- Dow Chemical (DOW -2.1%) and DuPont (DD -2.6%) are downgraded to Neutral from Overweight at J.P. Morgan, citing a lack of near term upside potential amid rising risks of contraction in the world's major economic regions, particularly Europe.
- "When recessions arise, oil demand contracts and oil prices decreases; plastics product prices and profit margins then move lower," writes JPM's Jeffrey Zekauskas, adding that under weakening economic conditions, the market likely will ask for a higher risk premium or margin of safety in investing in Dow.
- JPM sees a greater likelihood that Dow and DuPont can be purchased over the next year at comparable or lower share prices.
- The firm cuts its price target for Dow to $50 from $57 and lowers its price outlook for DD to $64 from $73.