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Now will not be the time for traders to load up on shares of Dow and LyondellBasell as commodity chemical costs face a short-term decline, JPMorgan Chase says. “Lyondell and Dow are most likely not one of the best locations to place new cash to work,” wrote analyst Jeffrey Zekauskas in a notice to purchasers Friday. “The route of shorter-term commodity chemical costs and volumes is decidedly decrease. The market will most likely have issue calibrating the diploma of EBITDA weak spot the businesses are more likely to expertise within the context of a slowing international financial system with rising rates of interest.” The analyst downgraded shares of each firms to impartial from chubby. Whereas each names boast sturdy dividends, good steadiness sheets and will ship sturdy money circulate yields forward, traders are too busy chasing rising bond yields within the Treasury markets, Zekauskas wrote. Earlier this week, the yield on the 2-year Treasury notice hit greater than double the dividend yield of the S & P 500 , based on information from Bespoke Funding Group . Bond yields have been on a tear in latest days, with the yield on the 2-year Treasury notice marching above 3.5% on Thursday and hitting its highest degree since November 2007. Shares of each Dow and Lyondell have slipped at the very least 11% for the reason that starting of the 12 months, with JPMorgan’s value targets suggesting each shares may transfer marginally decrease within the close to time period from Thursday’s shut. “Each Lyondell and Dow, in our opinion, replicate good worth that’s unlikely to be acknowledged shorter-term towards a background of detrimental shorter-term earnings momentum,” Zekauskas mentioned. — CNBC’s Michael Bloom contributed reporting
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