The index enjoyed an encouraging week, buoyed by strong economic data. A revival in the fortune of tech stocks also boosted the broader markets. However, the lack of any clarity about the chances of a near-term U.S-China trade deal kept investors on tenterhooks. Boeing BA emerged as the weakest link for the index, losing heavily this week after the crash of another 737 Max 8 aircraft.
Last Week’s Performance
The index lost 0.1% last Friday, declining for the fifth successive day for the first time since June 2018. Disappointing jobs data for February led to benchmarks closing lower. The U.S. economy added a mere 20,000 jobs in February, significantly below the consensus estimate of 186,000
Moreover, weak economic data from China and Germany also dented investors’ confidence. Exxon Mobil XOM was the major loser for the index, with a loss of 1.4%.
The index declined 2.2% last week, suffering its biggest weekly decline for the year so far. Renewed concerns about global economic growth were the primary cause of Wall Street’s decline. The slowdown in Chinese growth outlook, ECB’s downward revision of the Eurozone’s growth rate and weak job data in the United States dented investors’ confidence.
The Dow This Week
The index gained 0.8% on Monday, reversing a five-day losing streak, supported by a strong show from the technology sector. Shares of Boeing plummeted 5.3% after an Ethiopian Airlines 737 Max 8 plane crashed shortly after taking off from Addis Ababa. However, shares of Apple AAPL climbed 3.5% after Bank of America Merrill Lynch upgraded the stock to buy from neutral.
The index declined 0.4% on Tuesday following the release of tame inflation data, which offset the free fall of Boeing’s stock on safety issues. The Dow’s worst performer was Boeing, which declined 6.2%. Several countries such as the U.K., China, the 19-member Eurozone, Indonesia, Ethiopia and Australia grounded 737 MAX 8 planes, following two air crashes in five months.
The index increased 0.6% on Wednesday following the release of strong economic data. Meanwhile, the UK parliament voted against a no-deal Brexit and President Donald Trump said that he is ready to wait for a lasting trade deal to be concluded with China.
The index closed marginally higher on Thursday even as investors remained anxious about the delay in sealing a U.S.-China trade deal. Moreover, weak earnings data from the United States and China also dented investors’ confidence. However, stock price movements in either direction were largely marginal.
Components Moving the Index
Apple AAPL has been accused of unfair practices and stifling competition in the music streaming space. Notably, the complaint has been filed by music streaming giant Spotify SPOT with the European Commission's antitrust regulators.
Per Spotify CEO Daniel Ek, Zacks Rank #3 (Hold) Apple introduces “rules on the App Store that purposely limit choice and stifle innovation at the expense of the user experience.” To maintain its leading position in the music streaming space, Apple blocked Spotify and other players from providing services on Siri, Homepod and Apple Watch. Notably, this limits the choices offered to consumers.
Spotify and other digital service providers are also subjected to a 30% “Apple Tax” when consumers make purchases using Apple's in-app purchase system. Additionally, developers are also charged when customers upgrade from a free version to a premium music service. (Read: Apple’s Woes Rise as Spotify Alleges it of Unfair Practices)
Exxon Mobil along with British energy major BP plc BP recently signed an agreement with Alaska Gasline Development Corp (“AGDC”) with the goal of advancing the Alaska liquefied natural gas (“LNG”) project. The agreement enables the companies to look for ways that can improve the competitiveness of the LNG Project and successfully commercialize it. Exxon Mobil has a Zacks Rank #3.
The energy regulators of the United States recently postponed the expected date of taking a decision on the project from February 2020 to June 2020. The companies are planning to collaborate on the $43.4-billion project in order to progress with the authorization process from the Federal Energy Regulatory Commission (“FERC”).
The project is expected to liquefy 3.5 billion cubic feet of gas per day, which will be shipped to clients in the Asia-Pacific region. A three-train liquefaction facility will be built in Nikiski, a census-designated place in Kenai Peninsula Borough of Alaska.
The project incorporates a 1.1-meter diameter pipeline of 807 miles from the Alaska North Slope. Once completed, the project is expected to export up to 20 million metric tons of LNG per year. (Read: ExxonMobil & BP Eye Homecoming in Alaska LNG With AGDC Deal)
JPMorgan JPM expects to open 90 new branches by this year end. Additionally, the bank intends to hire roughly 700 employees to manage these branches.
Starting this summer, several branches will be opened in some of the top markets in the country – Charlotte and Raleigh, NC; Greenville, SC; Kansas City, KS; Minneapolis, MN; Nashville, TN; Pittsburgh, PA; Providence, RI; and St. Louis, MI. Also, JPMorgan intends to add branches in locations that are near large universities including Alabama and Nebraska, with plans for expansion in these states next year.
Moreover, JPMorgan will continue to open dozens of new branches in Greater Washington, DC, Philadelphia and Boston, as announced last year. Further, nearly 30% of the new branches (up from prior expectation of 20%) will be located in low-to-moderate income communities. The stock has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Verizon VZ has upped the ante against its rivals by aiming to launch the 5G Ultra Wideband network in Chicago and Minneapolis on Apr 11. As the company gears up to increase the tally of 5G Ultra Wideband mobility cities to 30 in 2019, it is offering an exclusive 5G moto mod by Motorola Solutions, Inc. MSI to power moto z3 – the world’s first 5G-enabled smartphone – to enable users to fully utilize the network features.
The 5G Ultra Wideband network hinges on three fundamental drivers to deliver the full potential of 5G technology. These include massive spectrum holdings, particularly in the millimeter wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy large numbers of small cells.
Simultaneously with the network launch, Zacks Rank #3 Verizon will exclusively offer 5G moto mod at an affordable $50 to upgrade the moto z3 to superfast 5G network. Customers availing this gadget within the twin cities will enjoy faster download speed of 5G Ultra Wideband network while automatically shifting to 4G LTE network once they move to any other city. (Read: Verizon to Launch 5G in April With Exclusive Moto Mod)
Pfizer PFE announced that the FDA has approved Trazimera, a biosimilar version of Roche’s RHHBY breast cancer drug, Herceptin. Pfizer has a Zacks Rank #4 (Sell).
Trazimera is approved for the treatment of HER2 overexpressing breast cancer and HER2 overexpressing metastatic gastric cancer. In April last year, the FDA had given a complete response letter (CRL) to Pfizer’s biologics license application (BLA) for Herceptin biosimilar. The FDA had also asked for additional technical information though it was not related to safety or clinical data submitted in the application.
The BLA filing was based on a comprehensive data package, which included data from the REFLECTIONS B3271002 study, a comparative safety and efficacy study of Trazimera in combination with paclitaxel versus a combination of Herceptin and paclitaxel in first-line patients with HER2-positive metastatic breast cancer.
Data from the study showed that the primary endpoint of objective response rate (ORR) was equivalent for Trazimera and Herceptin. (Read: Pfizer's Herceptin Biosimilar Trazimera Gets FDA Approval)
Microsoft MSFT continues to aggressively invest in renewable energy for its operations. The company recently inked two power purchase agreements (PPA) with EDP Renewables North America LLC to work on a wind energy project based out of Paulding County, OH.
The two new deals, each spanning 15 years, bring in a total 125-megawatt (MW) of wind energy to Zacks Rank #3 Microsoft’s renewable portfolio, which is now estimated to have reached 1.4 gigawatts.
The Timber Road IV Wind Farm project is anticipated to commence operations in 2019. The facility is estimated to create around 200 jobs in the course of construction. The wind farm is also expected to generate local state economic income of $1.1 million annually. (Read: Microsoft to Buy Wind Energy, Focus on Renewables Continue)
Performance of the Top 10 Dow Companies
The table given below shows the price movement 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 past five trading days, the Dow has gained 1.7%.
Next Week’s Outlook
The euphoria over a likely U.S.-China trade deal seems to be evaporating with no clarity on the timing of such an agreement. Additionally, fears about an imminent global economic slowdown are on the rise.
The only factor, which looks to be boosting stocks in the absence of earnings, is bullish economic developments. Investors will likely be keenly watching such events, including the Fed’s next meeting, which is scheduled for next week.
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