The Dow posted gains for most of the week following positive
economic data and encouraging comments from the Fed Chair. An
increase in the ISM Services Index helped the Dow move upwards on
Monday. Tuesday was the sole day when the blue chip index declined
following selling pressure in Internet stocks.
Encouraging comments from the Fed Chair helped the Dow gain on
Wednesday. The Dow closed on a positive note on Thursday, following
a decline in initial claims and dovish comments from the ECB
President. During the first four trading days, the Dow has gained
Last Week's Performance
The Dow lost 0.3% on Friday due to escalating tension between
Russia and Ukraine. Geopolitical tension also outweighed upbeat
nonfarm payroll data, which had helped benchmarks open in the
green. The U.S. Bureau of Labor Statistics said total nonfarm
payroll employment had risen to 288,000 in April. The economy added
the most number of jobs in April since January 2012.
The blue chip index closed in the green for the week, gaining
0.9%. Benchmarks advanced for the week following talk of a new deal
) boosted investor sentiment. Upbeat quarterly-results from the
Merck & Co. Inc.
) also had a positive impact on benchmarks.
Further, the Federal Reserve's decision to trim the monthly bond
repurchase plan helped benchmarks end higher. The Federal Open
Market Committee (FOMC) also indicated that economic
activity has picked up since its last meeting in March.
Additionally, the week's encouraging economic numbers on pending
home sales, private-sector hiring and manufacturing activity
were welcomed by investors.
The Dow This Week
The Dow gained 0.1% on Monday after encouraging services sector
data outweighed concerns emanating from escalating Ukraine-Russia
geopolitical tension. The ISM Services index increased 2.1
percentage points to 55.2% in April from March's reading of 53.1%.
The increase in the non-manufacturing Index also offset jitters
related to weak Chinese manufacturing data.
Selling pressure in Internet stocks and a decline in
American International Group, Inc.
) quarterly income dragged benchmarks down on Tuesday. New deals in
the health care sector failed to restrict the day's losses. The
day's economic reports were limited to March's trade balance, which
hardly made an impact on the markets. The blue chip index lost
Indications from Federal Reserve Chairwoman Janet Yellen that
key lending rates would remain low helped the Dow gain 0.7% on
Wednesday. In her testimony before the Joint Economic Committee,
Yellen reiterated that the central bank intends to keep the federal
funds rate low even after employment and inflation rates return to
the desired level. Market sentiment also improved after Russian
President Vladimir Putin agreed to discuss measures to ease the
The blue chip index gained 0.2% on Thursday while other
benchmarks closed in the red. Markets gained initially following
encouraging initial claims numbers and dovish comments from ECB
President Mario Draghi. Speaking at a press conference, the ECB
President said the central bank might lower lending rates or
provide more economic stimulus during their June policy meeting.
However, the session turned choppy following a late selloff in the
utilities and energy sectors.
Components Which Moved the Index
) reported weak first quarter results on falling production and
. Earnings per share came in at $2.36, below the Zacks Consensus
Estimate of $2.53 and deteriorated considerably from the year-ago
adjusted profit of $3.18 per share. The integrated supermajor's
quarterly revenue decreased 6.3% year over year to $53,265.0
million and was way below the Zacks Consensus Estimate of $66,446.0
Chevron's total production of crude oil and natural gas
decreased by 2.2% from the year-earlier level to 2,588 thousand
oil-equivalent barrels per day (MBOE/d). U.S. output dipped 3.6%
year over year, while Chevron's international operations
(accounting for 75% of the total) registered a 1.7% fall in
Chevron's downstream segment achieved earnings of $710.0
million, slightly higher than the profit of $701.0 million last
year. The results were positively influenced by improved
profitability from U.S. on the back of higher refined product sales
margins, lower operating expenses and lower turnaround
United Technologies Corp.
) unit Sikorsky Aircraft Corp. bagged a $1.24 billion worth
contract from the U.S. Navy to develop and build the new U.S.
presidential helicopter fleet. The new choppers will replace the
Marine One copters, also built by Sikorsky, that presently ferry
the U.S. president and executive branch officials.
Under the deal, Sikorsky will build 6 new choppers as the first
stride towards Pentagon's intended fleet of 21 new helicopters by
2023. Per the contract, Sikorsky will build, test and deliver 6
S-92 helicopters as certified by the Federal Aviation
Administration, along with 2 trainer simulators to the U.S. Marine
General Electric Co.
) has made a tender offer worth about $389 million to acquire a
stake in two of Alstom SA's India units, according to media
reports. Recently, General Electric made a $16.9 billion bid to buy
the French conglomerate's energy operations.
The proposal will be realized only if General Electric's bid to
buy the French giant's energy unit goes through, as then the U.S.
group will be required to launch a tender offer for Alstom's Indian
businesses in order to conform to local regulations.
JPMorgan Chase & Co.
) provided its latest outlook in quarterly filings with the
Securities and Exchange Commission. The company expects second
quarter 2014 market revenues to be down approximately 20% year over
year. Following this filing, shares of JPMorgan fell nearly 1.5% in
after-hour trading last Friday.
JPMorgan anticipates market revenue to be roughly $4.3 billion,
based on the market revenue results to date. The company stated
that the overall economic environment had continued to remain
challenged and client activity was lower as well. Notably, market
revenue had declined 17% in the first quarter.
The Coca-Cola Co.
) has agreed to do away with brominated vegetable oil (BVO) in its
citrus-flavored products, according to media reports. The decision
comes after some of the drinks of the company were severely
criticized by food activists on social media and online forums.
Coca Cola will, reportedly, discontinue the usage of BVO in its
drinks by the end of fiscal 2014. Though the company did not
provide any list of products, per media reports, the ingredient
will be removed from Fresca and some varieties of Fanta also.
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 declined 0.06%.
Last 5 Day's Performance
6 month performance
Next Week's Outlook:
Despite a mixed week for other benchmarks, the Dow has made
gains on most trading days. Economic data has been encouraging and
comments from the Fed Chair have added to market optimism. The
situation in Ukraine continues to daunt investors but recent
overtures from Russia have been encouraging.
Earnings numbers continue to pour in and will continue to impact
the fortunes of benchmarks. Next week has several key economic
reports lined up. These include retail sales, industrial production
and housing starts data. Taken together, they could well provide
direction for markets going forward.
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