Dow 30 Stock Roundup: Apple, GE, DuPont Beat, Boeing Posts Narrower-than-Expected Loss

The Dow slipped over an earnings heavy week, where results took precedence over other developments. Despite other benchmarks making some gains, the blue-chip index took losses because of two reasons. First, key components declined following disappointing earnings results. Secondly, oil prices slumped following data which indicated that inventories had increased for two successive weeks. These events overshadowed record gains by the iconic iPhone maker following strong earnings results.

Last Week’s Performance

The index increased 0.3% last Friday following strong gains from telecom giants Verizon Communications Inc. (NYSE:VZ) and AT&T (NYSE:T) and better-than-expected private domestic manufacturing data. Although some of Friday’s gains were curtailed by declines in industrial companies such as General Electric Company (NYSE:GE) , all the key U.S. indexes posted gains.

While AT&T’s and GE’s movements were due to encouraging and under par earnings, respectively, shares of Verizon gained following news that it has emerged as the front-runner to acquire the core internet business of Yahoo! Inc. (NASDAQ:YHOO) . Meanwhile, Markit’s U.S. manufacturing purchasing manager index (PMI) came in at 52.9 in July, reaching its best settlement since last October.

The Dow also gained 0.3% over last week. Technology was the biggest advancer among the S&P 500’s sectors, following upbeat earnings results of two Dow components. Even the broader markets were pushed upward following a flurry of encouraging earnings results. Moreover, economic data including housing data was also favorable.

The Dow This Week

The index lost 0.4% on Monday after crude supply worries heightened, resulting in a sharp decline in oil prices. Moreover, investors took a cautious stance ahead of Fed’s two-day policy meeting and a flood of quarterly earnings reports.

Oil prices slumped, following concerns over crude oversupply. Reports showed that crude inventories in the delivery hub of Cushing, Oklahoma have increased by 1.1 million barrels for the week ended July 22. Moreover, investors maintained a cautious approach ahead of the Fed’s two-day policy meeting.

The Dow declined again on Tuesday, losing 0.1% following a flurry of earnings results. McDonald’s Corporation (NYSE:MCD) suffered its worst one-day percentage decline in seven sessions, which in turn weighed on the Dow. 3M Co’s (NYSE:MMM) shares fell after reporting weaker-than-expected second-quarter earnings results

However, Caterpillar Inc. (NYSE:T) and United Technologies (NYSE:UTX) Corporation (NYSE:T) registered gains following better-than-expected earnings results. New home sales advanced, reaching their highest settlement since Feb 2008.

The index moved marginally lower on Wednesday following the Federal Open Market Committee’s policy statement and key earnings results. The Fed kept key rates unchanged as expected, but hinted at a rate hike as early as September. Moreover, declines in The Coca-Cola Company’s (NYSE:KO) shares following its revenue miss weighed on the S&P 500 and Dow.

However, Apple Inc. (NASDAQ:AAPL) registered its best percentage gains in more than two years, on the back of better-than-expected earnings results. This in turn curbed some of the losses in the Dow. Shares of Boeing Company (NYSE:BA) also increased following encouraging earnings results. Durable orders fell 4% in June while the EIA reported that U.S. commercial crude oil inventories rose for the week ended July 22.

The index moved 0.1% lower on Thursday, after a fall in oil prices weighed on some of its components like Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) . Reports showed that crude inventories in the delivery hub of Cushing, Oklahoma have increased by 328,000 barrels for the week ended July 26.

Also, shares of Royal Dutch Shell (LON:RDSa) plc RDS.A slumped 3% after earnings and revenues missed the Zacks Consensus Estimates. In contrast, Facebook’s encouraging second quarter earnings results boosted the S&P 500 and Nasdaq to end in the green.

Components Moving the Index

Apple posted better-than-expected results for both earnings and revenues in the third quarter of fiscal 2016. Earnings of $1.42 per share surpassed the Zacks Consensus Estimate of $1.39, though it came 23% below the prior-year quarter figure.

Revenues of $42.4 billion were also above the Zacks Consensus Estimate of $41.8 billion but declined 14.6% from the year-ago quarter. Apple iPhone unit sales came in at about 40.4 million, down 15% year over year. Nonetheless, the number of units sold was greater than anticipated, which boosted investors’ confidence.

For the fourth quarter of fiscal 2016, Apple forecasts revenues in the range of $45.5 billion to $47.5 billion (read: Apple (AAPL) Shares Up on Q3 Earnings & Revenue Beat).

3M reported relatively modest second-quarter 2016 results with GAAP earnings of $1,291 million or $2.08 per share compared with $1,300 million or $2.02 per share in the year-earlier quarter. Reported earnings matched the Zacks Consensus Estimate. Net sales during the quarter were $7,662 million, down 0.3% year over year and short of the Zacks Consensus Estimate of $7,725 million.

3M narrowed its earlier guidance for 2016. For 2016, the company anticipates GAAP earnings in the range of $8.15 to $8.30 per share compared to earlier projections of $8.10 to $8.45. Organic local-currency sales growth is expected to be 0%-1%, while the free cash flow conversion rate is anticipated to be 95%-105%. (read: 3M (MMM) Meets Q2 Earnings Estimates, Trims 2016 View)

Boeing incurred an adjusted loss of 44 cents per share in second-quarter 2016. The loss was, however, much narrower than the Zacks Consensus Estimate of a loss of 88 cents. The company's revenues increased 1% year over year to $24.76 billion in the reported quarter. The reported figure was also ahead of the Zacks Consensus Estimate of $24.45 billion.

Boeing lowered its adjusted or core earnings per share expectation to the range of $6.10–$6.30 from $8.15−$8.35 expected earlier for 2016. The company, however, maintained its 2016 revenue guidance in the range of $93−$95 billion (read: Boeing (BA) Incurs Loss in Q2 Hit by Charges, Guides Down).

Caterpillar’s second-quarter 2016 adjusted earnings of $1.09 per share beat the Zacks Consensus Estimate of 99 cents. However, compared to the prior year, earnings plunged 22% reflecting persistent tough market conditions for many of the company’s businesses. Revenues plummeted 16% year over year to $10.34 billion in the quarter, surpassing the Zacks Consensus Estimate of $9.99 billion.

Caterpillar now expects revenues in the $40–$40.5 billion range, as against the previous outlook of $40–$42 billion. Also, Caterpillar now expects earnings per share (excluding restructuring costs) of $3.55, down from the earlier projection of $3.70 (read: Caterpillar (CAT) Tops Q2 Earnings, Stock Down on Soft View).

Coca-Cola reported soft second-quarter 2016 results. Second-quarter 2016 adjusted earnings of the company were 60 cents per share, which beat the Zacks Consensus Estimate of 58 cents by 3.4%. Net revenue declined 5% year over year to $11.54 billion due to currency headwinds and the negative impact of acquisitions/divestitures and structural items.

Though the company reaffirmed the previously issued 2016 profit outlook, it lowered its sales expectations. Organic revenues are expected to rise 3%, less than the previous range of 4–5% in 2016. In 2016, the company expects adjusted EPS to be down 4% to 7% versus prior year’s comparable EPS of $2.00 (read: Coca-Cola (KO) Beats on Q2 Earnings; Cuts Sales Forecast).

General Electric reported strong second-quarter 2016 results. Operating earnings for the reported quarter were $3,613 million or 39 cents a share compared with $2,127 million or 21 cents a share in the year-ago quarter. Operating earnings for the reported quarter also beat the Zacks Consensus Estimate by 5 cents.

Total consolidated revenue for the reported quarter increased 15% year over year to $33,494 million from $29,226 million in the year-earlier quarter, and well exceeded the Zacks Consensus Estimate of $30,844 million.

The company anticipates operating earnings in 2016 to be within $1.45-$1.55 a share. The Zacks Consensus Estimate for 2016 is currently pegged at $1.50. Organic revenue growth in 2016 is expected to be 2-4% (read: GE Q2 Earnings & Revenues Beat Estimates, 2016 View Firm).

McDonald’s posted weaker-than-expected results in the second quarter of 2016. McDonald’s earnings of $1.25 missed the Zacks Consensus Estimate of $1.38 by 9.4% and declined 1% from the year-ago quarter.

Revenues of $6.265 billion fell 4% year over year mainly due to currency headwinds. In constant currency, the figure declined 1%. Revenues also missed the Zacks Consensus Estimate of $6.281 billion by a narrow margin of 0.3% (read: McDonald's (MCD) Lags Q2 Earnings Estimates, Stock Falls).

United Technologies reported solid second-quarter 2016 results with adjusted income (from continuing operations) of $1,508 million or $1.82 per share compared with $1,485 million or $1.67 per share in the year-ago quarter.

Net sales for second-quarter 2016 improved to $14,874 million from $14,690 million in the year-earlier quarter. Revenues beat the Zacks Consensus Estimate of $14,634 million.

For 2016, the company at present expects adjusted earnings to be in the range of $6.45 to $6.60 per share on revenues of $57 billion to $58 billion (read: United Technologies (UTX) Tops Q2 Earnings, Tweaks View).

Verizon reported mixed financial numbers in the second quarter of 2016. Adjusted earnings per share came in at 94 cents in the reported quarter. Quarterly GAAP net income was $831 million compared with $4,353 million in the year-ago quarter.

Quarterly total revenue decreased 5.3% year over year to $30,532 million. The Zacks Consensus Estimate was pegged at $31,117 million (read: Verizon's (VZ) Mixed Q2: Beats Earnings, Revenues Lag).

DuPont (NYSE:DD) topped earnings expectations in second-quarter 2016, aided by its aggressive cost-reduction actions. Barring one-time items, DuPont recorded adjusted earnings of $1.24 per share in the reported quarter, topping the Zacks Consensus Estimate of $1.10

DuPont raked in net sales of $7,061 million in the quarter, down roughly 0.8% year over year. That beat the Zacks Consensus Estimate of $7,048 million.

DuPont raised the bottom end of its earlier-announced adjusted earnings guidance range for 2016 by 10 cents per share to $3.15-$3.20 per share. The current Zacks Consensus Estimate for the year is $3.13. The company now expects full-year earnings (on a reported basis) to be in the range of $2.70-$2.75 per share (read: DuPont's (DD) Q2 Earnings Trounce Estimates on Cost Actions).

Visa Inc. (NYSE:V) posted third-quarter fiscal 2016 (ended Jun 30) earnings of 69 cents that beat the Zacks Consensus Estimate of 67 cents. The bottom line, however, saw a year-over-year decrease of 7% or 4% on a constant dollar basis.

Net operating revenue was $3.6 billion, up 3% year over year and almost in line with the Zacks Consensus Estimate. For the fiscal year, the annual net revenue is expected to grow in a range of 7–8%. Earnings per share are expected to grow at low double digit on a constant dollar basis (read: Visa (V) Q3 Earnings Beat, Revenues in Line with Estimates).

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 0.3%.

Next Week’s Outlook

Most Dow components have reported earnings over the last two weeks. Despite encouraging results from several components, others have disappointed investors, leading to losses for the blue-chip index over the week. Oil prices have also declined and it is likely that they will continue to weigh on proceedings going ahead.

However, the focus is likely to shift to economic data over the upcoming week. GDP numbers are scheduled for release today and growth is widely expected to pick up over the second quarter. Data on manufacturing, services and construction spending will also be made available. If the majority of these reports are positive in nature, the Dow could well return to its winning ways.

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