The stock market kept climbing on Tuesday morning, although the pace of the gains slowed from recent sessions. Investors seemed to remain pleased with the latest moves on trade and economic policy, although a return to more antagonistic rhetoric against some U.S. trade partners appeared to weigh on sentiment as the day went on. As of 11:35 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 56 points to 26,118. The S&P 500 (SNPINDEX:^GSPC) gained 3 points to 2,890, and the Nasdaq Composite (NASDAQINDEX:^IXIC) climbed 16 points to 7,840.
With the market in a lull between earnings seasons, the amount of company-specific news isn’t as high as it’s been in recent weeks. However, the merger and acquisition front has heated up lately, and Sprint (NYSE:S) and T-Mobile US (NASDAQ:TMUS) got some bad news regarding their proposed combination. Meanwhile, investors are hoping that JPMorgan Chase (NYSE:JPM) and other big banks will be able to deliver dividend increases in the near future.
A state of denial
Shares of Sprint fell almost 7% as news surfaced regarding the latest obstacles in its proposed merger with T-Mobile. Attorneys general in 10 states and the District of Columbia are set to file an antitrust lawsuit to try to block the deal.
New York Attorney General Letitia James is leading the way with the lawsuit, which should get filed in a federal court in New York today. The action asserts that the merger would hurt competition and lead to higher prices for wireless network consumers.
Many investors had believed as recently as last month that Sprint and T-Mobile would be able to move forward with the deal, after the Federal Communications Commission’s chair endorsed the combination. Yet the federal-level examination of the proposal by the U.S. Department of Justice remains outstanding, giving the state-level action somewhat unusual timing.
T-Mobile shares were also down 2%, but investors aren’t nearly as worried about its viability as an independent company as they are about Sprint’s. Without a deal, it’s extremely uncertain what Sprint will do to try to move forward on its own.
Dividend hikes could be coming
Meanwhile, shares of JPMorgan Chase were up less than 1%, moving in line with the overall market. The banking giant faces the annual ritual of having its capital allocation plan reviewed by the Federal Reserve, and now’s the time of year when it and other banks have traditionally announced how much capital the Fed will allow them to return to their shareholders and in what form.
JPMorgan in particular has seen immense dividend increases since the depths of the financial crisis 10 years ago. After slashing its quarterly payout to $0.05 per share, the bank boosted its dividend fivefold as early as 2011. In all, JPMorgan has lifted its dividend payment nine times in the past decade, including its most recent boost of 43% late last year.
Investors probably shouldn’t expect a repeat performance of 2018’s dividend heroics. Tax reform played a huge role in freeing up additional capital for JPMorgan to pay to shareholders as dividends, and the lack of any corporate action with comparable impact this year makes a similar-sized increase highly unlikely. Yet moves in the 10% to 20% range have been far more common over the years, and an increase to $0.90 or $0.95 per share quarterly from its current $0.80-per-share payout would be consistent with what JPMorgan shareholders have come to expect from the Wall Street giant in the past.