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Dow 30 Stock Roundup: Apple, DowDuPont, Caterpillar, Pfizer Earnings Impress

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The index endured a difficult week, marked by a decline in tech stocks and trade war fears. Market expectations from tech earnings were dashed early in week as industry majors failed to live up to their reputation. Investor sentiment was buoyed for a single trading session on news that the United States and China would recommence tariff talks. However, familiar trade war fears resurfaced soon after.

Last Week’s Performance

The index lost 0.3% last Friday as poor earnings from tech giants led to huge selloffs. Data from Commerce Department showed that the U.S. economy grew at an annualized 4.1% in the second quarter.

This is also the fast growth pace in almost four years and shows the strength in the U.S. economy. However, the poor show by tech stocks overshadowed the robust growth figures.

The index gained 1.6% over last week. The week started on a high with expectations of robust earnings from major tech companies. Moreover, higher bond yield helped lift financial stocks along with robust earnings from a spate of companies.

Also, tech stocks gained initially on robust earnings expectations. However, tech stocks led to huge selloffs in the later part of the week as major tech companies failed to post impressive results and missed expectations.

The Dow This Week

The index lost 0.6% on Monday, closing in the red for the third consecutive session following a widespread selloff in technology stocks. Markets had high expectations from tech stocks ahead of the earnings season.

However, major tech names had failed to meet expectations up to this point, which made investors jittery. Meanwhile, shares of Visa, Inc. (V - Free Report) and American Express Co (AXP - Free Report) declined 3% and 2.9%, respectively.

The index rebounded on Tuesday, gaining 0.4%. Reports that the United States and China were willing to start talks in an effort to resolve trade disputes boosted stocks. This also helped industrials to rally. Also, strong economic data revealed a rise in consumer spending, which gave a boost to investor sentiment.

The index lost 0.3% on Wednesday as the Fed left interest rates unchanged, while trade war fears once again offset strong gains in tech stocks. Trade war fears resurfaced on reports that the the Trump administration planning to slap 25% tariffs on another $200 billion worth of Chinese goods.

The index slipped 0.1% on Thursday as it failed to hold earlier gains. Industrial stocks once again came under pressure on fears of trade war. However, shares of Apple (AAPL - Free Report) gained rose 2.9% to $207.39 a share, thus making it the first publicly traded U.S. company to cross a market cap of $1 trillion.

Components Moving the Index

Apple’s third-quarter fiscal 2018 results created new records in a seasonally slow quarter. Earnings of $2.34 per share not only crushed the Zacks Consensus Estimate by 17 cents but also surged 40.4% year over year.

Zacks Rank #2 (Buy) Apple’s net sales increased 17.3% year over year to $53.27 billion, which surpassed the Zacks Consensus Estimate of $52.34 billion. Total iPhone unit sales of 41.30 million beat the Zacks Consensus Estimate and inched up 1% year over year on the back of iPhone X, iPhone 8 and iPhone 8 Plus.

For fourth-quarter fiscal 2018, revenues are projected between $60 billion and $62 billion that imply year-over-year growth of 16-19%. Gross margin is expected within 38-38.5%, while operating expenses are projected within $7.95-$8.05 billion range. (Read: Apple Crushes Q3 Earnings Estimates, Sales Jump Y/Y)

DowDuPont Inc. (DWDP - Free Report) recorded earnings (on a reported basis) from continuing operations of 76 cents per share for second-quarter 2018, compared with $1.07 per share it logged in the comparable quarter a year ago.

Barring one-time items, earnings came in at $1.37 per share for the quarter, which topped the Zacks Consensus Estimate of $1.33.

Zacks Rank #3 (Hold) DowDuPont raked in net sales of $24,245 million for the reported quarter, up 17% from the year-ago adjusted sales. It also surpassed the Zacks Consensus Estimate of $23,671 million.

DowDuPont expects net sales in the third quarter to increase more than 10% and operating EBITDA to rise more than 12% on a year-over-year basis. (Read: DowDuPont Earnings, Revenues Trounce Estimates in Q2)

Pfizer, Inc. (PFE - Free Report) reported second-quarter 2018 adjusted earnings per share of 81 cents, which beat the Zacks Consensus Estimate of 75 cents by 5.2%. Earnings rose 21% year over year. Pfizer has a Zacks Rank #2.

The pharma heavyweight recorded revenues of $13.47 billion, which also beat the Zacks Consensus Estimate of $13.26 billion. Revenues rose 4% from the year-ago quarter on a reported basis.

Revenues for 2018 are expected in the range of $53.0 billion to $55.0 billion compared with $53.5 billion to $55.5 billion previously. Adjusted earnings per share are expected in the range of $2.95 - $3.05 compared with $2.90 - $3.00 expected previously. (Read: Pfizer Beats on Q2 Earnings & Sales, Ups Profit View)

The Procter & Gamble Company’s (PG - Free Report) fiscal fourth-quarter core earnings of 94 cents per share beat the Zacks Consensus Estimate of 90 cents and improved 11% year over year. The company reported net sales of $16,503 million, slightly lagging the Zacks Consensus Estimate of $16,552 million.

Zacks Rank #3 Procter & Gamble anticipates core EPS growth of 3-8% in fiscal 2019 compared with fiscal 2018 core earnings of $4.22 per share. At the midpoint of the growth range, fiscal 2019 core EPS is likely to be $4.45. (Read: P&G Beats on Q4 Earnings, Stock Falls on Revenue Miss)

Caterpillar Inc. (CAT - Free Report) delivered adjusted earnings per share of $2.97 in second-quarter 2018, soaring 99% from the prior-year quarter’s figure of $1.49 per share. Earnings also beat the Zacks Consensus Estimate of $2.66 by a margin of 12%.

Revenues improved 24% year over year to $14.0 billion in the quarter under review, surpassing the Zacks Consensus Estimate of $13.7 billion. Caterpillar now expects adjusted earnings per share between $11.00 and $12.00 for fiscal 2018. The stock has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chevron Corporation (CVX - Free Report) reported earnings per share of $1.78, lagging the Zacks Consensus Estimate of $2.06. Quarterly revenue of $42,236 million beat the Zacks Consensus Estimate of $40,780 and was up 22.5% year over year.

Zacks Rank #3 Chevron spent $4,816 million in capital expenditures during the quarter, up from the year-ago period’s $4,538 million. (Read: Chevron Sets $3B Buyback Plan Even as Q2 Earnings Miss)

Exxon Mobil Corporation’s (XOM - Free Report) earnings per share of 92 cents missed the Zacks Consensus Estimate of $1.26. However, the bottom line improved from the year-ago quarter level of 78 cents. Exxon Mobil has a Zacks Rank #3.

Total revenues in the quarter rose to $73,501 million from $58,077 million a year ago. Moreover, the top line surpassed the Zacks Consensus Estimate of $70,252 million. (Read: ExxonMobil Earnings Miss Estimates in Q2, Rise Y/Y)

Intel Corp (INTC - Free Report) delivered second-quarter 2018 non-GAAP earnings of $1.04 per share, beating the Zacks Consensus Estimate of 99 cents. The figure surged 44.4% from the year-ago quarter and 19.5% sequentially. Intel has a Zacks Rank #1.

Revenues totaled $16.96 billion, up 14.9% year over year and 5.6% quarter over quarter. The figure marginally surpassed the Zacks Consensus Estimate of $16.91 billion. (Read: Intel Beats on Q2 Earnings & Revenues, Raises View)

Merck & Co., Inc. (MRK - Free Report) reported second-quarter 2018 adjusted earnings of $1.06 per share, which beat the Zacks Consensus Estimate of $1.03 by 2.9%. Earnings rose 5% year over year. Merck has a Zacks Rank #3.

Revenues for the quarter rose 5% year over year to $10.47 billion. Sales also surpassed the Zacks Consensus Estimate of $10.32 billion. (Read: Merck Q2 Earnings & Sales Top on Keytruda Strength)

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 0.5%.

Next Week’s Outlook

Despite initial hiccups, most second quarter earnings have lived up to or exceeded investor expectations. Tech stocks have suffered a few jitters but Apple’s stellar earnings and trillion dollar market cap has reinvigorated investors focused on the sector.

The only major impediments investors face at this point are trade related fears. If markets can ignore these tensions and focus on earnings and economic reports, stocks could return to their winning ways in the days ahead.

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