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Dow Inc., LyondellBasell Lower After Downgrades at Bank of America

Bank of America downgrades Dow Inc. and LyondellBasell, based on indications commodity-price inflation is peaking.

Shares of Dow Inc.  (DOW) - Get Dow, Inc. Report and LyondellBasell  (LYB) - Get LyondellBasell Industries NV (LYB) Report fell Friday after Bank of America analyst Steve Byrne downgraded the chemicals stalwarts and cut his price targets on them.

He lowered Dow Inc. to underperform from neutral and reduced his target price to $68 from $71. He cut LyondellBasell to neutral from buy and trimmed his price target to $114 from $117.

The moves were based on indications commodity-price inflation is peaking. 

“We see this as a risk for a number of chemical chains as China slows, production recovers, and spending shifts from goods to services,” Byrne wrote in a commentary.

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“This is particularly true for U.S. polyethylene markets, as inventory balances approach healthier levels and domestic demand is being met. While U.S. polyethylene prices could move higher from here, we see the strength as increasingly at risk, with substantial downside possible.”

Dow Inc. recently traded at $60.13, down 3%. The shares have climbed 5% in the past six months. LYB recently traded at $96.62, down 4%, and has firmed 2% in the past six months.

“We are more constructive on the chlor-alkali chain,” Byrne said. He upgraded Westlake Chemical  (WLK) - Get Westlake Chemical Corporation Report to neutral and Olin  (OLN) - Get Olin Corporation Report to buy.

In other industrial-sector news, Ferdi Scheepers listed the seven top energy sector dividend stocks on this week.

The list is pegs Chevron  (CVX) - Get Chevron Corporation Report as No. 1, followed by Enterprise Products Partners  (EPD) - Get Enterprise Products Partners L.P. Report, ConocoPhillips  (COP) - Get ConocoPhillips Report, Magellan Midstream Partners  (MMP) - Get Magellan Midstream Partners, L.P. Report, Enbridge  (ENB) - Get Enbridge Inc. Report, Exxon Mobil  (XOM) - Get Exxon Mobil Corporation Report and Imperial Oil  (IMO) - Get Imperial Oil Limited Report.