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Stock Market News: Chevron Takes the Money and Runs; Disney Readies for Liftoff

By Dan Caplinger – May 9, 2019 at 11:10AM

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Trade tensions weighed on the overall stock market on Thursday morning.

Stocks took another turn lower on Thursday morning, as new comments from President Trump fed into the idea that trade relations between the U.S. and China aren't nearly as close to a favorable resolution as investors had hoped. As of 11 a.m. EDT, the Dow Jones Industrial Average (^DJI 0.00%) fell 386 points to 25,581. The S&P 500 (^GSPC -1.72%) dropped 35 points to 2,844, and the Nasdaq Composite (^IXIC 0.00%) gave up 123 points to 7,820.

Amid the downdraft, there was still some good news for many individual companies. Chevron (CVX -6.53%) saw its stock rise on reports that it won't get itself into an endless bidding war against Occidental Petroleum (OXY -5.09%) in its efforts to purchase Anadarko Petroleum (APC). Meanwhile, Disney (DIS -2.60%) didn't see its shares make a big jump, but its quarterly earnings report revealed a clear pathway toward prosperity in which its new streaming service will play a significant role.

Chevron raises a white flag

Shares of Chevron climbed more than 2% after the company revealed that it will not go forward with its attempt to acquire Anadarko Petroleum. Chevron said in a press release that it would not exercise its right to make a counterproposal following the rival bid that Occidental Petroleum made.

Chevron logo in blue, red, and white.

Image source: Chevron.

Many had believed initially that Chevron would be able to purchase Anadarko without any drama, combining their highly complementary assets in the Permian Basin. However, Occidental not only came in with a rival bid but also one-upped itself with a more cash-rich offer in response to concerns about whether the first attempt was truly a superior proposal. That started a four-day clock for Chevron to make a higher bid.

Chevron CEO Michael Wirth explained the company's rationale in not pursuing a full-blown bidding war. "Winning in any environment doesn't mean winning at any cost," Wirth said, "and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal."

Yet the move comes with a reward any investor could appreciate. If Anadarko terminates its merger deal with Chevron as expected, then it will be on the hook to pay a $1 billion cash termination fee. Chevron said it intends to use that cash to boost its stock repurchase program, bringing anticipated buybacks to $5 billion per year and giving shareholders an even bigger boon. Investors were happy about Chevron's disciplined approach, and the oil major should have opportunities for other asset purchases in the future.

Disney has big plans

Elsewhere, shares of Disney lost 1%, falling in line with the overall market. The entertainment and media giant reported fiscal second-quarter results that were promising not only in what they said about the recent past but also in what they revealed about the House of Mouse's future plans.

Disney's primary financial metrics were mixed. Revenue climbed about 3% from year-ago levels, which outpaced the expectations of most of those following the stock. Even though adjusted earnings were down double-digit percentages over the same period, the declines weren't as steep as many had feared.

Given the recent success of Avengers: Endgame, it might come as a surprise that the studio entertainment segment saw revenue decline over the past year. Yet it was Disney's theme parks that carried the biggest part of the burden for the company during the quarter, which ended before Endgame's release.

Disney's future looks even brighter. New theme park exhibits are planned for the near future, and the company said that the rollout of the Disney+ streaming service will happen on Nov. 12. Perhaps more importantly, Disney said that it will release Endgame exclusively on Disney+ on Dec. 11 -- giving investors an early look at just how much demand the entertainment giant can garner from its latest hit movie.

Dan Caplinger owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
$99.50 (-2.60%) $-2.66
Chevron Corporation Stock Quote
Chevron Corporation
$144.77 (-6.53%) $-10.12
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$30,076.68 (0.00%) $0.00
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,693.23 (-1.72%) $-64.76
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,066.81 (0.00%) $0.00
Anadarko Petroleum Corporation Stock Quote
Anadarko Petroleum Corporation
Occidental Petroleum Corporation Stock Quote
Occidental Petroleum Corporation
$58.73 (-5.09%) $-3.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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