Stock Market Today, June 29: Verizon Drops After Dow Removal and BT Group Joint Venture Drives Heavy Selling
Verizon Communications (NYSE:VZ), a wireless and broadband telecom services provider, closed at $44.08, down 5.30%. Verizon fell after the stock was removed from the Dow Jones Industrial Average last week, alongside the company’s announcement of a new joint venture with BT Group to merge their international operations. Trading volume reached 47.9M shares, coming in about 93% above its three-month average of 24.9M shares.
How the markets moved today
The S&P 500 (SNPINDEX:^GSPC) rose 1.16% to 7,439, while the Nasdaq Composite (NASDAQINDEX:^IXIC) gained 2.07% to 25,820. Among integrated telecommunications services peers, AT&T (NYSE:T) fell 4.09% to $21.79 and T-Mobile U.S. (NASDAQ:TMUS) declined 4.77% to $173.97 as telecom shares absorbed competition and index-rebalancing headlines.
What this means for investors
With Alphabet replacing Verizon in the Dow Jones Industrial Average, effective today, it is entirely possible that the bulk of today’s selling stemmed from indexes rebalancing their portfolios. However, Verizon also announced a joint venture with BT Group that would combine their international operations. Though management believes the deal will be EBITDA accretive, there will be $700 million to $800 million in short-term restructuring costs, which have also seemed to spook the market.
Making matters worse, Space Exploration Technologies executives held talks with Charter Communications about the possibility of creating a consumer mobile phone offering in the U.S. -- giving Verizon yet another worry on an already dismal day. While many view Verizon as a pseudo-utility thanks to its essential offerings and high-yield dividend, I personally would rather stay away from the heavily indebted company.
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Josh Kohn-Lindquist has positions in Alphabet and Space Exploration Technologies. The Motley Fool has positions in and recommends Alphabet. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
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