The Dow started the week on a nervous note following rising tensions in the Crimean region of Ukraine. However, these fears subsided by the second trading day and the blue chip index chalked up gains over the next few sessions. During the first four trading days, the Dow has gained an impressive 1.57%.
Last Week’s Performance
The Dow gained 0.3% on Friday following a better-than-expected consumer sentiment report and an increase in the Chicago PMI. Consumers ignored lower than expected GDP and pending home sales numbers, attributing them to a harsh winter season.
For the week, the blue chip index rose 1.4% and posted a gain of 4% in February, its largest monthly percentage gain since January 2013. Investors were buoyed by encouraging earnings reports and positive economic data on durable goods, new home sales and business spending.
Much of the weekly gains also came on the back of optimism offered by Federal Reserve Chairwoman Janet Yellen. The Fed Chair blamed the harsh winter climate for recent weakness in the economy.
The Dow This Week
Escalating political tension between Ukraine and Russia over the Crimean region dragged the benchmarks down to their worst selloffs in about a month. Concerns that the movement of Russian troops in the Crimean region of Ukraine may lead to a larger conflict saw investors moving funds to safe havens. Encouraging economic reports failed to lift sentiment and the Dow plunged 0.9%.
Stocks soared on Tuesday as fears of a confrontation between Russia and Ukraine subsided. Russian President Vladimir Putin said he saw no need to use armed forces in Crimea for the moment. The blue chip index rose 1.4% as investors were confident enough to invest in equities rather than traditional safe-haven assets.
The Dow had lost 0.2% by the close on Wednesday as investors received discouraging economic reports. These included a greater-than-expected fall in ISM Services Index and dismal private sector hiring. However, the blue chip index recovered on Thursday, gaining 0.4%, after the Central Bank of United Kingdom and the European Central Bank kept key lending rates unchanged.
Components which Moved the Index
The Walt Disney Co. (DIS) has struck a deal with Dish Network Corp. (DISH) – the second largest satellite TV operator in the U.S. DISH will now offer live streaming of popular Disney channels to its subscribers. The deal primarily targets young price sensitive customers. This deal will allow DISH Network customers to directly watch live shows on devices like PCs, smartphones and tablets, thereby bypassing the need for a set-top box.
The company has dropped its ad skipping features from all Disney channels to make the latter withdraw its litigations against the satellite TV operator. The deal with Walt Disney will also help DISH Network to keep up with the popular demand of TV viewing on multiple platforms such as PCs, smartphones and tablets.
Exxon Mobil Corp. (XOM) announced that it expects to start production at 10 major projects, a company record in 2014. This would add new capacity of about 300,000 net oil equivalent barrels per day paving way for growth.
However, the encouraging startup plan is the result of higher levels of spending till 2013. 2014 is slated to witness a slide in spending levels. Market sentiment also was bearish and following the announcement, shares fell 1.5% to close at $93.80 on March 5.
The Boeing Co. (BA) was the biggest winner from Pentagon’s funding list of Mar 4, 2014. The company won a sizeable $1.16 billion contract modification to supply the U.S. Army with AH-64E Apache helicopters.
Per this contract, Boeing will remanufacture 72 Apaches as well as build and deliver 10 wholly new Apaches for the Army. The company will also refresh five crew trainers, refurbish one crew trainer and provide integrated logistics support, ground support equipment, spare parts, and perform engineering work on the helicopters.
Chevron Corp. (CVX) received good news from the U.S. District Court for the Southern District of New York regarding its Ecuador allegation. The judge declared that the multi-billion dollar Ecuador judgment is unenforceable in the U.S. on grounds of fraudulent activities by the Ecuadorian legal team.
The U.S. court stated that the Ecuadorian legal team had violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and found Chevron’s testimony convincing. The legal team, along with the lead lawyer, Steven Donziger, has been accused of fabricating environmental evidence, forcing scientific experts to manipulate reports, bribing the judge and other court-appointed experts and ghost-writing court reports.
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 0.61%.
|
Ticker |
Last 5 Day’s Performance |
6 month performance |
|
V |
-0.92% |
+26.71% |
|
IBM |
+1.33% |
+2.52% |
|
GS |
+3.69% |
+10.17% |
|
MMM |
-0.48% |
+16.55% |
|
BA |
-0.05% |
+21.49% |
|
CVX |
-0.42% |
-5.25% |
|
UTX |
+0.63% |
+14.08% |
|
XOM |
-2.61% |
+7.46% |
|
MCD |
+0.45% |
-0.71% |
|
CAT |
+0.65% |
+17.04% |
Next Week’s Outlook:
Key reports lined up for next week include retail sales, business and wholesale inventories as well as the producer price index. With fears over the Ukraine issue abating, market movement will be largely determined by how long the effects of a long and harsh winter continue.
The Fed has already attributed much of the recent mixed to negative economic data to its detrimental impact. On the other hand, heightened demand for gas and electricity and their rising prices will also come into play
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