Chevron Corporation (NYSE: CVX), Exxon Mobil Corporation (NYSE: XOM), Caterpillar Inc. (NYSE: CAT) Implode Amidst COVID-19 Pandemic

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Chevron Capital Cuts

Chevron is already down by more than 30%, having turned bearish after one of the longest Bull Run in the overall stock market. While the stock has pulled higher in recent trading sessions, its market sentiments have taken a significant hit on oil prices plunging to 17-year lows.

The oil and gas giant has announced plans to cut as much as 20% of its capital expenditure for 2020 on the business environment in the energy industry turning sour. The cuts will mostly affect the upstream arm in the Permian Basin, where cuts could top highs of $2 billion. Conversely, the company’s cash capital and exploratory expenditures could drop by as much as $3.3 billion.

Similarly, the company has announced an end to its $5 billion share repurchase program as it continues to explore ways of conserving capital. In addition to ending the repurchase program, the oil and gas giant has also confirmed it is reducing operating costs by more than $1 billion.

The cuts come at the backdrop of a glut in oil supply in the market that has seen oil prices plunge to the $20 a barrel level. Low demand triggered by the Covid-19 pandemic could see prices remain at current lows much longer.

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Exxon Mobil Rattled by Low Oil Prices

Exxon Mobil was one of the stocks that rallied as President Trump said he held talks with leaders of some of the major oil-exporting countries in a bid to end a long-running price war. The president announcing that the countries have agreed to cut oil productions helped offer some support to a stock that has come under immense pressure amidst a glut in supply.

Exxon Mobil is already down by more than 40% for the year, as a glut in supply at the back of low demand for oil products continues to take a toll on the stock. The stocks sentiments could turn sour as the company moves to report its first-quarter earnings result.

Given the impact of low oil prices, analysts expect the company to post earnings of $0.27 a share, representing a 50.91 % year over year decline. Similarly, the company has announced that it will cover its dividend using projected cash from operations for 2020.

Caterpillar Hurt by Low Orders

Orders for Caterpillar heavy equipment have dried up in the wake of the COVID-19 pandemic triggering shutdowns in industrial as well as infrastructure operations around the world. The stock’s sentiments in the market have since turned bearish as investors remain wary of the company meeting its earnings estimates.

In response to the challenges in the industry, Caterpillar has announced plans to cut costs, as it continues to explore ways of preserving cash. The Chief Executive Officer, as well as other executive’s managers and salaried workers, will have their base pay frozen. In addition, no incentive bonuses will be paid this year.

In response to the COVID-19 pandemic, Caterpillar has withdrawn its 2020 financial outlook. While the company boasts of a solid financial position of $8.3 billion in cash, it awaits to be seen as the impact of the COVID-19 pandemic on its supply chain at the next earnings report.

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