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After experiencing much turbulence last week, the Dow has witnessed better days of late, gaining marginally over the first four trading days. Even so, it has witnessed ups and downs this week as well, but the tide seems to have turned for now.

Last Week’s Performance

Last Friday was a particularly unfortunate day for the Dow. Following a 176-point fall on Thursday, the blue chip index fell by 318 points. This was the worst drop for the Dow since June of last year.

This was primarily due to dismal Chinese manufacturing numbers and Fed tapering fears. The Dow was down 3.5% over the week, registering its worst weekly loss since 2011. At that point, the Dow was down 5.1% over the month.

Economic Factors

The index lost 0.3% on Monday, following dismal home sales data and taper concerns. But the tide turned on Tuesday after concerns over emerging markets abated and consumer confidence improved. The Dow snapped its five-day rout, gaining 0.6% and was 10 points short of a 100-point gain.

A further tapering of the Fed’s stimulus package changed the balance again the next day. The Dow slumped about 190 points, or 1.2%, to close at 15,738.79. This was the blue chip index’s fifth triple-digit loss this month.

Strong fourth quarter initial GDP numbers helped benchmarks return to their winning ways on Thursday. The Dow jumped almost 110 points or 0.7% to close at 15,848.61.

GDP increased at a 3.2% annual rate in the fourth quarter. More significantly, personal consumption expenditures jumped 3.3% in Q4, sharply higher compared with third quarter’s 2% growth.

Components Which Moved the Index

Visa Inc. (V - Analyst Report) was the key performer for the Dow this week, increasing 1.73% to close at $220.88 on Thursday. Gains for the largest component for the price weighted index came on the back of excellent results.

Fiscal first-quarter 2014 operating earnings of $2.20 per Class A common share comfortably surpassed the Zacks Consensus Estimate of $2.16 per share. Net profit rose around 9% and operating revenue increased 11% over the quarter.

Nike, Inc. (NKE - Analyst Report) was the other major gainer for the day, increasing 3.02% to close at $73.94. The stock has increased in excess of 37% over the year and its growth has been somewhat halted only over the last three months.

Exxon Mobil Corp. (XOM - Analyst Report) posted fourth-quarter 2013 earnings of $1.91 per share, beating the Zacks Consensus Estimate by a penny. However, earnings per share fell 13.2% from $2.20 in the year-ago quarter. This was primarily due to a 1.8% decline in oil and gas production.

3M Company (MMM - Analyst Report) reported fourth quarter 2013 net income of $1,103 million or $1.62 per share compared with $991 million or $1.41 a share in the year-earlier quarter. The increase in earnings was driven by 3.4% organic local currency sales growth and acquisition benefits of 0.7%.

Tuesday was another significant day for earnings releases. Pfizer Inc. (PFE - Analyst Report) posted fourth quarter 2013 earnings of 56 cents per share, three cents above the Zacks Consensus Estimate and 22% above the year-ago earnings.

DuPont (DD - Analyst Report) wrapped up 2013 on a high note, having beaten earnings expectations every quarter during the year, thanks to its fast-growing agriculture business. Adjusted earnings of 59 cents per share in the reported quarter beat the Zacks Consensus Estimate by 4 cents.

Shares of Caterpillar Inc. (CAT - Analyst Report) went up 6.8% in pre-market trading as the company reported a 5% increase in its fourth-quarter 2013 earnings to $1.54 per share. This is the only quarter in the fiscal 2013 to report a y-o-y growth.

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.

Ticker

Last 5 Day’s Performance

6 month performance

V

-2.05%

+24.78%

IBM

-2.55%

-9.06%

GS

-2.37%

+1.10%

MMM

-3.75%

+9.04%

BA

-9.26%

+20.39%

CVX

-0.88%

-7.50%

UTX

+1.55%

+8.63%

XOM

-1.92%

+0.26%

MCD

-1.25%

-4.36%

CAT

+7.08%

+12.41%

Next Week’s Outlook:

Several major economic released are lined up for next week which are expected to impact the index. These include the ISM manufacturing and services index, construction spending and factory orders. The unemployment rate is the other key release next week. These releases will determine whether the Dow will maintain its newly regained momentum.

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PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%