The Dow declined over a holiday-shortened week due to a number of developments. Markets were closed on Monday for the Labor Day holiday. The only gains for the week came on Tuesday when disappointing services data reduced rate hike chances further.

The index declined both on Wednesday and Thursday. Losses on Wednesday were attributable to a decline in consumer staples stocks. The ECB disappointed investors on Thursday by refraining from announcing additional monetary stimulus measures.

Last Week’s Performance

The index increased 0.4% last Friday as disappointing jobs numbers weighed on immediate rate hike chances. The U.S. economy created a total of 151,000 jobs in August, considerably lower than the consensus estimate of 179,000. It was also significantly lower than July’s revised job number of 275,000. The unemployment rate in August of 4.9% was higher than the consensus estimate of 4.8%,

Disappointing job reports in August decreased Fed rate hike chances in September, which in turn boosted utilities stocks. Moreover, rising crude production freeze possibilities by major oil producing nations boosted oil prices and had a positive impact on energy stocks. Dow components Chevron (CVX Quick QuoteCVX - Free Report) and Exxon Mobil (XOM Quick QuoteXOM - Free Report) increased 0.7%.

The Dow increased 0.5% over last week. Fed Chair Janet Yellen’s hawkish comments and upbeat consumer data and private sector jobs report raised rate hike chances. Rising rate hike possibilities led to significant gains for financial stocks.

The Dow This Week

Markets were closed on Monday for the Labor Day holiday. The index increased 0.3% on Tuesday after lackluster services-sector data raised hopes that the Fed may refrain from making rate hikes this month. The ISM Services Index decreased from 55.5% in July to 51.4% in August. The reading also came in significantly below the consensus estimate of 55.5%. The reading showed that service sector activity in the U.S. grew at its slowest pace since 2010.

Following this development, debt-dependent sectors like utilities and telecom gained. Moreover, increase in energy sector following Enbridge-Spectra Energy acquisition news also boosted markets. Chevron and Exxon Mobil Corporation increased 1.3% and 1.5%, respectively.

The index lost 0.1% on Wednesday. Fed’s Beige Book showed that most of the districts signaled “that national economic activity continued to expand at a modest pace” during the period of July-August. Moreover, consumer spending remained “little changed,” while tourism activity was unchanged.

Meanwhile, Sprouts Farmers Market (SFM Quick QuoteSFM - Free Report) reduced its quarterly and full year guidance, which in turn had a negative impact on consumer staples sector. Declines in consumer staples stocks pulled the Dow lower. Apple Inc.’s (AAPL Quick QuoteAAPL - Free Report) shares rose 0.6% after the tech giant unveiled iPhone 7 at an event in the Bill Graham Civic Auditorium in San Francisco.

The index decreased 0.3% on Thursday after the European Central Bank (ECB) kept its interest rates unchanged and refrained from announcing any additional stimulus measures. The central bank also did not announce any changes to its $1.9 trillion stimulus package. ECB President Mario Draghi did show concern over low inflation, but also said policymakers did not come up with any new stimulus measures.

Moreover, Apple's shares fell 2.6% after the company said that the iPhone 7’s first weekend sales numbers will not be disclosed by the tech giant. Following this news, Apple’s shares registered its largest percentage decline since June 24. However, some of the day’s losses were curbed by gains in energy stocks on the back of a sharp drop in crude inventories.

Components Moving the Index

Apple Inc. unveiled the iPhone 7 at an event in the Bill Graham Civic Auditorium in San Francisco. Gains in Apple led the tech-based index, Nasdaq to close at its all-time record high. The new iPhone will be water-resistant and features major improvements to the camera. 

Confirming the rumors, Zacks Rank #3 (Hold) rated Apple announced the Apple Watch Series 2. The new watch will be “swim-proof” and is water-resistant up to 50 meters. Additionally, Apple announced that its App Store saw 106% year-over-year growth in the months of July and August. (Read: Here's Everything We Learned From Today's Apple Event)

3M Company (MMM Quick QuoteMMM - Free Report) continues to grow inorganically with the acquisition of Semfinder.  This deal will help the company expand it healthcare portfolio, and enhance its revenues going forward. The financial details of the deal remain undisclosed.

Headquartered in Kreuzlingen, Switzerland, Semfinder is a premier developer of semantic coding of medical services. Per the deal, Semfinder will provide upgraded coding technology which will enable Zacks Rank #3 rated 3M to speed up the availability of its 360 Encompass System across countries that are adopting the enhanced electronic medical records. (Read: 3M Expands Health Portfolio with Acquisition of Semifinder)

Intel Corporation (INTC Quick QuoteINTC - Free Report) is divesting a majority stake in its security division to alternative asset fund manager TPG. Per the definitive agreement recently signed by both the parties, a new jointly-owned company will be formed in which TPG will have a 51% stake.

The deal valued at $4.2 billion includes an equity value of approximately $2.2 billion for the security division in addition to net debt of approximately $2 billion. Moreover, TPG will infuse $1.1 billion in the standalone business, which will be renamed McAfee following the close of the transaction.

Formerly known as McAfee, rated Intel had acquired the antivirus software maker back in 2010 with a view to secure its chips and improve their threat detection power. The unit was rebranded as Intel Security Group in 2014. The stock holds a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Electric (GE Quick QuoteGE - Free Report) announced plans to purchase two European 3D printing companies, Swedish-based Arcam AB and Germany’s SLM Solutions Group AG, for $1.4 billion in order to accelerate its efforts in the growing industry.

Both SLM and Arcam will report to David Joyce, the President and CEO of GE Aviation, the corporation’s largest division. With this acquisition, Zacks Rank #3 rated GE will now have spent $2.9 billion on 3D printing, or additive manufacturing, since 2010, leading to a total of 346 patents. (Read: General Electric (GE Quick QuoteGE - Free Report) Doubles Down in 3D Printing, Buys SLM & Arcam)

Microsoft Corporation (MSFT Quick QuoteMSFT - Free Report) recently announced the divestment of its MSN China web portal to XiChuang Technology, a company co-founded by Liu Zhenyu, who formerly held the position of General Manager in MSN China. However, the amount of the deal has not been disclosed. The buyout will help XiChuang benefit from MSN China’s search advertising business. 

In May 2016, Zacks Rank #3 rated Microsoft had announced plans to shut down its Chinese web portal owing to strict government regulations and stiff competition from the nation’s web portals such as Tencent and Sina. (Read: Microsoft Vends MSN China to XiChuang, Focuses on Cloud)

Merck & Co., Inc. (MRK Quick QuoteMRK - Free Report) announced that it is discontinuing the clinical development of its osteoporosis pipeline drug, odanacatib as its overall benefit-risk profile does not support filing or further development. Odanacatib or MK-0822 was being developed as an oral, once-weekly treatment of osteoporosis in post-menopausal women.

In Sep 2014, Zacks Rank #3-rated Merck presented positive results from a pivotal phase III fracture outcomes study evaluating the use of odanacatib in postmenopausal women suffering from osteoporosis. However, though the study showed that treatment though odanacatib did reduce the risk of osteoporotic fractures, a higher number of adjudicated stroke events occurred in the odanacatib arm. (Read: Merck Stops Development of Odanacatib for Osteoporosis)

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 declined 0.9%.

Next Week’s Outlook

Markets have stuttered over the week and have only been buoyed by indications that a rate hike may not be forthcoming in the near future. This is why dismal ISM services data was met with such enthusiasm. In keeping with this trend, markets declined after failing to receive news of fresh stimulus measures from the ECB.

Several crucial economic reports are scheduled for release next week. This includes data on retail sales, industrial production and inflation. These releases are likely to have a significant impact on market proceedings in the near future.

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