Even healthcare dropped as COVID-19 pandemic has caused delays in elective procedures and closed dental offices all over the world.

Weakened consumer purchasing power

Severely weakened consumer purchasing power has been shown by American Express Company's /zigman2/quotes/203805826/composite AXP -0.12% earnings that plunged as consumers were forced to stay home. But the company is doing what it can to get back in the saddle by launching a financial wellness tool to help users improve their credit score. By setting a desired target, they will receive personalized recommendations on how to reach it. On the other hand, Visa /zigman2/quotes/203660239/composite V +0.08% recently provided an earnings beat despite the still 'frozen' travel category, showing a glimpse of economic recovery thanks to e-commerce.

Non-existant travel

Speaking of travel, Boeing's /zigman2/quotes/208579720/composite BA -3.39% earnings were as bad as it gets. The company reported a loss of $4.79 a share on $11.8 billion in sales for the second quarter whereas analysts expected a loss of $2.57 a share on $13 billion in sales.

Even the oil giants are existentially threatened. There is hardly an oil company with a strong balance sheet like Chevron /zigman2/quotes/205871374/composite CVX -0.21% yet the pandemic crushed its profits. Together with its oil peer Exxon Mobil /zigman2/quotes/204455864/composite XOM -0.20% , these are the only two oil giants that have the status of Dividend Aristocrats. But, maintaining that dividend comes at great cost as the second quarter was disastrous for both. Exxon raised a major new debt as it increased its long-term debt from $26.3 billion at December 31, 2019 by $20.2 billion until June 30, 2020. The cash position at June 30, 2020 was $12.6 billion which means that even with the debt, Exxon does not have sufficient cash to cover 12 months of dividend payout.

Caterpillar Inc /zigman2/quotes/203434128/composite CAT +0.53% saw its bottom line melt 64% compared to its prior year. Although its second-quarter revenues of $10 billion topped estimates of $9.2 billion, the top line dropped 31% due to lower sales volume. The pandemic diminished demand and consequently, dealer inventories were impacted negatively.

On Wednesday, Cisco /zigman2/quotes/209509471/composite CSCO -1.12% just reported its fourth consecutive revenue decline in its quarterly guidance. The 9% revenue decline resulted in its shares falling approximately 6% during extended trading. While much of the technology sector is seeing growth as the economy is getting an online shape and companies are turning to software to run their businesses, Cisco is struggling to keep up. The problem is that its core business has been centered around expensive hardware. Hardware has been pushed aside by cloud giants. The company's investments in software wasn't enough to come near Amazon, Microsoft and Google. But at least it topped estimates with 80 cents of adjusted earnings per share vs. 74 cents per share expected by Refinitiv. Revenue was $12.15 billion as opposed to the $12.08 billion expected.

Intel /zigman2/quotes/203649727/composite INTC +0.70% 's fall could get even worse. Its shares plunged followings its second quarter results that saw revenue come in 6.3% better than estimates at $19.7 billion. Earnings also came in ahead of forecasts by 10.7% at $1.23. It's the earnings guidance for the third quarter that is causing concern. Since the report, analysts have been lowering their estimates, fearing that its shaky stock could led to big losses.

The iconic business model of Walt Disney Corporation /zigman2/quotes/203410047/composite DIS -0.64% that many failed to copy is what made the legendary House of Mouse perfectly exposed to the pandemic. COVID-19 has shuttered Disney to pieces during the first two quarters . And if there wasn't for its streaming star that now exceeded 60 million subscribers, it would have been in ashes by now. The net adverse impact of the pandemic on its current quarter operating profit across all business has been about $2.9 billion. Moreover, during the second quarter, pandemic-induced theme park closures melted its operating profit by 58%.

Walgreen Boots Alliance /zigman2/quotes/203410933/composite WBA -0.09% profit has declined over the last three years, even though its revenue has increased. But in July, the company announced a $1.0 billion investment into VillageMD. This investment also includes opening 500 to 700 physician-staffed clinics inside their locations across 30 markets over the next five years. This big news was announced just a few days before third quarter earnings that showed substantial negative operating income due to the pandemic. Although it was expected that COVID-19 has temporarily altered consumer behavior, Walgreen's report showed that some of these changes could be in for the long-haul. Although WBA deserves an applause for speaking out so early in the game which is very far from over, this raises many questions and increases the level of uncertainty.

These 11 Dow members are reflecting the world's ongoing battle with COVID-19. It shows how the mightiest can fall. Fortunately, there are 19 of its members who have utilized the pandemic to become even stronger or at least have a shot to emerge out of it as winners. Now, that story has a great ending. It shows how a business can always find the opportunity to thrive. This other group will also give us a good idea how will the world look like after we put this pandemic behind us.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com

The post The Dow Jones – The Dark Side of COVID-19 appeared first on IAM Newswire .

COMTEX_369358240/2618/2020-08-13T09:52:04

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/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 249.53
+0.51 +0.20%
Volume: 19.96M
Sept. 24, 2020 4:00p
P/E Ratio
30.48
Dividend Yield
N/A
Market Cap
$709.41 billion
Rev. per Employee
$1.57M
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/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,422.86
+13.47 +0.96%
Volume: 1.72M
Sept. 24, 2020 4:00p
P/E Ratio
31.73
Dividend Yield
N/A
Market Cap
$960.56 billion
Rev. per Employee
$1.39M
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,019.79
+19.93 +0.66%
Volume: 5.50M
Sept. 24, 2020 4:00p
P/E Ratio
116.07
Dividend Yield
N/A
Market Cap
$1502.60 billion
Rev. per Employee
$359,671
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/zigman2/quotes/205029460/composite
US : U.S.: NYSE
$ 160.42
+0.91 +0.57%
Volume: 1.52M
Sept. 24, 2020 4:02p
P/E Ratio
18.19
Dividend Yield
3.67%
Market Cap
$91.88 billion
Rev. per Employee
$350,368
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/zigman2/quotes/203805826/composite
US : U.S.: NYSE
$ 95.45
-0.11 -0.12%
Volume: 4.20M
Sept. 24, 2020 4:03p
P/E Ratio
19.78
Dividend Yield
1.80%
Market Cap
$76.94 billion
Rev. per Employee
$733,559
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/zigman2/quotes/203660239/composite
US : U.S.: NYSE
$ 195.52
+0.15 +0.08%
Volume: 9.86M
Sept. 24, 2020 4:00p
P/E Ratio
38.17
Dividend Yield
0.61%
Market Cap
$415.72 billion
Rev. per Employee
$1.25M
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/zigman2/quotes/208579720/composite
US : U.S.: NYSE
$ 146.05
-5.13 -3.39%
Volume: 26.81M
Sept. 24, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$85.33 billion
Rev. per Employee
$660,961
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/zigman2/quotes/205871374/composite
US : U.S.: NYSE
$ 71.80
-0.15 -0.21%
Volume: 15.00M
Sept. 24, 2020 4:02p
P/E Ratio
N/A
Dividend Yield
7.19%
Market Cap
$134.35 billion
Rev. per Employee
$3.27M
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/zigman2/quotes/204455864/composite
US : U.S.: NYSE
$ 34.32
-0.07 -0.20%
Volume: 26.70M
Sept. 24, 2020 4:03p
P/E Ratio
20.44
Dividend Yield
10.14%
Market Cap
$145.41 billion
Rev. per Employee
$3.93M
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/zigman2/quotes/203434128/composite
US : U.S.: NYSE
$ 145.14
+0.76 +0.53%
Volume: 2.08M
Sept. 24, 2020 4:00p
P/E Ratio
19.46
Dividend Yield
2.84%
Market Cap
$78.18 billion
Rev. per Employee
$526,173
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/zigman2/quotes/209509471/composite
US : U.S.: Nasdaq
$ 37.85
-0.43 -1.12%
Volume: 30.84M
Sept. 24, 2020 4:00p
P/E Ratio
14.39
Dividend Yield
3.80%
Market Cap
$162.06 billion
Rev. per Employee
$684,933
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/zigman2/quotes/203649727/composite
US : U.S.: Nasdaq
$ 49.16
+0.34 +0.70%
Volume: 29.33M
Sept. 24, 2020 4:00p
P/E Ratio
9.05
Dividend Yield
2.69%
Market Cap
$207.63 billion
Rev. per Employee
$659,665
loading...
/zigman2/quotes/203410047/composite
US : U.S.: NYSE
$ 122.49
-0.79 -0.64%
Volume: 8.37M
Sept. 24, 2020 4:02p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$222.77 billion
Rev. per Employee
$295,532
loading...
/zigman2/quotes/203410933/composite
US : U.S.: Nasdaq
$ 35.03
-0.03 -0.09%
Volume: 5.50M
Sept. 24, 2020 4:00p
P/E Ratio
42.96
Dividend Yield
5.34%
Market Cap
$30.38 billion
Rev. per Employee
$380,198
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