The Dow has had a poor run this week, primarily due to a
selloff in biotech stocks and the resurgence of concerns over
Crimea. A House Committee Ruling sent biotech stocks into a
downward spiral at the start of the week. Additionally, the
possibility of further sanctions against Russia overshadowed
positive economic reports. During the first four trading days,
the Dow has lost marginally, by 0.08%.
Last Week's Performance
The Dow dropped 0.2% on Friday after a fall in biotech stocks
and futures and options expiration. Biotech companies were
affected after Democrats on the U.S. House Energy & Commerce
Gilead Sciences Inc.
) to justify the $84,000 price tag on its new hepatitis C drug
Sovaldi. Investors were also kept on the edge by recent
developments in Crimea.
However, the Dow gained 1.5% over the week. Crimea's vote to
join Russia was conducted peacefully and was overwhelmingly in
favor of citizens wanting to be part of Russia. This had helped
the benchmarks move up at the beginning of the week.
The Dow This Week
The blue chip index extended its losing run into Monday,
ending 0.2% lower. Escalating tension over Crimea and another
drop in the biotech stocks for the second straight day were the
primary factors for these losses. Investors' confidence further
dipped over growing concerns about China's economy. The day's
encouraging domestic economic numbers failed to prevent the
Markets ended higher on Tuesday after better-than-expected
consumer confidence data boosted investor sentiment. Biotech
stocks also helped to end the two-day losing streak. The
positives offset any negative concerns emerging from data
suggesting a drop in sales of new single-family houses in
February and a fall in U.S. home prices in January. Consequently,
the Dow gained 0.6%.
The Dow declined 0.6% on Wednesday, dragged down by declines
in the Technology and Materials sectors. Possibilities of further
sanctions on Russia intensified selling pressure post
mid-afternoon. The day's initial gains, largely a result of
encouraging durable orders numbers, were eroded by the end of the
The blue chip index dropped a meager 0.03% on Thursday after
investors feared sooner-than-expected rate hikes from the Federal
Reserve. Incidentally, the concerns emerged after the day's mixed
economic reports on fourth quarter GDP and weekly unemployment
benefits. Declines in financial and technology stocks also
dragged the markets lower.
Components which Moved the Index
Cisco Systems, Inc.
) recently announced plans to invest $1 billion over the next two
years to build the world's largest network facilitating cloud
computing service. Cisco declared that it expects to partner with
companies like online consultation provider WebEx, Australian
service supplier Telstra, a large-scale technology provider,
Ingram Micro and SAP, OnX Managed Services.
Such collaborations would help it to build and support the
Cisco Cloud Services network and expand its data centers. Cisco's
new service will be sold to consumers directly as well as through
) business unit GE Intelligent Platforms recently signed an
agreement with semiconductor firm
) for the incorporation of the NVIDIA Tegra K1 mobile processor
in its products meant for embedded computing platforms.
The agreement establishes General Electric as a preferred
provider of the Tegra K1 to bring high performance embedded
computing (HPEC) solutions to the increasingly growing market for
Size weight and Power (SWaP) constrained applications. The NVIDIA
Tegra K1 is expected to be a major add-on facility to General
Electric's wearable and portable products.
) shares inched up 1.05% on Tuesday after it announced positive
data from a phase III study evaluating oncology drug, Xalkori, in
treatment naive ALK-positive advanced non-small cell lung cancer
(NSCLC) patients. The stock has gained 0.88% over the last three
The phase III, PROFILE 1014 study compared the use of Xalkori
versus standard platinum-based chemotherapy regimens in patients
with advanced NSCLC. The study met its primary endpoint with
Xalkori significantly prolonging progression-free survival (PFS)
as compared to standard platinum-based chemotherapy regimens.
) entered the health tracking wearables market with the
completion of the Basis Science acquisition. Intel's share price
touched an intraday high of $25.67 on Tuesday, following the
announcement before closing at $25.46, thereby recording a 1.4%
The Basis team of 60 members will join Intel's New Devices
Group to work on the chipmaker's future wearable products. Though
the financial terms of the deal were not announced, Intel
reportedly paid about $100 million. Intel will likely continue
selling Basis' products through the company's present trade
) faces a Senate probe for possible overseas tax evasions. The
company allegedly evaded more than $2 billion of U.S. taxes by
shifting profits abroad. Caterpillar will be required to attend
the hearing in April held by the U.S. Senate's Permanent
Subcommittee on Investigations.
The investigation dates back to 2009 when a Caterpillar
employee working on the company's tax strategy alleged that the
mining equipment maker resorted to a "Swiss structure" to siphon
profits to offshore companies. He further alleged that
Caterpillar used a "Bermuda structure," which allows shell
companies to return profits to the U.S. without paying obligatory
Performance of the Top 10 Dow Companies
The table given below shows the price movements of the ten
largest components of the Dow, which is a price weighted index,
over the last five days and during the last six months. Over this
period, the Dow has declined 0.24%.
Last 5 Day's Performance
6 month performance
Next Week's Outlook:
But for Tuesday's Consumer Confidence report, positive
economic data has failed to provide direction to the markets.
Several key reports are lined up for next week. These include the
ISM manufacturing and services indices, as well unemployment rate
data. It remains to be seen whether they will have significant
impact on indices.
Currently, concerns over the crisis in Crimea and Fed rate cut
fears are weighing on investors. These factors may continue to
impede markets unless investors start taking notice of the
positive economic signals on offer.
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