The Dow Jones Industrial Average lost 62 points today after a strong finish to the week Friday, as the market continues to trade with volatility and little real direction. Investors are still weighing interest rate hikes by the Federal Reserve, which show no sign of abating, especially with inflation still an issue.
Fed Chairman Jerome Powell has previously said that he expects the Fed's rate-hiking committee to boost its benchmark interest rate by another one-half to three-quarters of a percentage point at its July meeting, making it difficult to believe that we've climbed out of this bear market just yet.
Although most of the Dow's 30 stocks ended the day in the red, one Warren Buffett stock, in particular, performed well, likely due to some geopolitical issues relating to Russia's ongoing invasion of Ukraine.
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Price caps on Russian oil
Oil stocks performed well today as countries that are part of the Group of Seven (G7) forum discussed potentially capping prices on Russian crude oil. The initiative would be another effort to hit the already struggling Russian economy as punishment for Russia's invasion of Ukraine, which is now entering its fifth month of fighting.
The large U.S. oil producer Chevron (CVX +0.00%) saw its stock climb nearly 2% today, the second-best performer in the Dow, on a day when only nine Dow stocks finished in the green.
The U.S., along with many other European countries, have already banned or limited Russian oil imports to hurt the Kremlin's pocketbook, but other countries like China have still been buying.
Vivek Dhar, an analyst at Commonwealth Bank of Australia, said in a research note that Russia could stop sending oil to G7 countries, which would only result in "exacerbating shortage conditions in global oil and refined product markets."
The price of West Texas Intermediate Crude Oil had jumped nearly $2.20 as of this writing and had risen to just below $110 per barrel.
NYSE: CVX
Key Data Points
While there have been calls for domestic oil producers like Chevron to increase production, it's not that simple.
Chevron's CEO Mike Wirth has previously told the public not to expect another new oil refinery to ever be constructed in the U.S. Even if there were, there's not going to be enough refining capacity.
Higher oil prices do bode well for companies like Chevron, however, which is why the stock is up more than 24% this year, despite the fact the Dow is down 14%. Other U.S. oil stocks like Occidental Petroleum (OXY 0.91%) and ExxonMobil (XOM +1.69%) also performed well today.
Is Chevron a buy?
After some buying and selling of the oil giant's shares over the past few years, Buffett and his company Berkshire Hathaway (BRK.A 0.24%)(BRK.B 0.38%) have committed to a substantial investment in Chevron.
Overall, Berkshire owns more than 159.1 million shares of the oil giant valued at nearly $23.5 billion. Chevron is now Buffett's fourth-largest holding and makes up more than 7% of Berkshire's portfolio of publicly traded stocks.
Chevron does look to be well-positioned right now. The company earlier this year announced plans to increase its share repurchase targets to $5 billion to $10 billion a year. The company also forecasts that operating cash flow per share will increase 10% annually through 2026 as long as Brent crude oil doesn't fall below $60 per barrel.
