The Dow had a dismal week, weighed down by disparate factors.
The blue chip index moved lower on Monday, as investors remained
wary due to international tensions. The Dow gained on Tuesday
following encouraging housing data and upbeat earnings. Dismal data
from key Dow components pushed the blue chip index lower on
The Dow dropped marginally on Thursday following mixed corporate
results and economic data. Despite these reverses, the Dow has
gained 0.19% during the first four trading days.
Last Week's Performance
The Dow gained 0.7% last Friday, as benchmarks rebounded from
initial losses to end in the green. Upbeat earnings results coupled
with gains in bio-tech and Internet stocks, helping markets move
higher. Meanwhile, investors kept an eye on developments related to
the MH17 crash and Israel's invasion of Gaza that had compelled
investors to take money out of equities on Thursday. Friday's
broad-based gains helped benchmarks end the volatile week with
For the week, the Dow settled in the green, gaining 0.9%.
Benchmarks settled in the green for the week, banking on upbeat
quarterly results from several major companies. A flurry of new
deals in the technology sector boosted investor sentiment. The
healthcare sector was also boosted by merger and acquisition
activities. AbbVie Inc. proposed an increased $53 billion takeover
bid of Shire plc. The energy sector too benefited from merger and
However, benchmarks suffered their biggest losses in months on
Thursday following reports that a Malaysian Airlines passenger jet
was shot down near Ukraine-Russian border. Further, benchmarks were
negatively impacted on Tuesday after a Fed monetary policy report
sparked concerns about "substantially stretched valuations" in
Internet and bio-tech stocks. Additionally, Federal Reserve
Chairwoman Janet Yellen's comment that federal funds rate might be
raised sooner if the labor market keeps surprising the central bank
dented investor sentiment.
Among major economic data, housing starts fell to a nine-month low
in June. However, the Federal Reserve's Beige Book stated that
economic activity in all twelve Federal Reserve Districts expanded
since the previous report. Additionally, the U.S. Producer Price
Index (PPI) for finished goods and industrial production increased
The Dow This Week
Benchmarks settled in the red on Monday as investors remained
cautious following international tensions. Ongoing geopolitical
developments kept investors jittery. Israel stepped up its ground
offensive in Gaza strip. Israel's move came despite growing
international pressure for a cease-fire. The day was devoid of any
major economic data and corporate earnings results that could have
impacted the markets. The Dow lost 0.3%.
The Dow advanced nearly 0.4% on Tuesday following encouraging
housing data and upbeat corporate earnings results. Investors were
encouraged by strong existing home sales data that rose 2.6% to a
seasonally adjusted annual rate of 5.04 million in June from May's
upwardly-revised figure of 4.91 million. This was the highest level
recorded since Oct 2013. Earnings results from Chipotle Mexican
Grill, Comcast and Verizon Communications Inc. (
) were also encouraging.
Upbeat quarterly results from healthcare and technology companies
helped benchmarks finish mostly higher on Wednesday. Apple
and Biogen's impressive quarterly performances helped the S&P
500 and the Nasdaq close in the green. However, analysts took a dim
view of The Boeing Company's (
) results and Caterpillar Inc. (
) reported weak monthly sales, leading to losses for the blue-chip
index. The Dow lost nearly 0.2%.
The Dow dropped a meager 0.02% on Thursday as investors received
mixed corporate results and economic data. Facebook and Ford
reported upbeat quarterly results. However, Caterpillar, General
Motors and D.R. Horton posted dismal corporate results. Economic
data on initial claims was positive, but new home sales numbers
Components Moving the Index
The Boeing Company
delivered upbeat second quarter 2014 results backed by robust
deliveries. The company reported adjusted second quarter 2014
earnings of $2.42 per share, beating the Zacks Consensus Estimate
by 19.8%. The quarterly number rose an impressive 44.9% from $1.67
per share a year ago.
Including pension-components related to market fluctuations and
other items, Boeing reported a profit of $2.24 a share, up 59% from
$1.41 per share in the year-ago quarter.
's second-quarter earnings increased 17% year on year to $1.69 per
share, beating the Zacks Consensus Estimate of $1.51. Including
restructuring costs, earnings stood at $1.57 in the quarter, up 8%
from $1.45 in the prior-year quarter.
Verizon Communications Inc.
reported second-quarter 2014 adjusted earnings of 91 cents per
share, beating the Zacks Consensus Estimate by a penny. The bottom
line improved 24.7% from 73 cents per share earned a year ago. The
earnings growth was buoyed by strong revenue contribution from
wireless services, improvement in wireless operating margins and
increased demand for FiOS services
The Coca-Cola Company
) posted mixed second quarter 2014 results. Second-quarter 2014
adjusted earnings of this Zacks Rank #3 (Hold) company were 64
cents per share, beating the Zacks Consensus Estimate of 63 cents.
Earnings increased 1% year over year (6% on a constant currency
basis) driven by improved sparkling beverage volumes, price/mix
gains, strong international volumes and better gross margins.
However, an improvement in volume of sparkling beverages like
Coca-Cola, Fanta and Sprite caught investors' attention.
Net revenue declined 1% year over year to $12.57 billion due to
headwinds from currency and structural changes. Revenues also
missed the Zacks Consensus Estimate of $12.85 billion.
) reported second-quarter 2014 net income of $1,267 million or
$1.91 per share compared with $1,197 million or $1.71 a share in
the year-earlier quarter. The reported earnings per share were in
line with the Zacks Consensus Estimate. The increase in earnings
was driven by higher sales.
Quarterly net sales increased 4.9% year on year to $8,134 million,
above the Zacks Consensus Estimate of $8,055 million. The increase
in sales was driven by 4.8% organic local currency sales growth and
0.1% impact of acquisitions. Operating income for second-quarter
2014 was $1.9 billion, while operating margin was 22.8%.
) reported second-quarter 2014 adjusted earnings per share of 62
cents, missing the Zacks Consensus Estimate by a penny. Adjusted
earnings dropped 7.5% year on year. Significant pricing
competition, new device financing plans and other promotional
strategies weighed on earnings.
Adjusted earnings for the quarter excluded the impact of 10 cents
related to expense of the Leap Wireless transaction and gains from
the sale of the company's equity investment in America Movil S.A.B.
de C.V. (AMX).
) posted adjusted earnings of $1.17 per share in the reported
quarter that was below $1.28 per share posted a year ago. Earnings
were in line with the Zacks Consensus Estimate. Adjusted earnings
exclude one-time items including charges associated with the
separation of the company's performance chemicals business,
restructuring expenses and pension costs.
Including one-time items, DuPont registered earnings from
continuing operations of $1.15 per share in the quarter versus
$1.10 per share a year ago. Consolidated net income, as reported,
was up 3.9% year over year to $1,070 million or $1.15 per share.
) reported adjusted earnings of $1.40 per share in the second
quarter of 2014, which missed the Zacks Consensus Estimate of
$1.43. Revenues increased 1.4% year over year to $7.18
billion, owing to improved global comparable sales (comps) at
Asia/Pacific, Middle East and Africa (APMEA). However, revenues
missed the Zacks Consensus Estimate of $7.29 billion by 1.5%.
) fiscal fourth quarter earnings were short of the Zacks Consensus
Estimate. But the recent restructuring announcement, directional
clarity and the decision to focus on fast-growing segments that
play to its strengths have increased optimism about Microsoft's
Microsoft CEO Satya Nadella's vision includes repositioning
Microsoft in a cloud-first mobile-first world. This will enable
Microsoft's services and technology to reach a larger number of
devices across PC and mobile platforms, as well as emerging
platforms like wearables and the Internet of Things (IoT).
The Travelers Companies Inc.
) posted operating earnings of $1.93 per share in the second
quarter, missing the Zacks Consensus Estimate by 13 cents. Earnings
were also 9.4% lower year over year. Higher-than-expected
catastrophe losses were largely responsible for the
United Technologies Corp
) reported second quarter 2014 net income of $1,680 million or
$1.84 per share, up from $1,560 million or $1.70 in the year-ago
quarter. The reported EPS beat the Zacks Consensus Estimate of
$1.79. The increase in earnings was primarily driven by higher
revenues. Total revenue for the second quarter rose 7% year over
year to $17,191 million, above the Zacks Consensus Estimate of
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 gained 0.25%.
Last 5 Day's Performance
6 Month Performance
Next Week's Outlook
As expected, earnings have influenced the Dow to a large extent
this week. However, economic reports have also impacted the
fortunes of stocks. Next week features key economic reports
including data on GDP, consumer confidence, initial claims and
pending home sales.
Since Monday, international developments have not impacted
indices significantly. However, the conflicts in Gaza and Ukraine
continue and breakthroughs in this regard would come as a welcome
gift to investors. Till then earnings and economic data are
expected to guide the course of markets
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AT&T INC (T): Free Stock Analysis Report
3M CO (MMM): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
BOEING CO (BA): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis
CATERPILLAR INC (CAT): Free Stock Analysis
MCDONALDS CORP (MCD): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
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