The Dow traded inside a tight band during a week marked by key earnings releases and legislative developments. The index moved lower on Monday after two of its components released disappointing quarterly results only to rebound on Tuesday following the release of upbeat earnings numbers.

The Dow closed nearly flat on Wednesday after the Fed left rates unchanged. The index also ended almost unchanged on Thursday amidst a drop in oil prices and key legislative developments.

Last Week’s Performance

The Dow moved lower last Friday, declining by 0.2%, after the U.S. economy recorded its slowest first quarter growth in three years. Gross domestic product (GDP) increased at an annual rate of 0.7% in the first quarter of 2017. Consumer spending increased 0.3%, marking the smallest increase since the last quarter of 2009.

Investors also remained cautious about the Trump Administration's outline for tax-reform plan. Meanwhile, strong earnings performance by Amazon.com (AMZN Quick QuoteAMZN - Free Report) and Alphabet Inc. (GOOGL Quick QuoteGOOGL - Free Report) lifted investor sentiment, which helped trim losses for the broader market.

The index gained 1.9% last week. Some of the leading companies continued to post strong performances in the earnings season. Meanwhile, sales of newly-constructed homes in March increased 5.8% above its revised February rate.

Additionally, the Dow advanced 1.3% over the month of March.  During the month, benchmarks suffered a setback due to weak auto sales data, a dip in manufacturing growth and rise in geopolitical tensions. However, strong quarterly earnings reports from companies helped benchmarks finish in the green for the month.

The Dow This Week

The index lost 0.1% on Monday due to a decline in shares of The Boeing Co. (BA Quick QuoteBA - Free Report) and The Home Depot, Inc. (HD Quick QuoteHD - Free Report) which lost 1.3% and 1.2%, respectively. Bank stocks fell following comments by President Trump about breaking up of the U.S.’s largest banks. The Dow traded lower after Trump’s comments but trimmed losses and ultimately closed about 25 points lower.

The index advanced 0.2% on Tuesday following the release of strong earnings reports. Meanwhile, investors remained cautious about the outcome of Fed’s two-day policy meeting which began on Tuesday. Additionally, energy shares declined due to fall in oil prices even as investors digested weak auto sales data for April.

The index gained only 8.01 points on Wednesday after the central bank kept monetary policy unchanged as expected. However, the central bank did not provide any insights into further rate hikes. Moreover, the central bank did not disclose any details regarding its plans to reduce its $4.5 trillion balance sheet. Bank stocks gained as Fed funds futures revealed there was a 75% possibility of an interest-rate hike in June.

The index declined 6.43 points amid drop in oil prices and the first steps taken by House Republicans to repeal Obamacare. Oil prices took a beating on anticipation of a rise in Libyan crude output, eventually dragging energy shares down.

Meanwhile, Republicans garnered enough support to push through the new healthcare bill in the House of Representatives that helped insurers and hospital stocks move north. At the same time, the House of Financial Services made significant progress on overhauling the Dodd-Frank law.

Components Moving the Index

Apple Inc. (AAPL Quick QuoteAAPL - Free Report) reported second-quarter fiscal 2017 earnings of $2.10 per share and revenues of $52.9 billion, easily beating the Zacks Consensus Estimate of $2.02 and $52.6 billion, respectively. On a year-over-year basis, earnings grew 10.5% and revenues increased 4.6%.

Total iPhone unit sales came in at about 50.7 million, down 1% year over year. However, revenues from iPhone grew 1% from the year-ago quarter to $33.3 billion (62.9% of total revenue).

Services— including revenues from Internet Services, App store, Apple Music, AppleCare, Apple Pay, and licensing and other services — surged 18% year over year (with an extra week in the quarter) to nearly $7 billion. App Store sales grew 40% year over year.

For the third quarter of fiscal 2017, Zacks Rank #3 (hold) rated Apple forecasts revenues in a range of $43.5–$45.5 billion. The Zacks Consensus Estimate is pegged at $45.1 billon. Gross margin is expected within 37.5–38.5%, while operating expenses are projected within $6.6–$6.7 billion. (Read: Apple Q2 Earnings and Revenues Beat, Increase Y/Y)

Merck & Co., Inc. (MRK Quick QuoteMRK - Free Report) reported first-quarter 2017 earnings of 88 cents per share, which beat the Zacks Consensus Estimate of 83 cents. However, earnings declined 1.1% from the year-ago period. Revenues for the quarter increased 1% year over year to $9.4 billion, beating the Zacks Consensus Estimate of $9.3 billion.

Zacks Rank #3 rated Merck updated its 2017 earnings and revenues guidance. The company now expects adjusted earnings in the range of $3.76–$3.88, an increase from the earlier figure of $3.72–$3.87 per share. The Zacks Consensus Estimate was $3.83 per share. Merck now expects revenues in the range of $39.1–$40.3 billion, compared to the earlier forecast of $38.6 billion–$40.1 billion. The Zacks Consensus Estimate of $39.7 billion was well within the updated guidance. (Read: Merck Beats on Q1 Earnings & Sales, Ups Annual View)

Pfizer, Inc. (PFE Quick QuotePFE - Free Report) reported first-quarter 2017 adjusted earnings per share of 69 cents, which beat the Zacks Consensus Estimate of 67 cents by 3%.Earnings also rose 3% year over year as lower costs offset a soft top-line performance. The pharma heavyweight posted revenues of $12.78 billion, which fell short of the Zacks Consensus Estimate of $13.04 billion. Again, revenues declined 2% from the year-ago period.

Pfizer’s re-affirmed its guidance for 2017. Revenues are expected in the range of $52 billion to $54 billion. Adjusted earnings per share are expected in the range of $2.50–$2.60. The Zacks Consensus Estimate stands at $53.11 billion and $2.55 per share for sales and earnings, respectively. The stock has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intel Corp (INTC Quick QuoteINTC - Free Report) reported first-quarter 2017 non-GAAP earnings of 66 cents per share, which surged 22.2% from the year-ago quarter but declined 16.5% sequentially. Earnings per share (EPS) beat the Zacks Consensus Estimate by a penny. Strong year-over-year earnings growth was driven by 7.2% increase in revenues, which totaled almost $14.80 billion but missed the Zacks Consensus Estimate of $14.81 billion. Revenues decreased 9.6% sequentially. The stock has a Zacks Rank #3.

Intel guided second-quarter 2017 revenues of around $14.4 billion (+/-$500 million), almost flat sequentially and up 6% year over year. The projected figure is better than the Zacks Consensus Estimate of $14.30 billion. Operating income is projected to be approximately $3.9 billion, while EPS is anticipated to be 68 cents (+/- 5 cents), up 15% on a year-over-year basis. The Zacks Consensus Estimate is currently pegged at 64 cents. (Read: Intel Beats on Q1 Earnings, Raises FY17 Guidance)

Chevron Corp. (CVX Quick QuoteCVX - Free Report) reported first quarter reported earnings per share of $1.41, sharply higher than the Zacks Consensus Estimate of 85 cents and turning around from the year-ago loss of 39 cents. Quarterly revenue of $33,421 million surpassed the Zacks Consensus Estimate of $32,008.7 million, increasing 42% year over year.

Zacks Rank #3 rated Chevron's total production of crude oil and natural gas remained essentially unchanged from the year-earlier level at 2,676 thousand oil-equivalent barrels per day (MBOE/d). The U.S. output decreased 4% year over year to 672 MBOE/d, while the company's international operations (accounting for 75% of the total) was up 2% to 2,004 MBOE/d. Chevron's downstream segment achieved earnings of $926 million, 26% more than the profit of $735 million last year. (Read: Chevron Shares Leap After Q1 Earnings, Sales Beat)

Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) reported first quarter earnings of 95 cents per share, which beat the Zacks Consensus Estimate of 85 cents. The bottom line also improved from the year-ago quarter level of 43 cents per share. Total revenue in the quarter increased to $63,287 million from $48,707 million in the year-ago quarter. However, the top line missed the Zacks Consensus Estimate of $64,354 million due to lower oil equivalent production.   

Quarterly earnings from the upstream segment were $2.3 billion, which compared favorably with a loss of $76 million in the prior-year quarter. The downstream segment recorded profits of $1.1 billion. The reported figure is $210 million higher than the January-March quarter of 2016. The chemical unit contributed approximately $1.2 billion. This is $184 million less than the first quarter of 2016. (Read: Exxon Mobil (XOM Quick QuoteXOM - Free Report) Beats on Q1 Earnings, Misses Revenues)

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 lost 0.1%.

Next Week’s Outlook

Overall, the Dow remained largely flat over a week which witnessed key earnings releases. Oil prices also played their part in dragging the index lower on some occasions. Meanwhile, legislative developments have intensified, a factor which is likely to play a key role in determining the direction of stocks going forward. At the same time, a data dependent Fed as well as market watchers will look toward key economic releases scheduled for release next week in order to predict the next move for stocks.

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>