US chem shares plunge as market sinks after Fed rate news

Al Greenwood

18-Dec-2024

HOUSTON (ICIS)–US listed shares of chemical companies fell sharply on Wednesday, with many falling by more than 4%, after the Federal Reserve lowered its expectations for rate cuts and raised them for inflation.

The following table summarizes the major indices followed by ICIS.

Index 18-Dec Change %
Dow Jones Industrial Average 42,326.87 -1,123.03 -2.58%
S&P 500 5,872.16 -178.45 -2.95%
Dow Jones US Chemicals Index 829.38 -21.74 -2.55%
S&P 500 Chemicals Industry Index 871.47 -23.78 -2.66%

The Federal Reserve lowered its benchmark federal funds rate by a quarter point as expected. However, it now expects to lower rates by a half point in 2025, down from earlier expectations of cuts totaling 1 point.

Meanwhile, inflation may not reach the Fed’s target until 2027.

The prospect of fewer rate cuts contributed to a run-up in yields for longer term government debt.

The yield on 10-year Treasury notes rose past 4.5%, a level it last reached at the end of May.

Yield on these notes affects rates for other types of longer term debt, notably those for 30-year mortgages.

Elevated mortgage rates have made housing unaffordable for a growing number of consumers. That has lowered demand for houses, appliances and furniture, all important end markets for many plastics and chemicals.

If longer term rates remain elevated, it is unlikely that chemical markets will recover as expected in the second half of 2025.

DEFICIT CONTRIBUTES TO ELEVATED MORTGAGE RATES
Another trend elevating rates on longer term debt is the growing size of the government deficit.

To fund the expanding deficit, the US will issue larger amounts of government debt. An increase in the supply of debt will lower prices, and yields on debt are inversely related to price.

PRICES FOR US-LISTED CHEMICAL SHARES
The following table lists the US-listed shares of chemical companies followed by ICIS.

Symbol Name $ Current

Price

$ Change % Change
ASIX AdvanSix 28.72 -1.38 -4.58%
AVNT Avient 42.37 -3.55 -7.73%
AXTA Axalta Coating Systems 35.01 -1.38 -3.79%
BAK Braskem 3.98 -0.29 -6.79%
CC Chemours 17.36 -0.85 -4.67%
CE Celanese 67.94 -0.47 -0.69%
DD DuPont 77.62 -2.51 -3.13%
DOW Dow 40.15 -0.42 -1.04%
EMN Eastman 90.95 -4.40 -4.61%
FUL HB Fuller 69.81 -2.16 -3.00%
HUN Huntsman 18.3 -0.26 -1.40%
KRO Kronos Worldwide 9.77 -0.19 -1.91%
LYB LyondellBasell 74.8 -0.64 -0.85%
MEOH Methanex 45.75 -1.37 -2.91%
NEU NewMarket 522.36 -16.76 -3.11%
NGVT Ingevity 41.61 -1.79 -4.12%
OLN Olin 34.1 -1.37 -3.86%
PPG PPG 121.25 -0.81 -0.66%
RPM RPM International 126.49 -4.93 -3.75%
SCL Stepan 68.33 -3.17 -4.43%
SHW Sherwin-Williams 348.66 -14.13 -3.89%
TROX Tronox 10.53 0.39 3.85%
TSE Trinseo 5.41 -1.17 -17.78%
WLK Westlake 115.54 -2.00 -1.70%
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