Deep Dive: These stocks took the biggest hit after the Fed’s interest-rate cut sent markets reeling

Investors were disappointed with the Federal Reserve’s surprise interest-rate cut Tuesday, reversing the previous day’s massive rally to send U.S. stocks down sharply.

The Dow Jones Industrial Average

DJIA, -2.94%

 shed 786 points (or 2.9%) to close at 25,917.41. The S&P 500 Index

SPX, -2.81%

 fell 2.8%, and the Nasdaq Composite Index

COMP, -2.99%

 fared worst of the three, sliding 3%.

To see the biggest losers in those three indexes, please see the tables below.

The Federal Open Market Committee didn’t wait until its regular March 17-18 meeting to lower the federal funds rate by 50 basis points to a range of 1% to 1.25%. Federal Reserve Chairman Jerome Powell said during a press conference that the Covid-19 strain of the coronavirus would “weigh on economic activity here and abroad for some time,” but that the committee believed the action would “provide a meaningful boost to the economy.”

After the rate cut, furious buying of long-term paper sent the yield on 10-year U.S. Treasury

TMUBMUSD10Y, -4.61%

 down to 1.00%, while the yield on 3-month Treasury bills

TMUBMUSD03M, -2.46%

 was only slightly lower, at 0.94%. (On March 2, those yields had been inverted, with the 10-year at 1.10% and the three-month yield at 1.13%.)

So the yield curve went from inverted to nearly flat, meaning fixed-income investors expect another rate cut or had expected Powell to take stronger action Tuesday.

President Trump was among those disappointed with the size of the rate cut:

Read: Why the stock market insn’t cheering the Fed’s surprise interest-rate cut

Financial firms that may be shielded

The financial sector of the S&P 500 dropped 3.7% on Tuesday. The cut in short-term interest rates, along with the decline in long-term rates, means most banks will face further pressure to their net interest margins, or NIM.

The following comments from sell-side analysts were all made before the Fed announced its rate cut:

• B. Riley analyst Steve Moss wrote in a report to clients that liability-sensitive banks, such as Bridgewater Bancshares

BWB, -1.58%,

First Foundation

FFWM, -2.83%,

HomeStreet

HMST, -5.57%

 and New York Community

NYCB, +2.23%,

“would benefit from rate cuts, though a 50-bp reduction would likely be necessary to drive NIM.”

• Jefferies analyst Ken Usdin wrote in a note that Citigroup’s

C, -3.76%

  earnings stream was “less impacted from lower U.S. interest rates than most other banks.” He also said Citi’s shares were compelling because they were priced below tangible book value. He rates Citi a “buy,” along with KeyCorp

KEY, -4.48%,

which he called “one of the better protected banks against the impact of lower interest rates due to foresight in its hedging strategies.”

• KBW analyst Sanjay Sakhrani wrote in a report that Visa

V, -3.43%

 and Mastercard

MA, -4.81%

 have “limited sensitivity” to narrowing interest-rate spreads and “should benefit from easing concerns around the virus given exposure to discretionary and non-discretionary spending, ongoing secular growth dynamics, and cost flexibility to protect earning growth.”

American Express

AXP, -5.15%

led the Dow lower Tuesday, with a 5% decline. The stock has now fallen 21% since the close Feb. 19, when the S&P 500 hit its most recent closing high. Restrictions on corporate travel have taken a toll on the company. But Sakhrani called American Express “less credit sensitive (~80% revenue from spending vs. ~20% from lending) than other consumer finance names” and wrote that it would benefit from the lower-interest-rate environment and had flexibility to cut costs.

Dow 30

All but one of the components of the Dow Jones Industrial Average were down Tuesday:

Company Ticker Price change – March 3, 2020 Price change since Feb. 19 Decline from 52-week high Price change – 2020 Price change – 2019
American Express Co.

AXP, -5.15%

-5.2% -21.1% -21.8% -13.3% 30.6%
3M Co.

MMM, -5.08%

-5.1% -8.8% -33.9% -17.6% -7.4%
Exxon Mobil Corp.

XOM, -4.79%

-4.8% -15.0% -38.6% -26.5% 2.3%
Microsoft Corp.

MSFT, -4.79%

-4.8% -12.2% -13.7% 4.3% 55.3%
UnitedHealth Group Inc.

UNH, -4.29%

-4.3% -14.4% -14.8% -11.1% 18.0%
Walgreens Boots Alliance Inc.

WBA, -4.14%

-4.1% -11.4% -35.2% -21.8% -13.7%
International Business Machines Corp.

IBM, -4.02%

-4.0% -14.6% -18.8% -3.8% 17.9%
Intel Corp.

INTC, -3.80%

-3.8% -16.6% -19.3% -6.5% 27.5%
J.P. Morgan Chase & Co.

JPM, -3.75%

-3.8% -14.9% -17.1% -16.1% 42.8%
Visa Inc. Class A

V, -3.43%

-3.4% -12.9% -13.3% -1.2% 42.4%
Apple Inc.

AAPL, -3.18%

-3.2% -10.6% -11.8% -1.5% 86.2%
Johnson & Johnson

JNJ, -3.16%

-3.2% -9.0% -12.2% -7.0% 13.0%
Boeing Co.

BA, -2.99%

-3.0% -17.0% -37.1% -13.9% 1.0%
Walt Disney Co.

DIS, -2.94%

-3.0% -17.6% -24.1% -19.5% 31.9%
Goldman Sachs Group Inc.

GS, -2.88%

-2.9% -14.3% -18.8% -11.5% 37.6%
Verizon Communications Inc.

VZ, -2.83%

-2.8% -4.3% -10.5% -9.3% 9.2%
Merck & Co. Inc.

MRK, -2.75%

-2.8% -3.5% -14.6% -13.0% 19.0%
Cisco Systems Inc.

CSCO, -2.74%

-2.7% -13.5% -31.3% -16.5% 10.7%
Walmart Inc.

WMT, -2.56%

-2.6% -4.1% -9.9% -5.0% 27.6%
Caterpillar Inc.

CAT, -2.52%

-2.5% -9.1% -17.4% -15.8% 16.2%
Chevron Corp.

CVX, -2.28%

-2.4% -14.8% -25.9% -21.7% 10.8%
Dow Inc.

DOW, -2.08%

-2.1% -14.8% -33.0% -25.9% #N/A
Nike Inc. Class B

NKE, -1.89%

-1.9% -11.3% -13.9% -10.2% 36.6%
Travelers Companies Inc.

TRV, -1.86%

-1.9% -6.8% -19.2% -8.5% 14.4%
Pfizer Inc.

PFE, -1.66%

-1.7% -5.4% -23.1% -12.5% -10.2%
McDonald’s Corp.

MCD, -1.50%

-1.5% -7.5% -10.1% 1.0% 11.3%
United Technologies Corp.

UTX, -1.15%

-1.3% -12.2% -16.5% -11.7% 40.6%
Procter & Gamble Co.

PG, -1.16%

-1.2% -5.8% -7.8% -5.4% 35.9%
Home Depot Inc.

HD, -0.87%

-0.9% -6.4% -7.9% 4.4% 27.1%
Coca-Cola Co.

KO, +0.25%

0.3% -6.2% -6.8% 1.3% 16.9%
Source: FactSet

You can click on the tickers for more about each company.

S&P 500

Here are the 10 components of the S&P 500 with the greatest declines:

Company Ticker Price change – March 3, 2020 Price change since Feb. 19 Decline from 52-week high Price change – 2020 Price change – 2019
Unum Group

UNM, -8.99%

-8.9% -23.2% -40.4% -21.8% -0.7%
Charles Schwab Corp.

SCHW, -8.77%

-8.8% -19.3% -25.8% -19.5% 14.5%
Lincoln National Corp.

LNC, -8.35%

-8.4% -27.3% -34.5% -25.0% 15.0%
SVB Financial Group

SIVB, -8.36%

-8.4% -25.6% -26.7% -20.9% 32.2%
Raymond James Financial Inc.

RJF, -7.93%

-7.9% -20.8% -21.7% -10.3% 20.2%
Hanesbrands Inc.

HBI, -7.56%

-7.6% -13.6% -35.5% -16.9% 18.5%
Alliance Data Systems Corp.

ADS, -7.42%

-7.5% -21.5% -56.5% -29.0% -25.2%
Halliburton Company

HAL, -6.40%

-7.4% -28.4% -50.6% -34.8% -7.9%
Comerica Incorporated

CMA, -7.31%

-7.3% -19.0% -42.3% -28.9% 4.5%
Marriott International Inc. Class A

MAR, -7.06%

-7.1% -22.6% -25.5% -24.5% 39.5%
Source: FactSet
Nasdaq

Here are the 10 components of the Nasdaq-100 Index

NDX, -3.19%

 that fell the most:

Company Ticker Price change – March 3, 2020 Price change since Feb. 19 Decline from 52-week high Price change – 2019 Price change – 2020
Marriott International Inc. Class A

MAR, -7.06%

-7.1% -16.7% -25.5% 39.5% -24.5%
Microchip Technology Inc.

MCHP, -6.10%

-6.1% -13.3% -20.5% 45.6% -14.6%
Facebook Inc. Class A

FB, -5.37%

-5.6% -9.7% -17.3% 56.6% -9.6%
Autodesk Inc.

ADSK, -5.39%

-5.4% -9.5% -14.7% 42.6% -1.6%
American Airlines Group Inc.

AAL, -5.36%

-5.4% -33.4% -50.4% -10.7% -37.8%
Western Digital Corp.

WDC, -5.18%

-5.2% -13.7% -20.9% 71.7% -10.3%
Micron Technology Inc.

MU, -5.11%

-5.1% -9.0% -15.3% 69.5% -3.7%
United Airlines Holdings Inc.

UAL, -4.85%

-4.8% -22.9% -39.3% 5.2% -33.8%
Microsoft Corp.

MSFT, -4.79%

-4.8% -7.7% -13.7% 55.3% 4.3%
Automatic Data Processing Inc.

ADP, -4.76%

-4.7% -10.1% -14.8% 30.0% -8.9%

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