Dow 30 Stock Roundup: Chevron, Exxon Beat On Earnings; Pfizer Misses

The Dow suffered a week of losses following rising uncertainty over the outcome of the U.S. Presidential election. The FBI said it was probing new personal emails of Hillary Clinton. Meanwhile, several polls indicated that Trump was closing on his Democratic opponent, raising market jitters.

The Federal Reserve refrained from raising rates after its two-day policy meeting. However, it indicated that the case for a rate hike in December had strengthened.

Last Week’s Performance

The Dow declined by 0.1% last Friday despite a strong third-quarter GDP reading following news that the FBI will start probing Hillary Clinton’s new emails. According to the “advance” estimate by the Bureau of Economic Analysis, the third quarter output of goods and services increased at an annual rate of 2.9%, registering its best percentage increase in two years.

Shares of Alphabet (NASDAQ:GOOGL) advanced 0.3% after its third quarter earnings per share of $7.25 beat the Zacks Consensus Estimate of $6.64 on the back of strong revenue growth. However, slump in Amazon’s (NASDAQ:AMZN) shares outweighed Alphabet’s gains.

Shares of ExxonMobil Corp. (NYSE:XOM) declined 2.5% after its quarterly revenue of $58,677 million came in below the Zacks Consensus Estimate of $60,562 million. Meanwhile, Chevron Corp’s (NYSE:CVX) shares climbed 3.9% announcing third quarter earnings per share of 68 cents, higher than the Zacks Consensus Estimate of 39 cents.

The index rose 0.1% over last week. Several mergers and acquisitions related developments had a positive impact on the markets. However, poor earnings performance from the likes of Caterpillar (NYSE:CAT) and 3M (NYSE:MMM) weighed on the benchmarks. Moreover, tech giant, Apple Inc’s (NASDAQ:AAPL) fiscal fourth quarter earnings and revenues beat the Zacks Consensus Estimate, but both the top and bottom line were down year-over-year.

The Dow This Week

The index lost 0.1% on Monday following a decline in oil prices and rising uncertainty over the outcome of the Presidential election. Oil prices fell following doubts over a possible crude production cuts by major oil producing nations. Moreover, news that the FBI was probing Hillary Clinton’s new emails continued to weigh on investor sentiment. General Electric’s (NYSE:GE) shares fell 0.4% on news that the company entered into a deal to merge its oil and gas business with oil services major Baker Hughes (NYSE:BHI) .

The Dow registered its third straight monthly decline, losing 0.9%. Weak Chinese trade data and disappointing September’s jobs data weighed on the broader markets. Moreover, investors digested mixed bag of earnings results in October. Further, the Fed’s Beige Book stated that the overall U.S. economy is expanding at a moderate pace, while a pick-up in inflation raised December rate hike chances.

The index decreased 0.6% on Tuesday following growing concerns over the U.S. Presidential election and Fed’s two-day policy meeting. News that the FBI was probing Hillary Clinton’s new emails last week continued to weigh on investor sentiment. Meanwhile, the recent ABC News/Washington Post poll, Trump leads Ms. Clinton by a point. Also, RealClearPolitics poll results showed that Clinton’s lead over Trump had narrowed from the previously held 7 points to 2.2 points.

The index declined 0.4% on Wednesday after the Fed hinted that it may raise interest rates in December though it kept rates unchanged at its two-day policy meeting. The Federal Open Market Committee agreed that the case for a rate hike in December has strengthened, but was seeking “some further evidence of continued progress toward its objectives.”

Also, uncertainty continued to prevail in the markets on news that the FBI was probing Hillary Clinton’s personal emails. The Dow ended below the psychological level of 18,000 for the first time in four months.

The index lost 0.2% on Thursday following continuing uncertainty over the upcoming Presidential election. Last Friday’s news that the FBI was probing Hillary Clinton’s personal emails has heightened election related concerns. According to the RealClearPolitics polls Clinton only has a 1.7-point lead over Trump, significantly lower than the 7-point lead she held in mid-October.

Shares of Facebook (NASDAQ:FB) fell 5.7% after the company noted that, although ad revenues will continue to grow, they will face tougher year-over-year comparisons in the coming quarters.

Components Moving the Index

Chevron Corp. reported strong third quarter results, buoyed by the success of its cost savings initiatives. The company reported earnings per share of 68 cents, higher than the Zacks Consensus Estimate of 39 cents. However, the bottom line compared unfavorably with the year-ago adjusted profit of $1.09 amid the continued plunge in commodity prices and lower refining margins.

Quarterly revenue of $30,140 million beat the Zacks Consensus Estimate of $30,057.1 million but declined 12% year over year. Zacks Rank #2 (Buy) rated Chevron’s total production of crude oil and natural gas edged down 1% from the year-earlier level to 2,513 thousand oil-equivalent barrels per day (MBOE/d).

Chevron’s downstream segment achieved earnings of $1,065 million, 52% lower than the profit of $2,211 million last year. Exploration costs fell from $315 million in the third quarter of 2015 to $258 million. (Read: Chevron (CVX) Q3 Earnings Beat as Cost Cut Offsets Low Price)

ExxonMobil Corp. posted earnings of 63 cents per share, beating the Zacks Consensus Estimate of 60 cents. The bottom line, however, deteriorated from $1.01 per share in the year-ago quarter. ExxonMobil has a Zacks Rank #3 (Hold).

Total revenue in the quarter decreased to $58,677 million from $67,344 million in the year-ago quarter. The top line also came in below the Zacks Consensus Estimate of $60,562 million.

Quarterly earnings for the upstream segment declined $738 million from the third quarter of 2015 to $620 million. The downstream segment recorded profits of $1.2 billion, down $804 million from the July to September quarter of 2015. The chemical unit contributed approximately $1.2 billion, which is $56 million less than the third quarter of 2015. (Read: ExxonMobil (XOM) Earnings Beat on Project StartUps in Q3)

Pfizer Inc.’s (NYSE:PFE) third-quarter adjusted earnings per share came in at 61 cents, a penny below the Zacks Consensus Estimate of 62 cents. The pharma giant’s earnings were 2% above the year-ago quarter as inclusion of Hospira operations, a lower tax rate, and a lower share count offset higher costs. Pfizer posted revenues of $13.05 billion, lower than the Zacks Consensus Estimate of $13.10 billion but up 8% from the year-ago period.

Adjusted earnings per share for 2016 are now expected in the range of $2.38-$2.43 per share compared with $2.38 - $2.48 expected previously. Revenues are expected in the range of $52 billion - $53 billion in 2016 compared with $51 billion - $53 billion previously. The stock has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Procter & Gamble Company’s (NYSE:PG) fiscal first-quarter adjusted earnings of $1.03 per share beat the Zacks Consensus Estimate of 98 cents by 5.1%. The bottom line also increased 5% from the prior-year quarter.

Zacks Rank #3 rated Procter & Gamble reported net sales of $16.52 billion which exceeded the Zacks Consensus Estimate of $16.46 billion by 0.4%. The top line, however, remained unchanged year over year.

The Cincinnati-based company maintained its organic sales growth projection at approximately 2% for fiscal 2017. P&G estimates all-in sales growth of about 1% for fiscal 2017. Core earnings per share are expected to grow in mid-single digits as against the fiscal 2016 core earnings of $3.67 per share. (Read: Procter & Gamble (PG) Q1 Earnings & Sales Top, View Intact)

General Electric inked a definitive agreement with Baker Hughes to merge its Oil & Gas business with the latter to form an industry leader with an unrivalled mix of service and equipment capabilities.

Under the terms of the agreement, GE Oil & Gas and Baker Hughes will form a new entity (the “New” Baker Hughes) using a partnership structure, pursuant to which both the parties will contribute their operating assets to the newly formed partnership.

Zacks Rank #4 (Sell) rated General Electric will own the majority stake of 62.5% in the new company, and the remainder will be held by the erstwhile Baker Hughes shareholders, who will also receive a special one-time cash dividend of $17.50 per share at closure. The transaction is expected to close in mid-2017, subject to mandatory regulatory approvals and other closing conditions. (Read: GE, Baker Hughes Tie Up for Re-Conglomeration, Shares Fall)

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 1.4%.

Next Week’s Outlook

Concerns over the likely outcome of the Presidential election dominated market proceedings this week. Several polls indicate that that the contest is getting tighter, leading to speculation that Donald Trump might yet pull off a surprise victory. This may not at all come to pass, but such fears are likely to keep investors on tenterhooks.

In case Clinton wins, markets would likely enjoy a relief rally. On the other hand, a Trump victory will lead to losses for investors. In this event, investors are likely to focus on the electoral race and speculations surrounding it and its ultimate outcome are likely to guide markets in the week ahead.

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