Dow 30 Stock Roundup: Nike Beats, J&J Gets $2.1B Offer For Diabetes Device Unit

The Dow traversed rough waters once again this week, a period which was marked by troubles for Facebook, Inc. (NASDAQ:FB) and the Fed’s latest policy statement. Concerns over Facebook’s data security policies arose following a whistleblower’s damaging revelations this week. Investors also remained focused on the central bank’s latest policy meeting. Trade war related concerns also surfaced with China preparing to retaliate against Trump’s latest actions on this front.

Last Week’s Performance

The Dow increased 0.3% last Friday following better than expected readings for industrial output. Industrial production surged 1.1% in February, comfortably surpassing the consensus estimate of 0.3% for the period.

This marked its highest reading since October 2017.Investors braced for higher volatility due to Friday being a quadruple-witching day. Meanwhile, news surfaced that Trump will soon fire his national security advisor H.R. McMaster.

The index lost 1.5% last week. During this period, President Trump fired Secretary of State Rex Tillerson, former CEO of Exxon Mobil Inc. (NYSE:XOM) . Further, special counsel Robert Mueller reportedly subpoenaed Trump Organization for Trump’s business-related documents.

This factor along with trade war fears weighed on investor sentiment. President Trump was expected to levy fresh tariffs on Chinese imports and announced that U.S.’s trade deficits with China will be reduced significantly in the process.

The Dow This Week

The index decreased 1.4% on Monday following concerns over Facebook’s policies regarding privacy of user data. Shares of Facebook declined 6.8% in a single session on Monday to post its worst dip in a day since March 26, 2014. The Dow lost 335.6 points to finish in negative territory, with all of its 30 components save for Boeing (NYSE:BA) , finishing in the red.

With this decline the blue-chip index turned negative for 2018, trading at -0.4%. Shares of Caterpillar (NYSE:CAT) declined 2.8%, emerging as the worst performing Dow component. Meanwhile, market watchers also speculated over the possibility of a rate hike post the culmination of the Fed’s two-day FOMC meet on Wednesday.

The index gained 0.5% on Tuesday, supported by a rally in energy shares after oil prices settled at their highest level for the month. Meanwhile, investors closely followed the FOMC’s policy meeting. Shares of Facebook continued to decline after the Federal Trade Commission decided to probe the data debacle which has taken markets by storm.

The Dow gained 119 points on Tuesday to end in positive territory a day after losing more than 300 points earlier in the session. The day’s gains for the blue-chip index were buoyed by a surge in the shares of Boeing and Nike (NYSE:NKE) , which gained 1.8% and 1.7%, respectively.

The index increased 0.2% on Wednesday following the much expected quarter-point rate hike by the Fed. However, the Federal Open Market Committee (FOMC) adhered to its December forecast of three rate hikes for 2018.

The central bank also increased its GDP projection for 2018, paving the way for future rate hikes. Meanwhile, existing home sales rebounded in February following back-to-back declines in the two months prior to the current period.

The Dow lost almost 45 points to end in negative territory on Wednesday. Shares of Apple (NASDAQ:AAPL) declined 2.3%, adding to the blue-chip index’s woes. However, the Dow surged more than 250 points at its session highs.

The index slumped 2.9% on Thursday after the specter of a damaging trade war with China triggered a broad selloff. Consequently, the Dow finished at its lowest point since Feb 8, the second lowest close recorded so far this year. Currently, the index is 10% lower than the all-time high achieved earlier this year.

Additionally, the Fed’s latest policy statement raised questions about the path of interest rate hikes. Also weighing on markets were ongoing troubles at Facebook, a factor which dragged tech stocks lower. Meanwhile, President Trump’s lead attorney resigned from his position, heightening political uncertainty.

Components Moving the Index

NIKE's third-quarter earnings per share of 68 cents were flat year over year but surpassed the Zacks Consensus Estimate of 52 cents. This marked its 23rd straight earnings beat. Nike has a Zacks Rank #3 (Hold).

Revenues of the swoosh brand owner have increased 6.5% to $8,984 million, beating the Zacks Consensus Estimate of $8,831.8 million. This was primarily driven by double-digit growth at international locations and global NKE Direct business, partly offset by soft North American Wholesale revenues. Sales grew 3% on a currency-neutral basis.

Going forward, the company stated that its overall outlook for fiscal 2018 remains unchanged, excluding the one-time impact of the U.S. tax reform. In fourth-quarter fiscal 2018, the company expects reported revenue growth of high single-digit, backed by persistent strength in international regions and reversal of the trend in North America. (Read: NIKE Rallies on Q3 Earnings & Sales Beat, Buys Zodiac)

Apple is reportedly developing next-generation MicroLED screens for its own use in a secret manufacturing facility near the company’s California headquarters. Per Bloomberg, the company is currently making small number of screens for testing purposes.

Zacks Rank #3 Apple’s foray into MicroLED display manufacturing has taken the market by surprise. It is likely that the company has been planning the venture into MicroLED display technology for quite some time. The company had acquired LuxVue technology, a developer of MicroLED screen technology way back in 2014.

The rumor-mills have now started buzzing on whether Apple will bring display manufacturing in-house, which makes sense, as it will no longer be dependent on Asia-based manufacturers for supply of display screens. (Read: Apple Reportedly Producing MicroLED Screen, OLED Stocks Fall)

Caterpillar is planning to close two facilities in Texas and Panama and is also mulling the shutdown of its engine manufacturing plant in Illinois, per a Reuters report. Though the move could lead to a layoff of 880 jobs, it is in sync with the company’s strategy to cut cost. Consequently, this will boost margins and equip the company to better handle business cycles.

The move will affect its work tools facility in Waco, TX, and its demonstration centre in Panama. The work at the Texas plant will be shifted to Wamego, KS, affecting 200 regular and contract positions. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Exxon Mobil recently commenced with a potential U.S. Gulf Coast project, intending to grow its capacity of producing polypropylene up to 450,000 tons a year. The company started the detailed engineering work of the project as it foresees a rise in demand for high-performance, lightweight durable plastics. Exxon Mobil has a Zacks Rank #3.

The final decision on the multi-billion facility, expected to come online in 2021, will be made this year. The construction period is expected to create more than 600 jobs. Once the project comes online, it will generate in excess of 60 permanent jobs. (Read: Exxon Mobil to Follow Strategy and Boost Polypropylene)

General Electric Company’s (NYSE:GE) operating segment GE Transportation announced that it has secured orders for 225 refurbished locomotives from several North American railroads in 2018, without disclosing the names of its clients.

Zacks Rank #4 (Sell) GE will also deliver 80 and 100 modernized locomotives previously ordered by Canadian Pacific Railway Limited (NYSE:CP) and Norfolk Southern Corporation (NYSE:NSC) , respectively throughout the year. (Read: GE Transportation Gets 225 Orders for Modernized Locomotives)

Johnson & Johnson (NYSE:JNJ) announced that it has received a binding offer of approximately $2.1 billion from a private equity firm, Platinum Equity, for its LifeScan diabetes device unit. The LifeScan unit makes blood glucose monitoring products and generated revenues of $1.5 billion last year.

Zacks Rank #3 J&J has time until Jun 15 to accept the offer, failing which it will expire. If J&J accepts the offer, the transaction is expected to close by the end of the year. (Read: J&J Gets $2.1B Offer for LifeScan Diabetes Device Unit)

Walmart Inc. (NYSE:WMT) is extending its agreement with Handy, according to sources. which will let customers hire helpers at about 2,000 Walmart stores to install or assemble their purchases of television and furniture. (Read: Walmart Stays Firm in the Game, Expands Alliance With Handy)

Further, according to reports the company inked a deal with FedEx’s (FDX) subsidiary, FedEx (NYSE:FDX) Office – which will add about 500 new FedEx Office locations inside certain Walmart stores over the next two years. (Read: Walmart Plays Another Card, Adds FedEx Shops to Select Stores)

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 lost 3.5%.

Next Week’s Outlook

Markets have endured quite a few rough weeks recently and it seems that they have yet to recover completely from February’s correction phase. The data related debacle at Facebook and Trump’s trade wars have done little to ease investor fears at this time.

Meanwhile, the Fed’s recent actions have been largely along predictable lines, but concerns surrounding future rate hikes continue to linger. At this time, investors will look toward upcoming economic reports, including crucial GDP data, for solace in the week ahead.

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