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The Dow navigated troubled waters this week, encountering its worst decline on Monday since June last year. The blue chip index made crucial gains on Thursday, buoyed by job market numbers and encouraging earnings from Disney. However, it is still down 0.5% this week.

Last Week’s and Month’s Performance

On Friday, market sentiment turned bearish following dismal results and forecasts, and another drop in Euro-zone inflation. This was also the benchmarks’ first monthly decline since last August.

Through January, emerging market concerns, China’s dismal economic data and finally the Fed taper dealt severe blows to the market. In January, the blue-chip index plunged 5.3%. This was the Dow’s worst start to a year since 2009.

The Dow This Week

Till now, the Dow has continued to suffer hard times, but for Thursday’s events. Weaker-than-expected domestic manufacturing data delivered a crushing blow to the blue chip index on Monday, which declined 2.1%. For the first time since Dec 28, 2012, the Dow closed below its 200-day moving average.

Tuesday, was decidedly better with the blue chip index gaining 0.5% on the back of encouraging corporate numbers. Encouraging service sector data failed to add enough strength to the Dow on Wednesday, which slipped by 0.03%.

A drop in initial claims and encouraging results from an entertainment giant helped benchmarks achieve their best single-day performance since December 18. The gains somewhat offset weekly losses and Friday’s session will be crucial to help the Dow post weekly gains, which gained 1.2% over the trading day.

Components Which Moved the Index

The Walt Disney Company (DIS - Analyst Report) enjoyed a 3.4% increase on the index after the media giant posted outstanding first-quarter fiscal 2014 results this Thursday. The company’s adjusted earnings came in at $1.04 per share, surging 32% year over year. Results were propelled by double-digit revenue growth across Studio Entertainment, Consumer Products as well as Interactive businesses.

Chevron Corp. (CVX - Analyst Report) reported weak fourth quarter results on falling production and refinery margins. It reflected in its share price on the NYSE, where it fell almost 4% in early trade last Friday. Earnings per share (excluding adjustments for foreign-currency effects) came in at $2.47 and deteriorated considerably from the year-ago adjusted profit of $3.78 per share.

Wal-Mart Stores Inc. (WMT - Analyst Report) said it expects its earnings to be at or slightly below the low end of its previous forecast of $1.60 to $1.70 per share. For fiscal 2014, Walmart expects its earnings to be at or slightly below the low end of its previous forecast of $5.11 to $5.21 per share. The restructuring of Sam's Club unit in the United States, food safety allegations, and weakness in the emerging markets, are responsible for the company’s weaker outlook.

Pfizer Inc. (PFE - Analyst Report) gained significantly following positive top-line data from a phase II study (PALOMA-1 or study 1003) on its oncology candidate palbociclib. Shares of the company were up by as much as 4% on the news during early trading on Monday. Pfizer was the sole stock to gain among the Dow 30 companies on the day.

Cisco Systems, Inc. (CSCO - Analyst Report) entered into a long-term patent cross-licensing agreement with Google Inc. in order to avert expensive patent litigations. The deal was described as a “cross-licensing agreement covering a broad range of products and technologies.”

Microsoft Corp. (MSFT - Analyst Report) named Satya Nadella as their new CEO, after a long search process that began last August. Nadella’s division raked in over $20 billion in revenues and over $8 billion in operating income last fiscal year. The firm’s Azure service has grown rapidly under his stewardship, giving the company a new growth avenue.

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

-0.05%

+20.74%

IBM

-0.90%

-7.37%

GS

-1.56%

-1.04%

MMM

+1.59%

+9.39%

BA

-0.98%

+15.27%

CVX

-1.30%

-9.78%

UTX

-3.25%

+3.23%

XOM

-2.44%

-1.69%

MCD

+1.78%

-3.45%

CAT

+1.03%

+13.83%

Next Week’s Outlook:

Crucial economic released are lined up for next week which are expected to impact the index. These include retail sales, business inventories and industrial production numbers. Meanwhile, the impact of global headwinds, such as the economic fortunes of China and the Eurozone are also having a significant impact on the Dow. These factors will jointly determine whether the Dow can return to its winning ways.

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