Credit: Shutterstock photoThe Dow registered a record winning streak this week, boosted by energy stocks and the Fed's dovish stance. The blue-chip index gained on Monday following gains in energy shares and expectations that Fed won't raise rates this year. The Dow edged up on Tuesday after a selloff in healthcare stocks offset gains in energy and materials shares.
The blue-chip index gained again on Wednesday. The Dow gained for the fifth straight session on Thursday, marking its longest winning streak this year. The Dow has gained 3.5% during the first four trading days.
LastWeek's Performance
The Dow increased 1.2% on Friday after gains in energy and materials shares offset weak jobs data. Weaker-than-expected September jobs report initially raised concerns about slowdown in economic growth and its adverse impact on the Federal Reserve's decision to raise short-term interest rates.
The U.S. economy added 142,000 jobs in September, significantly lower than the consensus estimate of 202,000. Employment gains for the previous two months were also trimmed by a combined 59,000.
Oil prices moved north on Friday after weekly data showed that the number of oil and gas drilling rigs fell to a five-year low in the U.S. Rise in oil prices had a positive impact on energy and materials shares, which eventually boosted the broader markets.
For the week, the Dow increased 0.9%. Friday's gains came in despite economic growth worries due to weak nonfarm payroll data. Meanwhile, better-than-expected jobs data from Automatic Data Processing, Inc. ADP offset dismal manufacturing data in Chicago on Wednesday, while a recovery in healthcare stocks helped markets end Tuesday's volatile trading session slightly higher.
On the other hand, continuing slump in biotech stocks and weak data out of China dragged down major benchmarks into negative territory on Monday. Decline in industrial profits elevated concerns regarding Chinese economy, which in turn increased global growth worries.
The DowThisWeek
The blue-chip index gained 1.9% on Monday following gains in energy shares and expectations that Fed won't raise rates this year. Russia's willingness to meet major oil producers to discuss the present oil market scenario and a rally in U.S. gasoline prices had a positive impact on global oil prices. Rise in oil prices boosted energy shares, which eventually lifted the broader markets.
Meanwhile, lackluster jobs data raised worries about economic growth, eventually cooling expectations of a rate hike this year. The ISM Services Index decreased to 56.9% in September from August's reading of 59%. The drop was more than the consensus estimate of a decrease to 57.7%.
The Dow increased 0.1% on Tuesday after a selloff in healthcare stocks offset gains in energy and materials shares. The blue-chip index eked out gains banking on a surge in E. I. du Pont de Nemours and Company's DD shares.
Shares of DuPont's soared 7.7% after the company declared that its chief executive officer Ellen Kullman will step down on Oct 16. Edward Been will act as the interim chairman and CEO. Separately, DuPont reduced its full-year earnings estimate to $2.75 from an earlier forecast of $3.10.
In economic news, the U.S. trade deficit swelled in August as imports from China increased, while a flagging global economy weighed on U.S. exports. The U.S. Census Bureau reported that trade deficit increased in August to $48.3 billion from $41.8 billion in July, more than the consensus estimate of deficit of $45.4 billion.
The blue-chip index gained 0.7% on Wednesday. Benchmarks ended Wednesday's choppy trading session in the green boosted by gains in biotechnology companies. Concerns about third quarter earnings results kept the trading session volatile.
Both the materials and energy sectors benefitted from a weaker dollar as it made commodities denominated in U.S. dollar more attractive. Energy shares gained despite oil prices ending a volatile trading session in the red on Wednesday. Oil prices snapped a three day rally after weekly oil stockpiles increased more than analysts' expectations.
The Dow gained for the fifth straight session on Thursday, marking its longest winning streak this year. The blue-chip index increased 0.8% following the Fed's decision to keep interest rates near zero in the September policy meeting. Turmoil in financial markets and slowdown in Chinese economy were cited to be the reasons behind the Fed's dovish stance.
Additionally, several Fed officials want the inflation rate to move up to the desired target of 2% before raising rates. Some Fed voting members said their confidence that inflation will climb to 2% "had not increased" since the July meeting. Meanwhile, the Fed staff estimated inflation won't be able to touch the 2% goal even by the end of 2018.
Meanwhile, a weaker dollar and expectations about shrinking U.S. oil production levels boosted global oil prices. Rising oil prices had a positive impact on energy shares. In economic news, initial claims decreased 13,000 to 263,000 in the week ending Oct 3.
ComponentsMovingthe Index
Boeing Co.'sBA shares edged up 1.78% on Oct 7 as Ethiopian Airlines CEO Tewolde Gebremariam revealed its plan to place an order for Boeing's 777X long-range jetliner before the end of 2015, per a Wall Street Journal report. The East African airline is considering buying 15 to 20 of Boeing's new 777X planes worth about $7.4 billion at list prices.
Although the airline had initially considered buying Airbus' A350-1000 planes, they changed their mind in favor of Boeing 777X as the aircraft is more suitable for operations at their high-altitude hub in Addis Ababa. The new planes are due for delivery in 2020.
Meanwhile, Boeing reported strong third-quarter as well as nine-month 2015 delivery numbers. The company delivered 580 commercial jetliners so far this year, increasing 9.8% year over year and beating its archrival Airbus. On Oct 5, Airbus reported that it has delivered 446 planes in the first nine months of this year. Boeing's total deliveries in the quarter jumped approximately 5.6% year over year.
Cisco SystemsCSCO recently announced plans to acquire consultancy firm Portcullis in a bid to expand its security consulting services. Cisco expects the acquisition to close in the second quarter of fiscal 2016. Financial terms of the deal were not disclosed.
Portcullis is a privately held U.K.-based firm which offers security advisory services to enterprise clients and the government sector. It will be incorporated into Cisco's Security Solutions group under the leadership of James Mobley, the vice president of the latter.
3M CompanyMMM recently completed the divesture of its North American Library Systems business to focus on its core operations. The assets were sold to independent management firm OEP Capital Advisors, L.P. for an undisclosed amount. 3M also intends to sell its other Library Systems assets across the globe to OEP in the near future.
The company expects the transaction to have zero impact on its earnings as it is likely to be offset by additional portfolio management actions in the fourth quarter of 2015.
General Electric CompanyGE inked an agreement to sell its corporate jet financing unit to luxury jet lender Global Jet Capital, as it continues to offload its financial assets at a breakneck speed. The transaction is subject to customary regulatory and other approvals, and is expected to close in stages over the coming months.
The divestment represents aggregate ending net investment ("ENI") of about $2.5 billion. The deal will likely contribute about $300 million toward GE's targeted dividend of $35 billion under the divestment plan. With $2.5 billion of net assets, the deal involves GE loans, leases and over 300 aircraft across the U.S., Canada, Mexico and Latin America.
MerckMRK announced that its anti-programmed death receptor-1 (PD-1) therapy, Keytruda, has been approved by the FDA for the treatment of metastatic non-small cell lung cancer (NSCLC) patients whose tumors express PD-L1 as determined by an FDA-approved test and who have disease progression on or after platinum-containing chemotherapy.
The FDA granted accelerated approval to Keytruda based on an encouraging tumor response rate and durability of response. Continued approval for the melanoma indication depends on data from the confirmatory studies.
Meanwhile, Merck KGaA and partner Pfizer Inc. PFE announced that avelumab received fast track status from the FDA for the treatment of metastatic merkel cell carcinoma (MCC). The candidate is being evaluated in a phase II study, JAVELIN Merkel 200, for this indication.
Microsoft CorporationMSFT announced on Oct 6 that it will be adding to its Surface line with the company's first ever laptop. Named the "Surface Book," the new device will feature a 13.5-inch display and a removable keyboard.
Microsoft described the device as a "digital clipboard." This product is an extension of what the Surface Line already is: A powerful tablet that runs a full version of Windows. However, the new keyboard seems to be a vast improvement over the accessory versions compatible with prior Surface tablets.
Microsoft went as far as to say the new keyboard was "perfect." The Surface Book will start at $1,499 and will go on sale October 29.
International Business Machines CorporationIBM has formed a new consulting unit, Cognitive Business Solutions based on its artificial intelligence computer system, Watson.
The unit will be spearheaded by Stephen Pratt and will have about 2,000 employees. IBM also stated that it will be training nearly 25,000 consultants and practitioners across the company on cognitive computing this fall.
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 4.5%.
Next Week's Outlook
The blue-chip index has enjoyed a record week of gains, boosted by material and energy stocks as well as the Fed's reluctance to raise rates. Rising oil prices have alleviated market concerns to a significant extent. Meanwhile, investors and market watchers have taken the view that a rate hike may not take place this year.
The spotlight will now be squarely for the earnings season. Markets will look for direction from these results in the days ahead. Meanwhile, several key reports are scheduled for release next week. This includes data on retail sales and industrial production. Any positive indications on this front could push stocks higher in the days ahead.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
