The Dow declined through the week, weighed down by a variety of
factors. The blue-chip index declined on Monday after investors
refrained from placing bets ahead of the second-quarter earnings
season. Declines in momentum stocks pushed the Dow lower once again
The positive tone of FOMC minutes helped the Dow chalk up gains
on Wednesday, However, the blue-chip index declined again on
Thursday, following concerns about the European banking system.
During the first four trading days, the Dow has lost 0.64%.
Last Week's Performance
The Dow gained 0.5% last Thursday, banking on encouraging June's
nonfarm payroll numbers. Total nonfarm payroll employment jumped
288,000 in June, more than the consensus estimate of a rise by
213,000. Nonfarm payroll jobs increased over the 200,000 level for
the fifth straight month in June, a stretch last seen in 1999.
Investors were also encouraged by a drop in the unemployment rate,
which declined to 6.1%. This is its lowest level since September
2008. The blue-chip index closed at a record level for the third
straight day. The Dow also closed above the 17,000 mark for the
first time on Thursday. Markets were closed last Friday due to the
Independence Day holiday.
For the week, the blue-chip index added 0.7%. Stocks notched up
gains for the week after economic data showed manufacturing
activity picked up in U.S and Asia. The Institute for Supply
management reported June PMI of 55.3%, indicating expansion in
factory output for the 13th successive month. China's final reading
of the HSBC/Markit purchasing managers' index (PMI) rose to 50.7 in
June. Moreover, Japan's manufacturing activity also expanded in
Gains in health-care, technology and consumer discretionary sectors
also propelled the Dow to close at record highs. Upbeat U.S. auto
sales in June also boosted investor sentiment.
However, upbeat private sector hiring numbers hardly impacted the
markets. Among other economic data, a gauge of pending home sales
numbers hit its highest level in eight months in May and data from
the Institute for Supply Management showed Chicago PMI numbers
dropped more than expected.
Meanwhile, investors remained focused on Federal Reserve Chairwoman
Janet Yellen's comments. Last Wednesday, at the International
Monetary Fund in Washington, Yellen said: "Monetary policy faces
significant limitations as a tool to promote financial stability."
However, she stated that concerns over financial stability
shouldn't lead to a change in current monetary policy.
The Dow This Week
Benchmarks settled in the red on Monday as investors refrained from
placing big bets ahead of the second-quarter earnings season.
Bio-tech and Internet stocks suffered losses. The blue-chip index
snapped its three-day record run of gains, losing almost 0.3%.
The blue chip index declined 0.7% on Tuesday. Benchmarks ended in
the red for the second-straight day, dragged down by declines in
momentum stocks. Investors also remained cautious ahead of the
start of the second-quarter earnings season. Shares of Internet and
bio-tech stocks fell sharply, adding to the losses suffered on
Monday. Meanwhile, consumer credit increased by $19.6 billion in
May, following a $26.1 billion increase in April.
Encouraging minutes of the FOMC meeting propelled stocks higher on
Wednesday. Policy makers said they will end the asset purchase
program by October provided the economy shows signs of strength.
They also clarified that this was not an indication that rates
would be hiked immediately. Meanwhile, the earnings season kicked
off on an upbeat note with
) reporting better-than-expected second quarter results. The Dow
The Dow declined 0.4% on Thursday following investor concerns about
the European banking system. One of Portugal's largest banks, Banco
Espírito Santo SA, failed to make bond payments. These jitters
compelled investors to park money in safe haven-assets. Economic
data from Asia was also disappointing and led investors to cut
equity exposure. Domestic economic reports were limited to
encouraging initial claims numbers and a less-than-expected rise in
U.S wholesale inventories.
Components Moving the Index
The Boeing Company
) reported strong delivery numbers for the second quarter as well
as the first half of 2014, beating archrival Airbus. During the
first half of the year, Boeing delivered 342 commercial jetliners,
11.8% higher than the year-ago level. On the other hand, Airbus
delivered 303 commercial planes so far this year.
The commercial aerospace major recently sealed a big deal for its
wide-bodied 777X aircraft from Dubai's Emirates Airline. Dubai's
Emirates Airline confirmed it will buy 150 777X aircraft,
comprising 115 Boeing 777-9Xs and 35 777-8Xs, for a whopping $56
billion at list prices.
Generally airlines get large discounts on bulk orders. Emirates
Airline also has purchase rights to buy an additional 50 airplanes,
which if exercised would boost the value to nearly $76 billion at
The company also secured a sizable contract from the National
Aeronautics and Space Administration (NASA) to develop the core
stage of the largest ever Space Launch System (SLS) rocket. After
completing the Critical Design Review (CDR) on the core stage,
Boeing finalized a $2.8 billion contract with the space agency to
enter into full production.
) sale of its low-end server business to China-based technology
company Lenovo Group for $2.3 billion recently received regulatory
approval from China's anti-monopoly branch.
This approval from the Chinese Government is a positive for both
Lenovo as well as IBM. IBM is a U.S.-based firm and per Chinese
law, a China-based entity aiming to expand into Western markets has
to obtain approval from the government for the same.
) has signed an agreement with Panasonic Corporation's System LSI
Business Division to produce system-on-chip (SoC) products for the
latter, using its proprietary 14-nanometer Tri-Gate transistor
The collaboration should be a positive for both the parties.
Intel's advanced manufacturing facilitates the fabrication of
highly integrated, more powerful chips that generate less heat at
lower costs. Therefore, Panasonic's SoC products using Intel's
technology will have a lead over chips offered by traditional
manufacturers like Taiwan Semiconductor Manufacturing Company.
) recently entered into a patent cross-licensing agreement with
Canon Inc. However, the specific terms and conditions of the
agreement have been kept under wraps.
The cross-licensing agreement covers a broad range of products and
technologies, including certain digital imaging and mobile consumer
products. Per the deal, Microsoft and Canon will be able to access
each other's patent portfolios. Such deals avert the risk of
unnecessary patent lawsuits and enable companies to focus on
offering inventive technologies.
Microsoft recently released the second generation Kinect, a motion
sensing camera, for Windows v2. Kinect 2.0 is available for
pre-order now in Microsoft stores and will hit the markets for sale
on Jul 15 at $199. Kinect was originally launched as part of
Microsoft's Xbox gaming console.
Performance of the Top 10 Dow Companies
The table given below shows the price movements of the 10 largest
components of the Dow, which is a price weighted index, over the
last five days and during the last six months. Over the last five
trading days, the Dow has lost 0.69%.
Last 5 Day's Performance
6 Month Performance
Next Week's Outlook
Stocks have made losses through the week due to a variety of
factors. While investors have been wary of placing bets ahead of
the earnings season, momentum stocks have plunged once again.
Meanwhile, concerns arising out of developments in Europe have also
dampened investor sentiment. Not many economic reports were
released during the period. The ones released had little impact on
However, next week has several key reports scheduled for
release. This includes data on retail sales, business inventories,
industrial production, inflation and housing. Given the nature of
these reports, they would probably have a significant impact on the
fortunes of shares. But international developments would continue
to affect market movement. As earnings season picks up pace, market
movement is also likely to be affected by the earnings of
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