The index traversed a lackluster trading week as investors looked toward first-quarter earnings numbers for direction. Developments on the trade war front continued to determine investor sentiment to some extent. The latest Fed minutes reaffirmed its recent dovish stance, providing some respite to investors. Meanwhile, crude oil prices surged to record highs.
Last Week’s Performance
The index gained 0.2% last Friday following strong U.S. job data for March and investors’ optimism about a possible solution to trade tensions. The U.S. economy added 196,000 in March, above the consensus estimate of 184,000. This was a tremendous improvement from February’s data, which was revised upward to 33,000 from 20,000 reported earlier.
The index increased 1.9% over last week. Strong jobs data, positive developments on U.S.-China trade conflict and a less volatile yield curve for government bonds negated recessionary fears and strengthened investors’ confidence in risky assets like equities.
The Dow This Week
The index lost 0.3% on Monday as investors waited for first-quarter earnings to commence. Lack of news on the trade front was another reason for the lackluster stock price movement. However, crude oil prices posted impressive gains.
On Apr 8, crude oil prices reached the highest level in five months. The U.S. benchmark West Texas Intermediate (WTI) crude gained $1.32 or 2.1% to close at $64.40 a barrel, its highest since Nov 1, 2018. The global benchmark Brent crude rose 76 cents or 1.1% to $71.10 a barrel, its highest since Nov 7, 2018.
The index declined 0.7% on Tuesday after trade tensions between the United States and European Union escalated. Moreover, the International Monetary Fund (IMF) reduced global growth forecast for 2019, which also dented investor’s confidence.
This was the third reduction in the last six months. The new estimate for the year is 3.3% compared with 3.5% projected in January and the forecast of 3.7% released in October. Global growth rate forecast for 2020 remained flat at 3.6%.
The index gained 6.58 points on Wednesday after the Fed reaffirmed its dovish monetary stance in the minutes of its latest meeting. Moreover, positive news on the trade war front also strengthened investors’ confidence.
Treasury Secretary Steven Mnuchin said the United States and China are making progress on a trade deal. Progress has been made on a key sticking point: full protection for U.S. intellectual property.
The index lost 0.1% on Thursday, primarily due to a 0.8% decline in shares of Apple Inc. AAPL. Investors keenly awaited first-quarter earnings numbers. Financial bellwethers J.P. Morgan Chase JPM and Wells Fargo WFC are among the companies that are expected to kick off this round of earnings.
Components Moving the Index
The Boeing Company BA reported first-quarter 2019 commercial deliveries of 149 airplanes, down year over year on a sharp decline in demand for 737 jets. Delivery of the single-aisle 737 jets declined to 89 in the first quarter of 2019 from 132 a year ago. Boeing has a Zacks Rank #3 (Hold).
Shipments of the 777 and 787 Dreamliners totaled 10 and 36 compared with 12 and 34 in the year-ago period, respectively. The company delivered two jets of the 747 variant, which remained flat year over year. For 767 jets, the company delivered 12 jets in the quarter, up from four in the year-ago quarter. (Read: Boeing Q1 Commercial Deliveries Down on Low 737 Jet Demand)
Pfizer, Inc.’s PFE blockbuster medicine Ibrance gained FDA approval for the treatment of breast cancer in men, thereby expanding the drug’s eligible patient population. Pfizer has a Zacks Rank #3.
Ibrance, CDK 4/6 inhibitor, can now be prescribed in combination with an aromatase inhibitor or AstraZeneca’s AZN Faslodex (fulvestrant) for the treatment of men with HR+, HER2- metastatic breast cancer. The approval for the expanded indication is based predominately on real-world data, a new approach to expanding the use of already approved innovative medicines. (Read: Pfizer's Ibrance Gets FDA Approval for Breast Cancer in Men)
Apple recently lowered prices of different tiers of Apple Music in India, according to Verge. A monthly plan for individuals now costs $1.43 compared with $1.73 earlier. Apple also lowered the prices of its family and student plans. This apart, Apple recently lowered prices of its products globally to fight competition and boost market share.
The company slashed prices of iPhone XR in India, lowered prices (roughly 6% on average) of many of its products including iPhones, iPads, Macs, and AirPods in China and cut HomePod prices by almost 15% globally. The stock has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Procter & Gamble Company PG announced a 4% hike in the quarterly cash dividend rate to 74.59 cents per share ($2.98 annually) from 42 cents in a bid to impress investors. The new dividend is payable on May 15, 2019, to shareholders of record as of Apr 19, 2019. This dividend increase is also applicable to the company’s Series A and Series B ESOP Convertible Class A Preferred Stock.
This consumer goods giant has consistently increased the dividend and has been paying out dividends for 128 years ever since its incorporation in 1890. In fact, the latest increase marks Zacks Rank #3 P&G’s 63rd consecutive year of dividend hike that reflects its commitment to add value to shareholders and confidence in business growth. (Read: Procter & Gamble Boosts Shareholder Value, Hikes Dividend)
Walmart Inc. WMT plans to undertake remodeling efforts in 54, 19, 15 and 34 stores in Texas, Indiana, Pennsylvania and Florida, respectively. In Florida, the company will construct a new Neighborhood Market. Accordingly, it will be making investments to ramp up these stores with advanced features, directed toward simplifying the consumer's shopping experience.
The store remodeling will include building capabilities such as grocery pickups, wherein customers can easily pick their online orders from stores. To make pickup services convenient, Zacks Rank #3 Walmart will be installing more pick up towers.
Moreover, customers can avail Walmart’s recently introduced Voice Order technology in partnership with Alphabet's GOOG Google. This technology enables consumers to directly add items to the shopping cart by simply talking to the Google Assistant. (Read: Walmart's Store Remodel Plans to Drive Omnichannel Growth)
UnitedHealth Group Incorporated’s UNH arm UnitedHealthcare is expanding its partnership with care providers and the government to offer top-quality medical care through its UnitedHealthcare Care Bundles Program. UnitedHealth has a Zacks Rank #3.
By virtue of this alliance, care providers across more than 30 states will be able to take part in the bundled payment models under certain UnitedHealthcare Medicare Advantage plans, such as hip and knee replacements, coronary bypasses and spinal fusions.
This program is part of the company’s commitment to provide its members with enriched, value-based care. UnitedHealth projects that by the end of 2020, it will have $75 billion in care provider reimbursements attached to value-based arrangements on a yearly basis.
In the current scenario, more than 3 million people under the UnitedHealthcare Medicare Advantage plans have access to avail of treatment per value-based models. (Read: UnitedHealth's Unit to Upgrade Care Bundles Program)
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 past six months. Over the last five trading days, the Dow has declined 0.5%.
Next Week’s Outlook
Trade negotiations are progressing well and the latest Fed minutes have served to reemphasize the central bank’s dovish stance. Under such circumstances, the focus will shift squarely to first-quarter earnings.
Additionally, several important economic metrics are scheduled for release next week. This includes data on industrial production and retail sales. If most of them are encouraging, markets would find a stable catalyst for gains in the days ahead.
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