The Dow suffered across the holiday shortened week, buoyed only by encouraging private sector hiring. After remaining closed on Monday for a holiday, the index slipped on Tuesday, dragged down by energy shares. Financials weighed on the blue-chip index on Wednesday. Ultimately, strong ADP data helped the index register its first session of gains for the week on Thursday.

Last Week’s Performance

The Dow lost a mere 2.67 points last Friday even as other benchmarks posted record closes on the back of strong gains in consumer staples and discretionary shares. Consumer staples shares were boosted by gains in shares of Costco Wholesale Corp. (COST Quick QuoteCOST - Free Report) following the release of its strong quarterly results. Moreover, strong earnings and upbeat full-year forecast from Ulta Beauty (ULTA Quick QuoteULTA - Free Report) led the consumer discretionary sector northward.

Further, investors digested the mixed bag of economic data released on Friday. New orders for manufactured durable goods in April fell 0.7% to $231.2 billion. Also, the second estimate for the increase in first quarter GDP was revised upward to 1.2% from the initial estimate of 0.7%. Consumer spending was also revised upward from 0.3% to 0.6%.

The index gained 1.3% over last week. FOMC minutes revealed that Fed officials have agreed to trim Fed’s $4.5 trillion balance sheet. The central bank also indicated that it may raise interest rates in its next meeting in June. Also, the Trump administration released its budget proposal which seeks to cut federal spending by $3.6 trillion with a focus on balancing the budget over the next decade.

The Dow This Week

Markets were closed on Monday for the Memorial Day holiday. On Tuesday, the index declined 0.2%, dragged down primarily by energy shares. Investors expressed doubts about whether OPEC and non-OPEC players including Russia will be able to implement an effective production cut policy to stabilize the global crude market.

As a result, Exxon Mobil Corp (XOM Quick QuoteXOM - Free Report) and Chevron Corp (CVX Quick QuoteCVX - Free Report) each declined by 0.6%. Meanwhile, investors remained focused on geopolitical developments centered on North Korea’s claim of its missile launch. Personal income and personal spending each increased by 0.4% in April and also came in line with expectations. Separately, personal-consumption expenditure saw an increase of 0.2% in the month.

The index lost 0.1% on Wednesday, weighed down primarily by financials. Banks stocks dragged financials lower after J.P. Morgan Chase & Co. (JPM Quick QuoteJPM - Free Report) and Bank of America (BAC Quick QuoteBAC - Free Report) signaled a potential slump in second-quarter trading. Meanwhile, energy shares dropped following concerns that major oil producing countries will not be able to implement effective production curbs to stabilize the global crude market.

As per the Federal Reserve’s Beige Book, the U.S. economy expanded at a “modest or moderate” pace through late May and is still growing at the same pace. Meanwhile, pending home sales in April tumbled for the second month in a row.

Over last month, the Dow advanced 0.5%. Even as FOMC minutes and Trump’s budget proposals were released, the President’s decision to dismiss of FBI director James Comey sent ripples through the market. Meanwhile, U.S. auto industry reported disappointing sales in April, with sales hitting 16.88 million, below an expected annual rate of 17.2 million.

The index advanced 0.7% on Thursday, buoyed by solid private sector hiring. According to ADP data released on Thursday, private payrolls surged by 253,000 in May which came in above its consensus estimate of 185,000. The ISM Manufacturing index increased from 54.8 in April to 54.9 for May. However, construction spending declined by 1.4% while auto sales experienced a year-over-year decline to come in at 16.7 million.

Components Moving the Index

General Electric Company (GE Quick QuoteGE - Free Report) recently inked various agreements for power generation, aircraft engines, and services in Vietnam as the country attempts to forge strong business ties with the U.S. amid growing concerns about China’s meteoric rise. The agreements worth $5.8 billion is General Electric’s biggest such deals to date with any Southeast Asian country.

The company signed a memorandum of understanding (MoU) to co-develop two 750-megawatt gas-fueled turbine power plants in the country along with a joint development agreement for an 800-megawatt Phu Cuong Wind Farm in Soc Trang. These deals, worth $2 billion, will support the development of Vietnam’s energy sectors.

In addition, Zacks Rank #3 (Hold) rated General Electric signed agreements valued at over $3.58 billion for new aircraft engines and maintenance support. These include deals for 20 jet engines for Vietjet Aviation, a low-cost airline of the country. (Read: GE Inks $5.58B Deals in Vietnam to Augment Regional Ties)

The Walt Disney Company’s (DIS Quick QuoteDIS - Free Report) superb box office run continues with "Pirates of the Caribbean: Dead Men Tell No Tales," topping the Memorial Day weekend box office collections. During the four day holiday weekend, the movie garnered nearly $77 million domestically beating Dwayne Johnson starrer "Baywatch." In the first three days, the movie collected $62.2 million.  Disney has a Zacks Rank #3.

However, the opening weekend collections for the “Pirates of the Caribbean” were well below the previous three movies of the franchise. In 2011, “Pirates of the Caribbean: On Stranger Tides” collected $90 million domestically in the opening weekend, while in 2007 “Pirates of the Caribbean: At World's End” garnered a whopping $153 million over the Memorial Day weekend. In 2006, “Pirates of the Caribbean: Dead Man's Chest” collected $135 million over the opening weekend. (Read: Disney's Pirates of the Caribbean Sequel Tops Box Office)

Merck & Co., Inc. (MRK Quick QuoteMRK - Free Report) announced that it has bought exclusive worldwide license from Teijin Pharma for the development, manufacture and commercialization of an investigational preclinical anti-tau antibody.

Merck sees potential in the development and commercialization of the candidate for the treatment of Alzheimer’s disease (AD) and other neurological diseases. The company will make an undisclosed upfront payment to Teijin Pharma, which is also eligible to receive development, regulatory and sales milestone payments. Further, Teijin Pharma will receive royalties on product sales and retains an option to co-promote an approved product in Japan. (Read: Merck Buys Rights to Anti-tau Antibody for Alzheimer)

In a separate development, Merck announced that the FDA has approved Isentress HD, a new 1,200 mg once daily dose of its marketed drug Isentress (raltegravir), in combination with other anti-retroviral therapies. The drug is meant for the treatment of adults and pediatric patients with HIV-1 infection (weighing at least 40 kg). The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pfizer, Inc. (PFE Quick QuotePFE - Free Report) announced that an FDA advisory committee has recommended approval of its biosimilar version of Amgen's erythropoiesis-stimulating agent (ESA) Epogen and Procrit.

The Oncologic Drugs Advisory Committee (ODAC) recommended approval across all indications of the reference product, which includes treatment of anemia and chronic kidney disease (CKD). (Read: Pfizer's Epogen Biosimilar Gets Positive FDA Committee Vote)

In a separate development, Zacks Rank #3-rated Pfizer announced that its Trumenba vaccine received approval from the European Commission (EC) for active immunization of people aged 10 years and older for the prevention of invasive disease caused by Neisseria meningitidis serogroup B (MenB). (Read: Pfizer's Trumenba Vaccine Approved by European Commission)

Chevron recently inked a $250 million deal with Royal Dutch Shell plc (RDS.A) per which the latter will acquire most of the Chevron’s gas-related assets in the Republic of Trinidad and Tobago. This development will substantially increase Royal Dutch Shell’s natural gas-rich holdings in the twin-island Caribbean nation.

Per the deal, Shell will buy all the shares of Zacks Rank #3-rated Chevron’s local subsidiary, Chevron Trinidad and Tobago Resources SRL, including 50% stake in three offshore natural gas fields in the East coast Marine Area. Shell will also acquire part of Chevron’s stake in the Manatee cross-border gas field shared with neighboring Venezuela. Furthermore, Shell will purchase Chevron’s entire stake in Trinling Ltd LNG transportation and marketing company. (Read: Shell Inks Deal with Chevron to Expand Holdings in Trinidad)

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 0.4%.

Next Week’s Outlook

This week saw market gains being curbed by a variety of factors with energy shares and financials experiencing losses. Meanwhile, policy related support continues to remain elusive for markets. If anything, investors are heaving a sigh of relief if the current administration’s policy announcements are coming in line with expectations. In such an event, economic events are taking center stage. This is why crucial releases lined up for next week, including data on factory orders, are likely to guide markets in the week ahead.  

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