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Dow 30 Stock Roundup: Nike Beats, AmEx Raises Dividend

The Dow witnessed gains and losses on alternate days of an eventful week. Utilities and telecom stocks boosted the index on Monday. The index moved lower on Tuesday, dragged down by healthcare and tech stocks. Financials gained on Wednesday following an encouraging report from the Fed, combining with rebounding tech shares to lift the index. However, tech shares suffered another selloff on Thursday, leading to losses for the Dow.

Last Week’s Performance

Last Friday, the Dow lost 2.53 points to finish marginally lower, dragged down primarily by financials. According to market watchers, financials have been under pressure recently because of the flattening yield curve. However, other benchmarks moved higher after energy shares rebounded. Oil prices posted its only gain of the week, recovering from its lowest level since last August.

Gain in shares of tech stalwarts such as Apple AAPL, Facebook FB and Microsoft MSFT boosted the broader markets. Both Facebook and Microsoft recorded a gain of more than 1%, while Apple’s shares finished 0.5% higher. Investors appeared to have recovered their faith in tech shares following the tech selloff in the past two weeks.

The index has gained 0.1% over the last week. Healthcare shares posted gains following the release of Senate’s Healthcare Bill, aimed to repeal key sections of Obama’s Affordable Care Act. Meanwhile, existing-home sales increased by 1.1%. Separately, President Emmanuel Macron secured a comfortable victory in the final round of voting in France’s parliamentary elections.

The Dow This Week

The index gained 0.1% on Monday, boosted by gains in utilities and telecom stocks. Moreover, financials were boosted by bank shares following news that the Italian government has decided to close two of its struggling regional banks, Popolare di Vicenza and Veneto Banca.

Comments from several Fed officials, who seemed to support further rate hike this year, also aided financials. Additionally, investors kept a close watch on comments made by several Fed officials. Durable-goods orders in May recorded a decline for the second successive month.

The index declined 0.5% on Tuesday dragged down by healthcare and technology shares. Postponement of a vote on the Senate healthcare Bill raised questions over implementation of President Trump’s pro-growth agenda including tax reforms.

Technology shares continued to drop following a decline in shares of major tech companies including Alphabet GOOGL. Google parent’s shares dropped 2.5% following news that the tech giant was fined $2.7 billion by the European Union's antitrust regulators on account of violation of antitrust rules. 

The index advanced 0.7% on Wednesday, lifted by gain in financials and technology shares. Financials were led higher by increase in bank stocks on expectations of a positive outcome from the second round of bank stress test results. Shares of major technology companies recovered. Additionally, energy shares moved north due to uptick in oil prices after a government report revealed a drop in weekly U.S. crude output. Meanwhile, investors also digested weak pending home sales data.

The index declined 0.8% after technology shares suffered another setback on Thursday, sending the broader markets lower. Technology sector dropped as investors resumed selloff of tech shares in the backdrop of overvaluation concerns. However, financials gained following the release of positive stress test results by Federal Reserve on Thursday. Gain in financials helped to pare some losses in the broader markets.

Components Moving the Index

NIKE Inc.’s NKE fourth-quarter earnings per share of 60 cents rose 22% year over year, comfortably beating the Zacks Consensus Estimate of 49 cents. Revenues of the swoosh brand owner advanced 5% to $8,677 million and surpassed the Zacks Consensus Estimate of $8,613 million primarily driven by growth at international locations and global Direct-to-Consumer (DTC) businesses. The stock has a Zacks Rank #3 (Hold).

For fiscal 2018, the company expects currency-neutral revenue growth in the mid-to-high single digit range, reflecting growth across all regions, with continued strength outside the U.S. Further, the company projects gross margin, excluding currency impacts, to surpass the high-end of its long-term target of 30–50 bps. (Read: NIKE Gains on Q4 Earnings & Sales Beat, Guides FY18)

American Express Co. AXP announced its intention to increase quarterly dividend by 9.4% to 35 cents per share, beginning with the third quarter. It also plans to repurchase up to $4.4 billion of common shares during the Comprehensive Capital Analysis and Review (CCAR) approval period from the third quarter of 2017 to the second quarter of 2018. The stock has a Zacks Rank #3.

The announcement came on the back of “no-objection” received by the company from the Board of Governors of the Federal Reserve System to its capital plan submitted recently. The plan submission was part of the 2017 CCAR. (Read: American Express Stock Up on Investor-Friendly Moves)

The Boeing Company BA has received an order for 15 737 MAX 10 jets. The order was placed by Copa Holdings S.A. (CPA) at the 2017 Paris Air Show. With the current order, Copa Airlines will be one of the launch customers of the 737 MAX 10 airplane. The current order will transform its previously placed order of 737 MAX 8 aircraft to 737 MAX 10 airplanes. (Read: Boeing Wins Order for 15 737 MAX 10 Jets from Copa Holdings)

In a separate development, Boeing announced that it has received a delivery order worth $10.2 million from the Air Force Life Cycle Management Center, Eglin Air Force Base, FL. This contract is for providing the joint direct attack munition (JDAM) high compact telemetry modules. Per the terms, Boeing needs to deliver flight test instrumentation hardware to the Air Force. The company expects to complete the work by Apr 2019 at its San Diego, CA facility. The stock has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DuPont DD has declared that it will offer three newly approved bakery enzymes in Japan. The company recently secured approval of the Ministry of Health, Labor and Welfare for these enzymes for use as processing aids in that country.  The PowerFresh and PowerSoft enzymes are based on proprietary G4 amylase technology which has anti-staling properties. (Read: DuPont to Launch Three Bakery Enzymes in Japan)

In a separate development, Zacks Rank #2 (Buy) DuPont and Dow Chemical DOW have provided an update on the status of their proposed merger. The companies noted that their boards have jointly commenced a comprehensive portfolio review aimed at capturing material value-enhancing opportunities. The boards have also engaged McKinsey & Co. to assist the companies in the review process. (Read: Dow, DuPont Provide Update on $130 Billion Mega-Merger)

Microsoft Corp. MSFT recently announced an extended partnership with Box BOX. The duo will offer Box’s cloud content management to enterprise customers based on Zacks Rank #3 rated Microsoft’s Azure platform. Moreover, both the companies agreed to share “go-to-market investments” and “co-sell” Box and Azure. The combined offering is expected to be available in late 2017.

Additionally, Azure’s artificial intelligence (AI) and machine learning features will be incorporated into Box’s platform in the future. (Read: Microsoft and Box Come Together for Cloud Content Management)

Intel Corp. INTC recently announced that it has signed up as a sponsor for the International Olympic Committee (IOC) till 2024. Per the terms of the deal, Intel will be spending $400 million in cash and kind for the global sporting event. The stock has a Zacks Rank #3.

The deal was announced after a week, following long-time sponsor McDonalds' MCD withdrawal of its sponsorship deal three years early due to some cost reductions. Intel is looking at this deal as an opportunity to showcase its 5G platform, virtual reality (VR) and drone technology. (Read: Intel Becomes a Sponsor of Olympics, VR & Drones in Focus)

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 declined 0.3%.

Ticker

Last 5 Day’s Performance

6-Month Performance

MMM

-2%

+17.9%

GS

+2.2%

-5.7%

IBM

-0.8%

-5.5%

HD

-1.6%

+14.8%

BA

-2.5%

+28.9%

UNH

-1.4%

+16.7%

MCD

-1.5%

+27.5%

TRV

-0.8%

+4.4%

JNJ

-2.6%

+16.7%

AAPL

-2.7%

+25.1%

Next Week’s Outlook

Losses for tech shares are continuing to rile the markets even as regulatory developments provide encouragement. This week’s most important event was possibly the positive outcome of the Fed’s capital adequacy tests. Additionally, the final reading of first quarter GDP was not as soft as earlier expected. Given the continuing weakness in tech shares, investors will continue to look toward economic data and regulatory developments to boost the bourses in the days ahead.

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Facebook, Inc. (FB): Free Stock Analysis Report
 
Alphabet Inc. (GOOGL): Free Stock Analysis Report
 
Box, Inc. (BOX): Free Stock Analysis Report
 
Boeing Company (The) (BA): Free Stock Analysis Report
 
E.I. du Pont de Nemours and Company (DD): Free Stock Analysis Report
 
Dow Chemical Company (The) (DOW): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
American Express Company (AXP): Free Stock Analysis Report
 
McDonald's Corporation (MCD): Free Stock Analysis Report
 
Nike, Inc. (NKE): Free Stock Analysis Report
 
Intel Corporation (INTC): Free Stock Analysis Report
 
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