Stay-at-home orders around the country have closed bars and restaurants, as well as other businesses deemed “non-essential.” This is having an impact on businesses all over.
New York’s battle against COVID-19 shutdown Broadway and other tourist-heavy areas. Recently, governor Andrew Cuomo announced a roadmap to begin re-opening some parts of the New York state economy by mid-May. However, the re-opening might look different for New York City, which has been relatively hard-hit by COVID-19. Mayor Bill De Blasio has his own timeline, and is opening up city streets to pedestrians in an effort to help residents maintain social distancing guidelines.
But how is this impacting business? Let’s take a look.
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Depends on the Business
First of all, the impact of Coronavirus depends on the business, and how they interact with customers. For example, JPMorgan Chase & Co (JPM) isn’t likely to have a huge impact on their business, beyond what comes as part of any general stock market losses. However, these types of companies are likely to benefit from a subsequent recovery.
In fact, with the government announcing an injection of $1.5 trillion designed to help buoy the markets, many financial companies are likely to weather the storm. While they might see losses and stock price drops during market volatility, their long-term prospects probably won’t be damaged by New York’s efforts.
Additionally, some companies based in NYC, like the drugmaker Pfizer (PFE), are also likely to come out of this just fine. Indeed, Pfizer is one of the major companies asked by President Trump to help with this crisis and work on developing responses to COVID-19. Indeed, Pfizer is working with BioNTech to develop and manufacture a vaccine for the novel coronavirus.
Other companies, though, might not be so lucky. Local small businesses, especially those that rely on tourism might see a bigger hit. Additionally, companies like Foot Locker (FL) that have retail components, might see drops in sales and value due to social distancing practices.
With New York banning large gatherings and encouraging people to stay at home, companies that rely on in-person interactions are likely to be the hardest-hit during this time. While some might be able to recover, small businesses are likely to find themselves struggling–and some might even close down.
Taking a look at the 30 companies listed on the Dow Jones Industrial Average might provide some clues as to how different areas might be impacted. These companies, which are prominent on the New York Stock Exchange, are often considered a harbinger of things to come.
- 3M (MMM): As a manufacturer of personal protective equipment (PPE), the company might do well during this time. While the stock is down year-to-date, it has seen some recent gains, thanks to the potential for increased demand for PPE.
- American Express (AXP): American Express is offering its own tips for dealing COVID-19, as well as offering help for struggling businesses and extending welcome bonus timelines. The company has seen recent gains and is up overall on the year.
- Apple (AAPL): While the company has seen a year-to-date increase in its share price, it is currently struggling. Part of the issue is Apple’s supply chain, as well as sales, have been negatively impacted by coronavirus.
- Boeing (BA): Boeing’s commercial airline manufacturing operation was hit by the COVID-19 pandemic, and now the CEO is saying that it could take at least two years for the air travel industry to recover. The stock price is currently volatile, but is up year-to-date.
- Caterpillar (CAT): The company withdrew its 2020 guidance due to coronavirus and is dealing with supply chain disruptions. The stock price is down year-to-date.
- Chevron (CVX): Not only are fuel companies like Chevron dealing with decreased demand due to COVID-19, but also the recent situation in which oil prices actually went negative. CVX remains negative on the year.
- Cisco (CSCO): Like other technology companies, Cisco is experiencing supply chain disruptions and is trying to make up for them. So far, the company is down year-to-date.
- Coca-Cola (KO): Even though the supply chain is providing some problems for Coca-Cola, demand is up in the United States, so that is likely to help the company in the long-term. The company’s stock price is up year-to-date.
- Disney (DIS): Following shutdowns of parks due to coronavirus, Disney recently announced that it is furloughing 100,000 employees. Concerns have the stock price down year-to-date, but not by much.
- Dow Chemical (DOW): Even though Dow Chemical is promising to expand hand sanitizer production in order to help with the COVID-19 outbreak, the company’s share price has still seen a decline of more than 11% year-to-date.
- Exxon Mobil (XOM): In the same boat as Chevron, the global pandemic hasn’t been kind to Exxon, and the recent price war among OPEC members didn’t help. Exxon is down more than 12% year-to-date.
- Goldman Sachs (GS): Like other financial services companies, Goldman Sachs isn’t likely to hurt very much, or for very long. The company has dedicated funds for COVID-19 relief efforts. Goldman is up on the year.
- Home Depot (HD): In many states, Home Depot is considered “essential” and so is still open. The company continues to do well, seeing an increase on the year.
- IBM (IBM): Unlike some tech companies, IBM is experiencing some benefits from coronavirus. The cloud ecosystem is getting a boost, as is IBM’s experience in cybersecurity. The stock price is up year-to-date.
- Intel (INTC): Intel has provided access to innovation and providing coronavirus relief. While there are supply chain issues, Intel is still seeing an increase of more than 12% year-to-date.
- Johnson & Johnson (JNJ): The consumer products company is seeing an increase in its year-to-date price. Like other consumer product makers, JNJ has a chance to see some increased demand during this time.
- JPMorgan Chase (JPM): As with other financial services companies, JPM is likely to weather the storm, and is seeing a year-to-date increase in its share price.
- McDonald’s (MCD): Even though McDonald’s came under fire for some of its sick leave policies and has closed some of its dining rooms, it’s still possible to get drive-through, as well as delivery through apps like DoorDash. MCD is up on the year.
- Merck (MRK): Even though drug-maker Merck is down year-to-date, the long-lasting impact on big pharma is likely to be limited.
- Microsoft (MSFT): Microsoft has seen a surge year-to-date, with its stock price gaining almost 17%. With more white-collar companies working online, Microsoft Teams is seeing an increase in use right now.
- Nike (NKE): While there was an impact on sales and manufacturing in China related to coronavirus, Nike is overcoming the problem. Year-to-date stock price is edging higher, and in positive territory.
- Pfizer (PFE): Even though Pfizer is down on the year, there is a chance that there could be benefits down the road if its partnership yields a successful COVID-19 vaccine.
- Procter & Gamble (PG): Procter & Gamble is ramping up its advertising efforts in the wake of coronavirus. On top of that, sales of toilet paper helped the company’s earnings. The company is up on the year, and might see benefits of demand for consumer products.
- Travelers Companies (TRV): As a travel insurance provider, this company might struggle as various trips are cancelled. Additionally, the company is providing billing relief. So far, the company’s stock price is about even year-to-date, but that could change.
- United Technologies (UTX): This manufacturer was one of the hardest-hit by drops to the stock market, and the company has responded with spending cuts and hiring freezes. The stock price is slightly higher year-to-date, even with earlier losses.
- UnitedHealth (UNH): Health insurers have seen net benefits since COVID-19. Elective care costs are down as people can’t get in for surgeries, and insurers are seeking federal support. UNH is seeing a year-to-date gain in stock price.
- Verizon (VZ): Even though VZ is down on the year, it is considered one of the most likely to emerge from coronavirus in good shape. With streaming demand up and its services in demand, VZ could see benefits.
- Visa (V): As with other financial companies, Visa is well-positioned. Digital payment processing is up since COVID-19, and that helps transaction companies like Visa, whose stock is higher year-to-date.
- Wal-Mart (WMT): Even though Wal-Mart’s stock price is down year-to-date, the company has potential in the future. Stores remain open in many states, and there are some who believe the company will be one of retailers able to emerge from this crisis.
- Walgreens (WBA): Stay-at-home orders are hitting Walgreens in-store sales. As a result, the company is seeing a dramatic drop to its stock price year-to-date.
In general, publicly-traded companies might see lower stock market prices, volatility and uncertainty related to the Coronavirus pandemic, depending on how soon the economy re-opens, and how investors respond to economic issues, like the millions of jobs lost. However, depending on the company and what it provides, there might be a limit to the losses.
Additionally, some companies are sure that when things return to normal they might be able to make up for the losses later in the year–as long as this pandemic doesn’t trigger a recession. In the long run, though, many of the companies listed on the Dow are likely to weather the storm. It may take a few years for recovery, but these companies are large enough and have been profitable enough that they aren’t likely to collapse as a result of the Coronavirus.
Indeed, for some investors, COVID-19 offers an opportunity for bargain-hunting, especially if they are far from retirement and have the ability to buy some of these stocks if they continue to drop in price.