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Dow 30 Stock Roundup: WMT Earnings Beat, MRK's Keytruda sBLA Gets Priority Review

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The index endured a holiday-shortened but volatile week. Optimism about a resolution increased among investors as a fresh round of trade talks between the United States and China started in Washington. Investors were also buoyed by indications from the Fed that the process of balance sheet unwinding could end soon. However, indications of a global slowdown kept investors worried.

Last Week’s Performance

The index increased 1.7% last Friday, buoyed by positive developments on the U.S. - China trade war front. China vowed to make efforts to boost U.S. exports to the country. Meanwhile, Trump declared a national emergency over funding for his border wall along America’s southern border with Mexico.

The Dow amassed 443.9 points to end the session in the positive territory. Gains for the Dow were backed by a surge in shares of JPMorgan Chase & Co. (JPM - Free Report) and Goldman Sachs (GS - Free Report) , which gained 3.1% each.

The index gained 3.1% over last week. This marked the Dow’s best streak of weekly gains since November 2017. U.S. markets closed at their highest levels for 2019 on Tuesday. Stocks soared after a temporary deal to provide funding for a U.S. – Mexico barrier was reached between Republican and Democratic lawmakers.

Further, the rally continued for the rest of the week, buoyed by positive developments on the trade war front. Moreover, President Trump’s statement, which negated the possibility of a second government shutdown, also boosted investors’ confidence.

The Dow This Week

Markets were closed on Monday for the President’s Day holiday. The index inched up 0.03% on Tuesday as another round of U.S.-China trade talks kickstarted in Washington this week. Market watchers largely expect positive outcomes from the meeting.

Meanwhile, a group of U.S. states filed lawsuits against Trump’s declaration of national emergency over the border wall funding. Gains for the Dow were buoyed by a bump of 2.2% in shares of Walmart Inc. (WMT - Free Report) . The company posted an earnings beat in the fourth quarter of fiscal 2019.

The index gained 0.2% on Wednesday after the release of the minutes from Fed’s last meeting held in January. The Fed remained undecided on the future of rate hikes in the country.

However, the minutes indicated that Fed’s balance sheet unwinding might end by the end of this year. Meanwhile, trade talks between the United States and China continued in Washington. Gains for the Dow were buoyed by gains recorded by Boeing (BA - Free Report) and Caterpillar (CAT - Free Report) , up 1.3% and 3.3%, respectively.

The index lost 0.4% on Thursday after dismal economic data emanating from Europe and Japan indicated a slowdown in global growth. The Dow lost a whopping 103 points after shares of Walgreen Boots (WBA - Free Report) lost nearly 2%.

However, concerns over a global slowdown were curbed to an extent as trade talks between the United States and China progressed. The two sides are in the process of hammering out an agreement to end this lingering conflict. 

Components Moving the Index

Pfizer Inc. (PFE - Free Report) and Eli Lilly and Company (LLY - Free Report) announced that a higher dose of their NGF inhibitor, tanezumab, met the primary endpoint in a phase III study, evaluating it in patients with chronic low back pain (“CLBP”). Pfizer has a Zacks Rank #4 (Sell).

The phase III study evaluated two dosages – 5 mg or 10 mg – of tanezumab, a non-opioid candidate, subcutaneously administered every eight weeks for 56 weeks in patients with moderate-to-severe CLBP, followed by 24-week safety follow-up period. The eligible patients experienced inadequate relief or are intolerant to analgesics and suffering from the disease for more than three consecutive months.

Top-line data from the study showed that treatment with the 10 mg dose of tanezumab led to statistically significant improvement in pain compared to placebo after 16 weeks of treatment. (Read: Pfizer & Lilly's Pain Candidate Succeeds in Back Pain Study)

Merck & Co., Inc. (MRK - Free Report) announced that the FDA has granted priority review to yet another supplemental biologics license application (sBLA) for its PD-L1 inhibitor, Keytruda. In the latest sBLA, Zacks Rank #3 (Hold) Merck is looking for FDA’s approval of Keytruda as monotherapy for advanced small cell lung cancer ("SCLC") in third or later-line setting. With the FDA granting priority review, a decision is expected on Jun 17, 2019.

The sBLA filing was based on data from the SCLC cohorts of the phase II KEYNOTE-158 study as well as supporting data from an early stage study — KEYNOTE-028.

Data from the KEYNOTE-158 study, presented in June 2018, showed that treatment with Keytruda achieved overall response rate of 18.7% with 3% complete response in patients whose disease progressed after two or more lines of prior therapy. The median progression-free survival was 2 months and median overall survival was 8.7 months. (Read: Merck Gets Priority Review for Keytruda in Third-Line SCLC)

Walmart’s fourth-quarter fiscal 2019 adjusted earnings came in at $1.41 per share, which came way ahead of the Zacks Consensus Estimate of $1.33. Further, earnings improved about 6% year over year. Including one-time items, Walmart reported earnings of $1.27 per share, which surged 74% year over year.

Total revenues advanced 1.9% to $138.8 billion that fell slightly short of the Zacks Consensus Estimate of $139.3 billion. The year-over-year upside was driven by strength in the U.S. business. On a currency-neutral basis, total revenues grew 3.1% to $140.5 billion.

The company reiterated its outlook for fiscal 2020, which was issued on Oct 16. The company anticipates consolidated net sales to rise at least 3%, including benefits from Flipkart, adverse impacts from Walmart Brazil’s deconsolidation and planned tobacco sales cut downs at Sam’s Club. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft Corporation (MSFT - Free Report) recently broadened the reach of its AccountGuard offering, which is part of its Defending Democracy Program, to 12 new markets in Europe. Microsoft has a Zacks Rank #3.

The company announced the development via a blog post by the company’s corporate vice president, Customer Security & Trust, Tom Burt.

AccountGuard service, which is already available in the U.K. and Ireland, has now been extended to 12 new European countries, namely Germany, France, Denmark, Sweden, Netherlands, Estonia, Latvia, Finland, Lithuania, Portugal, Spain, and Slovakia. (Read: Microsoft Extends AccountGuard Access Across Europe)

The Procter & Gamble Company (PG - Free Report) , popularly known as P&G, remains committed toward innovating ways to make people’s life simpler and faster. Evidently, Zacks Rank #2 P&G’s Tide rolled out Tide Cleaners — an end to end on-demand laundry solution — that provides laundry and dry cleaning service at the click of a button.

Notably, this is an out-of-home laundry that allows customers to get clean clothes via the Tide Cleaners app. In urban areas, customers can avail this service by using 24/7 drop-boxes available in apartments, offices and storefronts. (Read: P&G's Tide Cleaners to Offer Hassle-Free Laundry Solutions)

JPMorgan Chase plans to launch its own cryptocurrency called the "JPM Coin" in order to help corporate clients instantly settle payments between themselves. With this move, JPMorgan became the first global bank to incorporate blockchain technology into its system.

The “JPM Coin” will be transferable over a blockchain network. Whenever a customer deposits money at the bank, he will be issued the digital coin. The coin can then be used for transferring money to other corporate clients over the same network.

Each “JPM Coin” will be redeemed for a single U.S. dollar. Hence, its value will not fluctuate, making it similar in concept to “stablecoins”.

Using these digital coins, customers at Zacks Rank #3 JPMorgan will be able to settle transactions instantaneously, thereby, reducing settlement risk. Moreover, the bank believes that this will help in mitigating counterparty risk and decrease capital requirements. (Read: JPMorgan Plans to Launch "JPM Coin" Using Blockchain)

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 0.1%.

Next Week’s Outlook

Going by the signals emanating from Washington and Beijing, investors may soon be rid of trade war worries. This would bring to end months of consternation over a vexing issue, which has the potential to derail steady domestic economic growth.

Meanwhile, fourth-quarter earnings have also come in far better than expected. However, investors will now have to grapple with the new threat of a global economic slowdown, particularly in Europe and Japan. This could raise volatility in the trading weeks ahead.

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