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Dow 30 Stock Roundup: AmEx, UNH Beat; Goldman, JNJ, Verizon Disappoint

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The index experienced a volatile week, guided by geopolitical events, earnings and oil prices. Easing geopolitical concerns over the weekend boosted the index on Monday. However, the index declined on Tuesday following disappointing earnings releases from two of its major components.

A fall in energy prices led to further losses on Wednesday. Ultimately, bullish earnings and encouraging comments from the government helped the index to end with gains on Thursday.

Last Week’s Performance

The Dow declined on Thursday, losing 0.7% following the deployment of Mother of ll Bombs’ (MOAB) on ISIS tunnels in Afghanistan. Investors, meanwhile, remained concerned on tensed relationship between U.S. and Russia following U.S. air strike in Syria and escalating tension between U.S. and North Korea. Investors also remained focused on corporate earnings results.

For the week, the index declined by 1%. During the week, the benchmarks suffered a setback after rise in geopolitical tensions. Trump’s comment on dollar valuation also had an adverse impact on the investor sentiments which eventually led the benchmarks to finish in the red. The weekly first-time jobless claims declined in the last week, falling to 234,000. Meanwhile, Trump’s remarks on revamping the Dodd-Frank law helped stocks pare losses.

The Dow This Week

The index gained 0.9% on Monday as geopolitical concerns eased out over the weekend, major indexes moved higher on Monday. North Korea failed to launch a ballistic missile, which reduced tensions among investors. U.S. Vice President Mike Pence warned North Korea not to escalate tensions. Additionally, Treasury Secretary Steven Mnuchin’s encouraging comments on tax reforms helped stocks gain, while financials were boosted primarily due to strong first quarter earnings results.

The index declined 0.6% on Tuesday following the release of disappointing first quarter corporate earnings results from The Goldman Sachs Group, Inc. (GS - Free Report) and Johnson & Johnson (JNJ - Free Report) .  Both Johnson & Johnson and Goldman Sachs’ quarterly earnings fell short of analysts' expectations. Meanwhile, investors also remained concerned about the persistent tense relationship between U.S. and North Korea.

The index lost 0.6% again on Wednesday, dragged down primarily by energy shares after oil prices declined to a two-week low on Wednesday. WTI crude prices fell by $1.97, or 3.9%, to $50.44 a barrel after the release of the Federal Reserve’s Beige Book. Meanwhile, IBM Corp (IBM - Free Report) came out with weaker than expected first quarter results, which ultimately dragged down the Dow, contributing to a 57 point loss.

The index gained 0.9% on Thursday, following the release of strong earnings reports and encouraging comments on tax related changes. Treasury Secretary Steven Mnuchin’s encouraging comments on President Donald Trump’s proposed tax reforms lifted the broader markets. Meanwhile, Trump’s called for a government probe into foreign steel imports, which helped boosted the sector’s stocks.

Components Moving the Index

American Express Company’s (AXP - Free Report) adjusted earnings per share (EPS) of $1.34 beat the Zacks Consensus Estimate of $1.28 but declined 8% year over year. Revenues of $7.9 billion came in ahead of the Zacks Consensus Estimate of $7.7 billion. However, revenues were down 2% year over year reflecting lower discount revenue and net interest income following the Costco portfolio sale in the second quarter of last year. The stock has a Zacks Rank #3 (Hold). (Read: American Express (AXP - Free Report) Q1 Earnings Beat, 2017 View Intact)

Goldman Sachs reported earnings per share of $5.15, missing the Zacks Consensus Estimate of $5.38. Further, the bottom line witnessed significant deterioration on a year-over-year basis. Zacks Rank #3 rated Goldman’s net revenue climbed 27% year over year to $8.0 billion in the quarter under review. However, revenues lagged the Zacks Consensus Estimate of $8.4 billion. (Read: Goldman (GS - Free Report) Q1 Earnings Disappoint on Rise in Expenses)

IBM reported first-quarter 2016 non-GAAP earnings of $2.38 per share, which increased 1.3% from the year-ago quarter and beat the Zacks Consensus Estimate by 4 cents (1.7%). Revenues of $18.16 billion missed the Zacks Consensus Estimate of $18.49 billion and decreased 2.8% year over year and 16.6% sequentially. Zacks Rank #4 (Sell) rated IBM reiterated forecasts for full-year 2017. Non-GAAP earnings are expected to be at least $13.80. (Read: IBM Corp (IBM - Free Report) Q1 Earnings Top Estimates, Revenues Miss)

Johnson & Johnson first-quarter 2017 earnings came in at $1.83 per share, beating the Zacks Consensus Estimate of $1.77 and increasing 5.8% from the year-ago period. Sales came in at $17.77 billion, missing the Zacks Consensus Estimate of $18.0 billion by 1.3%.

J&J raised its sales and earnings guidance for 2017 to include the impact of the Actelion deal. J&J expects adjusted earnings per share in the range of $7.00 - $7.15 for 2017 compared with $6.93 to $7.08 expected previously. The revenue guidance is in the range of $75.4 billion to $76.1 billion compared with $74.1 billion to $74.8 billion expected previously.

The Zacks Consensus Estimate for sales and earnings are pegged at $75.02 billion and $7.03 per share, respectively for 2017. The stock has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Verizon Communications Inc.’s (VZ - Free Report) first quarter adjusted earnings per share came in at 95 cents, below the Zacks Consensus Estimate of 98 cents. Quarterly total revenue decreased 7.3% year over year to $29,814 million, missing the Zacks Consensus Estimate of $30,504 million. Management has estimated 2017 revenues and earnings per share to be mostly in line with 2016. Consolidated capital spending for 2017 will be in the range of $16.8 billion to $17.5 billion. The stock has a Zacks Rank #3. (Read: Verizon (VZ - Free Report) Misses Earnings and Revenue Estimate in Q1)

UnitedHealth Group Inc. (UNH - Free Report) reported first-quarter net operating earnings per share of $2.37, comfortably beating the Zacks Consensus Estimate of $2.18 and increasing 31% year over year. Zacks Rank #2 (Buy) rated UnitedHealth posted net revenue of $48.7 billion, outpacing the Zacks Consensus Estimate of $48.24 billion. Further, revenues were up 9.4% year over year.

Driven by strong first-quarter earnings, the company pulled up its 2017 guidance. It now expects revenues of $200 million, up from the previous guidance of $197 billion to $199 billion. The projected GAAP net earnings range of $9.10 to $9.30 per share and adjusted net earnings of $9.65 to $9.85 per share are up from the previous forecasts of $8.75 to $9.05 and $9.30 to $9.60, respectively. (Read: UnitedHealth (UNH - Free Report) Q1 Earnings Beat on Membership Growth)

The Travelers Companies, Inc.’s (TRV - Free Report) first-quarter 2017 core income of $2.16 per share missed the Zacks Consensus Estimate of $2.40 by 10%. Moreover, the bottom line deteriorated 7.3% year over year. Total revenue of Zacks Rank #3 rated Travelers improved nearly 3.8% from the year-ago quarter to $6.9 billion. Revenues surpassed the Zacks Consensus Estimate of $6.8 billion. (Read: Travelers (TRV - Free Report) Q1 Earnings Miss Estimates, Decline Y/Y)

JPMorgan Chase & Co.’s (JPM - Free Report) first-quarter 2017 earnings of $1.65 per share, handily outpaced the Zacks Consensus Estimate of $1.51. Also, the figure reflects a 22% rise from the year-ago period. Notably, the results included a legal charge of $218 million and a tax benefit of $373 million. Managed net revenue of $25.6 billion in the quarter was up 6% from the year-ago quarter. Also, it compared favorably with the Zacks Consensus Estimate of $24.6 billion. (Read: JPMorgan Q1 Earnings Easily Beat with Surprising Loan Growth)

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 0.7%


Last 5 Day’s Performance

6-Month Performance































Next Week’s Outlook

Earnings results are likely to guide the Dow over the upcoming week as well. With most key earnings expected to be encouraging, the index is likely to receive a welcome boost from these releases. However, geopolitical events and oil prices could play spoiler on this count. However, economic releases lined up for next week and further comments from the new administration will help to boost the index higher in the days ahead.

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