The Dow had a mixed week following mixed earnings results and
concerns about the situation in Ukraine. The possibility of
stimulus measures in the Eurozone and deal news lifted the
blue-chip index higher on Monday. Encouraging economic data on
durable orders and consumer confidence helped the Dow chalk up
gains on Tuesday.
The blue-chip index posted meager gains on Wednesday following
mixed earnings and wariness of investors ahead of crucial economic
data. The Dow suffered losses on Thursday as tensions in Ukraine
overshadowed positive economic reports. The Dow has gained 0.02%
during the first four trading days.
Last Week's Performance
The Dow dropped 0.2% last Friday after US Fed chairwoman Janet
Yellen and ECB President Mario Draghi's speeches at Jackson Hole,
WY failed to encourage investors. In her speech at Jackson Hole,
Yellen said there is no "simple recipe" that the Fed could follow
to determine whether it was achieving its targets. On the other
hand, European Central Bank president Mario Draghi also failed to
provide any clear picture about weak growth in the Eurozone.
Escalating tensions between Russia and Ukraine also dragged the
For the week, the blue-chip index increased 0.7%. Encouraging
economic data especially from the housing sector and upbeat
earnings results helped the markets end in the green zone for the
week. News of a deal between Dollar General Corporation and Family
Dollar Stores Inc. was also welcomed by investors. However,
investors remained concerned about the sooner-than-expected
interest rate hike. The S&P hit an all-time high on Thursday.
Economic data came in positive throughout the week. Housing data,
including reports on homebuilder confidence, existing home sales
and building permits were encouraging. Separately, leading
indicator index numbers also encouraged investors. Upbeat earnings
from companies helped to improve investor sentiment. However,
markets were affected after the Fed minutes suggested differing
views among the Fed officials about hiking rates sooner than
The Dow This Week
Deal news and possibility of stimulus measures in the Eurozone
lifted the blue-chip index on Monday. Biotech company InterMune
agreed to be bought by Swiss pharmaceutical behemoth Roche Holding
AG for an all cash deal valued at about $8.3 billion or $74 per
share. This is approximately a 38% premium over InterMune's closing
price last Friday. Roche edged up 0.7%. Separately, comments from
the European Central Bank's President Mario Draghi at Jackson Hole
on Friday lifted investor sentiment. The Dow gained 0.4%.
The blue chip index rose 0.2% on Tuesday following encouraging
economic data. The Conference Board reported that the Consumer
Confidence Index rose to 92.4 in August from 90.3 in July.
Investors were also encouraged by the durable orders report. The
U.S. Department of Commerce reported that durable orders in July
soared 22.6%, beating the consensus estimate of 10%. However, home
price data for June was lesser than expected. Merger and
acquisition news between Burger King and Tim Hortons also helped
the benchmarks end higher. The Dow hit a record intraday level of
17,153.80, but shed some of the gains by the end of the day.
The blue chip index rose a meager 0.1% on Wednesday. Benchmarks
ended a listless trading session nearly flat following mixed
earnings reports. Investors adopted a wait and see approach ahead
of the release of key economic data. These include second estimate
of second quarter GDP and pending home sales data. Trading volume
on Wednesday was one of the lowest in the year. The volumes were
unexpectedly low during this week as some of the investors are in
holiday mode ahead of Labor Day.
Markets ended in the red and the S&P fell below the record 2K
mark as concerns about Russia-Ukraine tension overshadowed
encouraging U.S. economic data on Thursday. Dismal inflation rate
data from Eurozone also dragged down the benchmarks. Germany posted
higher-than-expected unemployment rate in August with a dismal
inflation rate of 0.8%. On the other hand, Spain saw annual
deflation rate of 0.5% in August. Moreover, Belgium's inflation
rate reached 0.02%, the lowest level in about 5 years. These
factors overshadowed a 4.2% increase in GDP and encouraging data on
initial claims and pending home sales. The Dow declined 0.3%.
Components Moving the Index
United Technologies Corp.
) recently reiterated its earnings guidance for 2014 prior to an
investor meeting. The outlook was probably based on steady
improvements in key end markets and solid execution of its
operational plans. At the same time, the company is likely to
remain committed to delivering sustainable organic growth through
continued focus on product development, best-in-class margins and
strong cash generation.
Earnings expectations for 2014 were reaffirmed in the range of
$6.75 - $6.85 per share. United Technologies expects revenues will
aggregate about $65 billion. The earnings outlook represents
year-over-year growth of 9%-10%. The current Zacks Consensus
Estimate for 2014 earnings is pegged at $6.85 a share.
The Boeing Co.
) won a sizable order from the Singapore-based aircraft-leasing
company of the Bank of China Ltd. - BOC Aviation Ltd - for 82
Boeing jets. The contract is valued at $8.8 billion at list prices.
This order comprises 80 single-aisle Boeing 737 jets that include
50 737 MAX 8s. The contract also covers 30 next-generation 737-800s
and two extended-range 737-300ERs. These planes are scheduled to be
delivered from 2016 through 2021.
The unprecedented rise in passenger traffic in the Asia-Pacific
region is bringing in a steady flow of orders. Going ahead, the
projected 5.7% increase in airline traffic by 2017, as revealed by
the International Air Transport Association (IATA), would boost
Boeing's commercial airplane order book.
Earlier, Boeing had revealed that Asia-Pacific will require 12,820
airplanes worth $1.9 trillion in the next two decades. The
deliveries will account for a sizeable 36% of the global commercial
airplane delivery in the aforesaid period. These deliveries will
triple the size of the Asia-Pacific aircraft fleet by 2032 from
) division 3M New Ventures recently obtained an equity stake in
Canadian company Smart Energy Instruments (SEI). The financing by
3M New Ventures was accompanied by several existing stakeholders
increasing their equity in SEI as well, taking the total financing
to $5 million.
SEI develops electronic chipsets with high-precision, real-time
monitoring capabilities for smart grids. This stake will bolster
3M's relevance in the energy sector. SEI's innovative technology is
likely to strengthen 3M's leadership in this sector and enable the
development of innovative solutions for utilities and electrical
) has filed a patent infringement lawsuit in the U.S. District
court for the District of Delaware against SunEdison (SUNE) and its
confederate NVT LLC. DuPont claimed that SunEdison has --
infringed the former's patented "Telurium Paste" technology by
using photovoltaic cells and solar modules containing "front side
metallization paste" manufactured by Samsung SDI Co., Ltd. Neo
Solar Power of Taiwan, the cell manufacturer and Flextronics, the
contract manufacturer of SunEdison were also named in the
According to DuPont Electronics & Communications, installers
and module makers like SunEdison are not supposed to use infringing
cells or pastes from any other manufacturers other than DuPont and
are licensed to use only its patent technology. DuPont will execute
its patent rights against violation of the contract to protect its
investments in innovation for improving solar power efficiency.
The Home Depot, Inc.
) announced Craig Menear as the company's new Chief Executive
Officer (CEO) and president. Currently working as president, U.S.
retail, Menear's new role will be effective from Nov 1. Also, he
has been appointed as a new board of director with immediate
Home Depot's current CEO and chairman Frank Blake will continue to
be the chairman once Menear takes over as CEO.
) troubles with the Russian authorities continue. Reportedly, the
Russian courts upheld the temporary closure of the company's three
outlets in Moscow per the orders of Russian consumer-safety agency,
Rospotrebnadzor, on account of multiple violations of sanitary
rules. However, McDonald's reportedly announced that it would
appeal against the court ruling that ordered a minimum 90-day
shutdown of these Moscow restaurants. Earlier this month, three
Moscow restaurants were closed after unplanned inspections by
Merck & Co. Inc.
) will be collaborating to evaluate Pfizer's Xalkori in combination
Merck's pipeline candidate, pembrolizumab, in a phase Ib study in
patients suffering from anaplastic lymphoma kinase (ALK)-positive
advanced or metastatic non-small cell lung cancer (NSCLC). The
financial terms of the deal were not made public.
Pfizer, which will conduct the multi-center, open-label phase Ib
study, expects to initiate the same in 2015.
Xalkori is currently approved for the treatment of patients
suffering from metastatic NSCLC whose tumors are ALK-positive as
detected by an approved test. Xalkori generated revenues of $196
million in the second quarter of 2014, up 63% from the year-ago
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 0.5%.
Last 5 Day's Performance
Next Week's Outlook
This week has witnessed the release of a series of encouraging
economic reports. This includes a substantial increase in GDP and
positive reports on consumer confidence, durable orders, initial
claims and pending home sales. However, external factors have
overshadowed such data as well as encouraging deal news. Earnings
reports were mixed, limiting the impetus received from positive
The key to market movement in the days ahead possibly lies with
the slew of upcoming economic reports next week. These include data
on manufacturing, services, factory orders and unemployment. A
section of investors are also in holiday mode ahead of Labor Day.
Next week's holiday shortened trading is likely to be affected by
economic data and international factors as earnings season winds
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3M CO (MMM): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
BOEING CO (BA): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis
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MERCK & CO INC (MRK): Free Stock Analysis
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