Williams Companies Fell Due to Financial Repositioning
The financials sector rose on Tuesday and supported the S&P 500 Index. On January 10, the S&P 500 Financials sector rose 0.39%. Expectations of banking industry–favored regulations by Donald Trump supported financials. It increased expectations about the financials sector’s performance. Factset expects the financial sector to post 13.8% growth year-over-year. The market is looking forward to 4Q16 earnings reports from JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC). The reports are scheduled to release on January 13. JPMorgan Chase rose 0.29% on January 10. Read Will JPMorgan Chase Continue to Beat Estimates in 4Q16? for analysts’ earnings forecast and how interest rate hikes impact JPMorgan.
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After starting the week on a weaker note, the energy sector fell to the lowest levels since November 29. On January 10, the S&P 500 Energy sector fell 0.95%. Williams Companies (WMB) and Halliburton (HAL) were the worst performers in the energy sector on Tuesday. Weakness in crude oil prices weighed on the energy sector. Doubts about the execution of the output cut agreement along with a rise in crude oil inventory levels dented the sentiment in the crude oil market. The American Petroleum Institute reported a build in inventories by 1.5 MMbbls (million barrels). It’s higher than the market’s expectation of 1.2 MMbbls.
Williams Companies, which is into natural gas processing and transportation, fell 10.7% on Tuesday. It announced an increase in the quarterly dividend by 50%. It discussed plans to increase its stake in its subsidiary Williams Partners LP (WPZ) to 72%. The increase will be paid through equity. Some analysts such as Barclays and Jefferies downgraded Williams Companies after the financial repositioning announcement. Williams Companies is limiting its long-term growth potential, which led to a drop in prices. Read Williams Announces Major Financial Repositioning for a complete analysis on Williams Companies’ financial repositioning.