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Dow 30 Stock Roundup: Home Depot Beats, Yellen Lifts Sentiment - Analyst Blog

By: Zacks.com
Posted: 2/28/2014 12:59:00 PM
Referenced Stocks: GE;HD;KO;MMM;XOM

Positive economic data has helped the Dow post a mostly positive performance so far this week. The fastest growth in new home sales in five years and reassurances from Fed Chair Janet Yellen were the positive cues on the domestic front. During the first four trading days, the Dow has gained 0.4%.

Last Week's Performance

The Dow lost 0.2% on Friday after the Federal Reserve indicated that it may not curtail the pace of tapering. Dismal existing home sales data and futures and options expiration dragged the markets down. Investors also had to focus on certain dismal corporate earnings results.

For the week, the Dow declined 0.3%. This was primarily due to a number of disappointing economic reports and fears of further Fed tapering. Investors also had to contend with several dismal earnings reports.

The Dow This Week

Merger and acquisition activities and a rally in health insurers lifted the blue chip index to a 0.6% increase on Monday. A buoyant German consumer confidence report also boosted investor sentiment.

The Dow ended 0.2% lower on Tuesday following a decline in consumer confidence and dismal US home prices data. However, the retail sector gained on the back of better-than-expected earnings reports.

An increase in new home sales helped the blue chip index gain 0.1% on Wednesday. Sales of new single-family houses increased 9.6%, the fastest pace in more than five years, despite harsh winter weather.

Ultimately, the Dow gained 0.5% on Thursday following comments from Fed Chair Janet Yellen. Yellen blamed  the  harsh  winter  climate  for  the  recent  weakness  in  the  economy. She also said the central bank may continue with the tapering process.

Components Which Moved the Index

The Home Depot Inc. ( HD ) reported better-than-expected bottom-line results for the fourth quarter of fiscal 2013. The company's earnings of 73 cents per share exceeded the year-ago quarter's adjusted earnings of 67 cents as well as the Zacks Consensus Estimate of 71 cents. Consequently, the stock led gains among the Dow components, with its shares increasing nearly 4% on Tuesday.

The fourth quarter of fiscal 2012 was 14 weeks long. The company stated that the fourteenth week contributed approximately 7 cents to its earnings results. Excluding that, Home Depot's earnings on a 13-week comparable basis increased 19.7% year over year in the reported quarter.

Exxon Mobil Corp. ( XOM ) on Feb 21 announced that it has replaced 103% of its 2013 production by adding proved oil and gas reserves totalling 1.6 billion oil-equivalent barrels, including a 153% replacement ratio for crude oil and other liquids.

However, this did not have any impact on the bourses as the integrated oil major has been replacing more than 100% of its reserves regularly over the past two decades. As a result, the share price which opened at $95.48 on Feb 21 dipped 0.5% to finally settle at $95.03.

General Electric Co. ( GE ) floated a new distributed power business, which involves generating electricity from several small energy sources. The company plans to invest $1.4 billion in this division over a four-year time period.

The company aims to meet rising demand for "on-site power systems that are easier to finance, faster to install and more efficient and reliable." The idea behind distributed power is to "to improve access to electricity in remote areas with poor or non-existent electric grids."

3M Co. ( MMM ) strengthened its healthcare analytics division by inking a definitive agreement to acquire leading healthcare data analytics and business intelligence provider, Treo Solutions, for an undisclosed amount. However, the news failed to draw any reaction from investors as share prices remained relatively flat at $132.20 at the close of trading on Feb 24.

The Coca-Cola Co. ( KO ) launched its first frozen Diet Coke product in the brand's 31-year existence. The company launched Diet Coke FROST Cherry as a Slurpee only at 7-Eleven stores this week. When temperatures rise as spring approaches, availability of this new drink will be increased.

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 gained 1.05%.

Ticker

Last 5 Day's Performance

6 month performance

V

+1.31%

+29.15%

IBM

+1.36%

+1.71%

GS

+0.53%

+8.11%

MMM

-+2.11%

+18.88%

BA

+0.22%

+24.49%

CVX

+2.67%

-5.02%

UTX

+1.07%

+16.63%

XOM

+0.85%

+7.88%

MCD

-1.04%

-1.42%

CAT

-0.82%

+17.28%

Next Week's Outlook:

The most eagerly awaited report for the month, GDP data, is to be released today. GDP numbers are expected to fall and their direction will set the tone for this week as well as the next month.

The next week features several key reports, including the ISM manufacturing and services indexes, construction spending, factory orders and employment data. These numbers will largely chart out the course for the Dow.

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GENL ELECTRIC (GE): Free Stock Analysis Report

HOME DEPOT (HD): Free Stock Analysis Report

COCA COLA CO (KO): Free Stock Analysis Report

3M CO (MMM): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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