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Dow 30 Stock Roundup: Apple's Earnings Disappoint, Boeing, Coca Cola, Microsoft Impress

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The Dow endured another volatile week, dominated by key earnings results. The index gained on Monday after a plethora of acquisitions helped stocks settle in the green. The index declined on Tuesday after a spate of disappointing quarterly reports dragged stocks lower. The index increased on Wednesday, buoyed by a jump in quarterly profits of a key component. The index declined on Thursday as declines in yield sensitive sectors outweighed gains in healthcare stocks.

Last Week’s Performance

The Dow declined by 0.1% last Friday following mixed earnings results. The Dow closed in negative territory after General Electric Company’s (GE - Free Report) weaker than expected revenue growth dampened investor sentiment. The Nasdaq, on the other hand, settled in the green primarily due to Microsoft’s (MSFT - Free Report) stellar performance. Shares of the software giant hit record highs buoyed by first quarter sales and earnings that topped analysts’ expectations.

The index gained 0.04%, over last week. A slew of better-than-expected earnings results from heavyweights Morgan Stanley (MS - Free Report) , Goldman Sachs Group Inc. (GS - Free Report) , Johnson & Johnson (JNJ - Free Report) , and UnitedHealth Group Inc. (UNH - Free Report) helped the broader markets settle in the green. Separately, the Fed’s Beige Book stated that the overall U.S. economy is expanding at a moderate pace, while a pick-up in inflation raised December rate hike chances.

The Dow This Week

The index gained 0.4% on Monday after a plethora of acquisitions helped stocks settle in the green. A heavy round of merger announcements included AT&T Inc.’s (T - Free Report) plan to buy HBO parent company, Time Warner Inc. TWX. AT&T agreed to acquire Warner in an $85.4 billion cash-and-stock deal. Under the terms of the merger, Time Warner shareholders will receive $107.50 per share, comprising $53.75 in cash and $53.75 in AT&T stock.

Strong quarterly earnings results from T-Mobile US Inc. TMUS also lifted the broader markets, but, gains were subdued due to drop in oil prices and a stronger dollar. T-Mobile US Inc. reported third quarter earnings per share of 27 cents, above the Zacks Consensus Estimate of 22 cents.

The index lost 0.3% on Tuesday after a spate of disappointing quarterly reports dragged stocks lower. Mixed results from Caterpillar Inc. (CAT - Free Report) , 3M Company MMM and General Motors Co.’s GM led their shares 1.8%, 3% and 4.2% lower.

Consumer confidence, meantime, tumbled ahead of the presidential election, which in turn dampened investor sentiment. In fact, consumer confidence dropped to 98.6 this month, a three-month low, according to the Conference Board.

The index increased 0.2% on Wednesday, buoyed by a jump in The Boeing Company’s (BA - Free Report) quarterly profits despite slower sales. Decline in Apple Inc.’s (AAPL - Free Report) shares weighed on the S&P 500 and the Nasdaq. For the third consecutive quarter, the iPhone maker registered declines in both income and revenues on a year over year basis.

While Apple notched its biggest daily percentage loss since Sept. 9, Boeing’s shares hit their highest level since Dec. 31. Sales of newly built homes increased 3.1% in September. Sales in September were 29.8% higher compared to a year ago.

The index lost 0.2% on Thursday as declines in yield sensitive sectors outweighed gains in healthcare stocks. Selloff in defensive sectors such as real estate and utilities took place due to jump in bond yields. Global bond market rout has pushed the U.S. 10-year yield to its highest close since June. Concerns about the future path of monetary policy of major central banks sparked a bond selloff. 

Components Moving the Index

Apple posted better-than-expected results for both earnings and revenues in the fourth quarter of fiscal 2016. Earnings of $1.67 per share surpassed the Zacks Consensus Estimate of $1.66, but dropped more than 15% from the prior-year quarter figure. Revenues of $46.852 billion were also above the Zacks Consensus Estimate of $46.626 billion but declined 9.9% from the year-ago quarter. The stock has a Zacks Rank #3 (Hold). (Read: Apple (AAPL - Free Report) Q4 Earnings & Revenues Beat But Decline Y/Y)

3M reported relatively healthy third-quarter 2016 results with GAAP earnings of $1,329 million or $2.15 per share compared with $1,296 million or $2.05 per share in the year-earlier quarter. The reported earnings exceeded the Zacks Consensus Estimate by a penny. Net sales during the quarter were $7,709 million, marginally down from $7,712 million in the year-ago quarter and in line with the Zacks Consensus Estimate. The stock has a Zacks Rank #4 (Sell). (Read: 3M (MMM) Marginally Beats Q3 Earnings, Trims 2016 Guidance)

Boeing reported adjusted earnings of $3.51 per share for third-quarter 2016, beating the Zacks Consensus Estimate of $2.62 by a wide 34%. Reported earnings were also up 39.3% from the year-ago figure of $2.52.The company's revenues amounted to $23.90 billion in the reported quarter, beating the Zacks Consensus Estimate of $23.46 billion by 1.8%. The reported figure, however, declined 7.5% year over year. The stock has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Caterpillar third-quarter 2016 adjusted earnings of 85 cents per share beat the Zacks Consensus Estimate of 75 cents but plunged 19% from the prior-year quarter. Revenues plummeted 16% year over year to $9.16 billion in the quarter, falling short of the Zacks Consensus Estimate of $9.80 billion. The stock has a Zacks Rank #3. (Read: Caterpillar (CAT - Free Report) Q3 Earnings Top, Stock Down on View Cut)

The Coca-Cola Company (KO - Free Report) reported impressive third-quarter 2016 results. Third-quarter 2016 adjusted earnings of the company were 49 cents per share, which beat the Zacks Consensus Estimate of 48 cents by 2.1%. Net revenue declined 7% year over year to $10.63 billion but surpassed the Zacks Consensus Estimate of $10.54 billion by 0.8%. The stock has a Zacks Rank #3. (Read: Coca-Cola (KO - Free Report) Beats on Earnings & Revenues; View Intact)

DuPont DD recorded adjusted earnings of 34 cents per share in the reported quarter, up from 13 cents per share a year ago. The results trounced the Zacks Consensus Estimate of 21 cents. Zacks Rank#2 (Buy) rated DuPont raked in net sales of $4,917 million for the reported quarter, up roughly 1% year over year. That beat the Zacks Consensus Estimate of $4,879 million. (Read: DuPont's (DD) Q3 Earnings Top Estimates, Ups FY16 EPS View)

General Electric reported third-quarter 2016 earnings of $1,994 million or 22 cents a share compared with $2,506 million or 25 cents a share in the year-ago quarter. The operating earnings (including industrial and other verticals) for the reported quarter beat the Zacks Consensus Estimate by a penny. Total consolidated revenue of $29,266 million missed the Zacks Consensus Estimate of $29,836 million. The stock has a Zacks Rank #4. (Read: GE Beats Q3 Earnings, Misses Revenues; 2016 View Narrowed)

Merck & Co., Inc. MRK reported third-quarter 2016 earnings of $1.07 per share, surpassing the Zacks Consensus Estimate of 98 cents and increasing approximately 12% from the year-ago period. Revenues for the quarter were up 5% to $10.54 billion, beating the Zacks Consensus Estimate of $10.24 billion. The stock has a Zacks Rank #2. (Read: Merck (MRK) Beats on Q3 Earnings & Revenues, Lifts View)

Microsoft reported first-quarter fiscal 2017 earnings adjusted for Windows 10 deferrals and currency effect of 76 cents per share, which comfortably surpassed the Zacks Consensus Estimate of 68 cents. Revenues (adjusted for Windows 10 deferrals) of $22.33 billion dipped 1.4% sequentially.  However, revenues increased 3.1% from the year-ago quarter and exceeded the Zacks Consensus Estimate of $21.54 billion. The stock has a Zacks Rank #3. (Read: Microsoft (MSFT - Free Report) Beats Q1 Earnings on Strong Cloud Growth)

United Technologies Corporation UTX reported third-quarter 2016 adjusted income (from continuing operations) of $1.76 per share, comfortably ahead of the Zacks Consensus Estimate of $1.68. Net sales for third-quarter 2016 improved to $14,354 million from $13,788 million in the year-earlier quarter, but lagged the Zacks Consensus Estimate of $14,400 million. The stock has a Zacks Rank #3. (Read: United Technologies (UTX) Beats Q3 Earnings, Raises View)

Visa Inc. (V - Free Report) posted fourth-quarter fiscal 2016 (ended Sep 30) adjusted net income of $1.9 billion or 78 cents per share. The bottom line not only beat the Zacks Consensus Estimate of 73 cents per share but also increased 27% year over year. Net operating revenue of $4.3 billion surpassed the Zacks Consensus Estimate of $4.2 billion and increased 19% year over year. The stock has a Zacks Rank #3. (Read: Visa (V - Free Report) Tops Q4 Earnings & Revenues, Provides FY17 View)

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 0.6%.

Ticker

Last 5 Day’s Performance

6-Month Performance

MMM

-2.6%

-0.7%

GS

+3.1%

+8.2%

IBM

+1.3%

+4.3%

HD

-3.3%

-7.9%

BA

+5.5%

+6.3%

UNH

-2.2%

+7.5%

MCD

+1.4%

-12.4%

TRV

-1.4%

-1%

JNJ

+0.2%

+2.9%

AAPL

-2.9%

+20.7%

Next Week’s Outlook

Earnings results have dominated proceedings this week. Positive earnings results guided stocks higher while discouraging results resulted in losses. Meanwhile, key merger news also provided impetus to stocks. However, markets are being weighed down by a decline in yields. In such a situation, economic data acquires renewed significance.

Recent housing data has been encouraging. Crucial economic reports scheduled for next week, such as the all-important GDP report are likely to provide direction to stocks in the days ahead.

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