The Dow has experienced mixed fortunes during a holiday shortened week. Dismal economic data and the Fed minutes resulted in marginal to moderate losses on the first two trading days. Ultimately, the blue chip index managed to chalk up gains on Thursday, buoyed by positive manufacturing data. So far this week, the Dow has gained barely 0.02%.
Last Week’s Performance
Investors focused on some encouraging earnings results and better-than-expected consumer sentiment gauge numbers to help drive benchmarks into the positive zone on Friday. Gains on Friday came despite a surprise drop in industrial production data.
Friday’s finish in the positive territory also helped benchmarks register a second consecutive week of gains. The Dow moved up 2.3% last week. Much of the weekly gains came on the back of optimism offered by Fed Chair Janet Yellen.
The Dow This Week
The blue chip index slipped marginally on Tuesday, by 0.05% as benchmarks finished mixed. A pharma acquisition boosted investor confidence while dismal economic data was overlooked as an outcome of the bitter winter season.
The Dow frittered away the morning’s gains to settle 0.6% lower on Wednesday. Investors were discouraged after the US Federal Reserve’s latest policy meeting minutes showed that the tapering process would continue. They also revealed that the central bank was debating on when it should begin raising short term rates.
The Dow finally gained 0.6% on Thursday following a better-than-expected reading of Markit's preliminary US Manufacturing Purchasing Managers Index. Markets ignored dismal foreign data and a decline in the Philadelphia Fed's gauge of manufacturing activity
Components Which Moved the Index
The Coca-Cola Company (KO) reported adjusted earnings of 46 cents per share, in line with the Zacks Consensus Estimate. This was also 2% higher than the year-ago figure. However, revenues missed the Zacks Consensus Estimate and markets reacted negatively. Shares of Coca-Cola closed the day 3.8% lower and pulled down the Dow.
Currency hurt earnings growth by 5% as a strong dollar lowered the value of the company’s ex-U.S. sales. Earnings grew 7% year over year on a constant currency basis as strong gross margins and lower taxes made up for soft revenues and margins.
Exxon Mobil Corp. (XOM) produced first gas from its Damar field, off the east coast of Peninsular Malaysia. With a forecasted peak capacity of 200 million cubic feet per day, the project is expected to help Malaysia meet its rising natural gas demand.
In particular, the startup of Damar – in which Exxon Mobil holds a 50% operated interest – is another important step towards the company’s global production growth in the coming years.
Microsoft Corp. (MSFT) made its personal cloud storage service OneDrive globally available. Known earlier as SkyDrive, OneDrive provides users 7GB of free storage space. Users can also increase their storage space by 50 GB, 100 GB and 200 GB at a time. SkyDrive customers can use their existing credentials to access files on OneDrive.
Visa Inc. (V) said its clients will now be able to make secure mobile payments globally. This will be made possible by hosting payWave accounts in a virtual cloud, secure from infringement. It will also provide financial institutions wider choice in giving customers the freedom to make secure payments using their smartphones.
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.
|
Ticker |
Last 5 Day’s Performance |
6 month performance |
|
V |
-1.12% |
+25.26% |
|
IBM |
+0.31% |
-0.32% |
|
GS |
+0.48% |
+4.70% |
|
MMM |
-0.42% |
+15.99% |
|
BA |
-0.46% |
+24.68% |
|
CVX |
+0.99% |
-2.63% |
|
UTX |
+1.04% |
+13.13% |
|
XOM |
-+1.34% |
+10.36% |
|
MCD |
-0.03% |
+0.67% |
|
CAT |
+0.38% |
+16.86% |
Next Week’s Outlook:
The largest drop in housing starts in about three years also weighed on benchmarks on Wednesday. More housing data is scheduled for release going ahead, starting with today’s existing home sales report. Next week will feature Case Shiller home prices and new home sales data.
On the whole, next week is full of crucial economic reports, including consumer confidence and durable orders. But most important of all is the GDP report due on Friday, which will determine, among other things, the course of the Dow to a large extent.
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