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The Dow made significant gains this week, riding on strong economic data. Consumer spending and manufacturing data came in positive. Meanwhile, the ADP report revealed that private sector hiring had improved in March. The Fed also reiterated its policy of continued support to the economy. Thursday was the only day when investors remained cautious, ahead of crucial nonfarm payroll data. During the first four trading days, the Dow moved up 0.70%.

Last Week’s Performance

The Dow gained 0.4%, boosted by encouraging consumer spending data. Personal consumption expenditure increased 0.3% in February. This was in line with consensus expectation and also with the rate of growth in January. Disposable personal income too increased 0.3% in February, up from 0.2% increase in January. The launch of Microsoft Office on iPads propelled the Dow to end in the green.

For the week, the Dow ended 0.1% higher. Conversely, the S&P 500 and the Nasdaq Composite Index ended the week in the red due to a drop in bio-tech stocks. Declines in financial and material sectors also dragged the markets lower. Throughout the week, escalating tension over Crimea kept the mood jittery.

The Dow This Week

The blue chip index gained 0.8% on Monday buoyed by Fed Chair Janet Yellen’s comment that the central bank will maintain its “extraordinary commitment” to support the economy for some more time. Investor sentiment received a further boost from the possibility that the ECB will begin a monetary stimulus program to counter effects of deflation in the Eurozone. The Dow lost 0.7% during the first quarter of 2014, but gained 0.7% over last month.

Markets finished in the green on Tuesday following encouraging manufacturing data. March PMI increased 0.5 percentage points to 53.7%. Better-than-expected new-vehicle sales for March also boosted investor sentiment. This was the third-straight day of gains for the markets. Total vehicle sales increased to an annualized rate of 16.4 million in March. Consequently, the Dow gained 0.5%.

The Dow gained once again on Wednesday, by 0.2%, boosted by encouraging private-sector hiring numbers. The ADP (ADP - Analyst Report) report showed private sector hiring improved in March. Benchmarks’ finish in the green was also aided by an increase in factory orders in February. New orders for manufactured goods increased 1.6% in February. This was the fourth-straight day of gains for the benchmarks.

The blue chip index ended nearly flat on Thursday, as investors adopted a wait-and-see approach ahead of Friday’s nonfarm payroll data. Economic data came in mixed, hardly impacting the cautious stance of investors. Reports revealed that the service sector situation had improved while weekly jobless claims and the U.S. trade deficit had increased. Benchmarks snapped a four-day winning streak and ended lower.

Components which Moved the Index

Microsoft Corporation (MSFT - Analyst Report) gained 2.4% last Friday after announcing Thursday that it was bringing Microsoft Office to the iPad. All individual apps such as Word, Excel and Powerpoint can be installed free of cost. However, this only allows you to read documents. An Office 365 subscription will be required to edit and create documents. The company also spoke of shifting its focus from Windows. The stock was the biggest gainer among the Dow components for the day.

The Boeing Co. (BA - Analyst Report) has won a sizable firm order from Canada's largest airline, Air Canada, for a total of 61 Boeing single-aisle jets, worth $6.5 billion at list prices. The contract includes the delivery of 33 737 Max 8 and 28 737 MAX 9 jets, with Air Canada having options and rights on an additional 48 aircraft.

A couple of big orders from Japanese airline operators further boosted the order book of the company. The combined value of the orders at list prices comes to a whopping $14.1 billion. The larger order among the two, worth $13.1 billion came from Boeing’s old Japanese customer All Nippon Airways (“ANA”).

Another order worth $1.3 billion came from Japan Transocean Air for 12 Next-Generation 737-800 airplanes. In its first quarter of 2014, Boeing delivered 161 airplanes, approximately 17.5% higher than the year-ago number.

JPMorgan Chase & Co. (JPM - Analyst Report) continues to face legal hassles pertaining to ‘London Whale’ trading loss of $6.2 billion. U.S. District Judge George Daniels upheld the case filed by shareholders, which accused the company of covering up the risks related to derivative transactions.

Daniels stated that shareholders can pursue the case against JPMorgan Chief Executive (CEO) Jamie Dimon and former Chief Financial Officer (CFO) Douglas Braunstein for misrepresenting the facts about the company’s risk management capabilities.

The Goldman Sachs Group, Inc. (GS - Analyst Report) is in talks with IMC Financial Markets to vend its floor-trading business that operates in the New York Stock Exchange (NYSE). However, the company will continue to serve as a brokerage firm providing liquidity electronically for the NYSE-listed stocks.

Meanwhile, Goldman Sachs and some of the world’s top cable producing firms have been slammed with a total fine of €301.6 million by the European Union (EU) regulators. The companies were fined on the basis of investigations which revealed that these deliberately operated an illegal cable cartel for nearly 10 years since 1999.

Chevron Corp’s (CVX - Analyst Report) Myanmar subsidiary has been awarded exploration rights in Block A5 in the Rakhine basin, off the coast of Myanmar. The affiliate, Unocal Myanmar Offshore Co. Ltd, will have a 99% stake in the block and act as the operator. The remaining interest will be held by a Myanmar-based firm, Royal Marine Engineering. The block is situated about 125 miles northwest of Yangon and spread across 2.6 million acres.

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 1.71%.

Ticker

Last 5 Day’s Performance

6 month performance

V

+0.17%

+12.88%

IBM

+0.36%

+4.67%

GS

+1.57%

+6.09%

MMM

+1.52%

+14.02%

BA

+3.49%

+9.88%

CVX

+0.83%

+0.77%

UTX

+4.21%

+14.87%

XOM

+1.32%

+13.45%

MCD

+1.19%

+3.13%

CAT

+3.37%

+21.79%

Next Week’s Outlook:

Nonfarm payroll data holds the key to a positive weekly finish and the unemployment rate is expected to decline. Next week is largely devoid of important economic reports. Weekly jobless claims and the producer price index are the only exceptions.

The focus will now shift to the earnings season which will be officially kicked off by Alcoa next week. Profits are expected to fall across sectors, a result of the long and bitter winter season. The effect of weather on earnings will only be learnt next month. However, earnings may dictate market direction going forward.

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