Stocks were choppy Monday as investors looked ahead to a busy week. In addition to Big Tech earnings slated for release over the next several sessions, the Federal Reserve's latest policy decision is due out Wednesday afternoon.
"The Fed is still in a very good position to deliver another 75 basis-point hike as inflation stays around a four-decade high and as the economy is still adding jobs at a healthy clip," says Edward Moya, senior market strategist at currency data provider OANDA. "Since the Fed was late to fight inflation, it should not come as a surprise that they will try to remain aggressive with tightening as the [economic] outlook dims."
The energy sector (+3.7%) outperformed today as U.S. crude futures jumped 2.1% to $96.70 per barrel, while consumer discretionary stocks (-0.9%) lagged on a sharp selloff in Weber (WEBR, -12.7%) shares. The grill maker issued preliminary fiscal third-quarter sales figures that came in well below analysts' consensus estimate and withdrew its full-year guidance, citing "rising inflation, supply-chain constraints, fuel prices and geopolitical uncertainty." Weber also said it is replacing its CEO, effective immediately, as it looks to better position itself "to navigate historic macroeconomic challenges."
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As for the broader markets, the Dow Jones Industrial Average ended the day up 0.3% at 31,990 and the S&P 500 Index gained 0.1% to 3,966. The Nasdaq Composite, meanwhile, shed 0.4% to 11,782 as semiconductor stocks like Marvell Technology (MRVL, -2.5%) and Nvidia (NVDA, -1.7%) sold off.
Other news in the stock market today:
- The small-cap Russell 2000 rose 0.6% to 1,817.
- Gold futures fell 0.5% to $1,719.10 an ounce.
- Bitcoin slumped 3% to $21,906.41. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Newmont (NEM) spiraled 13.2% after the mining company reported second-quarter adjusted earnings of 46 cents per share on revenue of $3.06 billion, falling short of analysts' consensus estimates. The company also said costs applicable to sales (CAS) were up 23.4% year-over-year for the three-month period, due to higher labor and fuel costs. Several other gold stocks fell in sympathy with NEM, including Agnico Eagle Mines (AEM, -4.6%) and Barrick Gold (GOLD, -2.78%).
- Travelers (TRV, +2.3%) was the second-best Dow Jones stock today – coming in just behind energy giant Chevron (CVX, +3.0%) – after Raymond James analyst C. Gregory Peters upgraded the insurance name to Strong Buy from Market Perform (Neutral). The analyst listed several reasons why TRV "could be positioned to continue outperforming on a relative basis," including a solid uptrend in its Business Insurance segment's renewal pricing, upcoming rate increases in both auto and homeowners' insurance and the stock's attractive valuation. "TRV is an industry leader in the independent agency channel and has averaged a return on equity above 13% over the last 10 years," Peters says.
Watch for Dividend Hikes This Earnings Season
As earnings season starts to heat up, investors will certainly be watching how companies are doing on their top and bottom lines, but they'll also be looking for dividend announcements. Many corporations tend to announce shareholder-friendly initiatives, such as stock buybacks or dividend hikes, in conjunction with their quarterly updates.
And given the turbulent market we've seen so far this year, "investors should be focused on the industry leaders," says Nancy Tengler, CEO and CIO of asset management firm Laffer Tengler Investments, particularly those with "strong free cash flow and dividend growers if possible."
Naturally, the best place for investors to find companies boosting their annual payouts is among the Dividend Aristocrats – the elite group of names in the S&P 500 Index that have raised their dividends for at least 25 consecutive years. Here, we take a closer look at the S&P 500's best dividend stocks. While they are scattered across nearly every sector, they share one thing in common: a commitment to dependable dividend growth.
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