Dow 30 Stock Roundup: Goldman Sachs, IBM, J&J, Microsoft Earnings Impress

The index posted impressive gains this week, boosted by a strong economy and expectations of robust earnings. Retail sales data was encouraging while weekly initial claims fell to a record low. Meanwhile, the Fed Chair reinstated investor confidence through his bullish comments on the economy. The Fed’s Beige Book report also presented a positive economic picture.

Last Week’s Performance

The index added 0.4% last Friday, reclaiming its 25,000 mark for the first time since Jun 15. The rally was led by tech and industrial stocks, which offset a decline in financial stocks, as results from three of the major banks failed to boost investors’ confidence. Shares of United Technologies Corporation UTX and Walgreens Boots Alliance, Inc. WBA increased 1.7% and 2%, respectively.

The index gained 2.3% over last week. It was one of the better weeks for markets in a long time. Markets closed higher on four of the five trading sessions, as trade war fears failed to dent investors’ confidence. However, Trump’s fresh threat of imposing tariffs on another $200 billion worth of goods, saw investors panicking on Wednesday, which led to huge selloffs.

That said markets bounced back once again on Thursday as techs tocks once again rallied. Moreover, market participants are expecting strong showing by American corporates as second-quarter earnings slowly gather steam. This helped in reinstating investors’ confidence that saw markets ending sharply higher last week.

The Dow This Week

The index gained 0.2% on Monday, boosted primarily by financial stocks. However, the broader market struggled, as impressive economic data and quarterly results failed to boost investors’ confidence. Retail sales increased 0.5% in June.

Moreover, energy stocks weighed on markets. Oil prices fell more than 4%, as Libyan ports reopened and investors expected a potential increase in supply by Russia and other countries. Investors also keenly watched President Donald Trump and Russian president Vladimir Putin’s summit in Helsinki, Finland.

The index advanced 0.2% on Tuesday, led by a rally in tech stocks. Shares of Amazon AMZN increased 1.2% to hit an all-time high. Moreover, investors’ confidence was reinstated as Fed Chairman Jerome Powell expressed optimistic views about the U.S. economy. Powell also said that the Central Bank won’t change monetary policy in a rush.

The index gained 0.3% on Wednesday, registering a five-day long winning streak. This was also the Dow’s longest winning stretch since the eighth-day period ended May 14. Robust earnings results gave a boost to industrial and financial stocks.

Moreover, an upbeat picture of the U.S. economy coupled with high expectations of a strong earnings season reinstated investors’ confidence. The Fed Reserve’s Beige Book revealed that the U.S. economy had expanded at a robust pace but will grow a lot slower in the near future. Housing starts fell 12.3% in June to a nine-month low.

The index lost 0.5% on Thursday, ending it five-day long winning streak. A selloff in financials led to losses for broader markets. Also, trade war fears once again escalated as worries that EU could impose retaliatory tariffs on U.S imports dented investor confidence.  Meanwhile, President Trump criticized the Fed saying that he wasn’t thrilled about rate hikes.

Components Moving the Index

American Express Company AXP reported second-quarter 2018 adjusted earnings per share of $1.84, beating the Zacks Consensus Estimate by 0.55%. Moreover, the bottom line witnessed a 25% year-over-year improvement.

Revenues came in at $10 billion, 0.5% below of the Zacks Consensus Estimate of $10.05 billion. The top line increased 9% year over year, driven by higher loan volumes and increase in Card Member spending and fees.

Zacks Rank #3 (Hold) American Express retained its 2018 earnings per share guidance on the high end of the $6.90-$7.30 range. The company now expects revenues to grow at least 9% compared with the earlier estimate of at least 8% growth. (Read: AmEx Q2 Earnings Beat, Revenues Miss, Guidance Intact)

Goldman Sachs GS reported earnings per share of $5.98, comfortably beating the Zacks Consensus Estimate of $4.67. Further, the bottom line witnessed 51.4% year-over-year improvement.

Zacks Rank #2 (Buy) Goldman’s net revenues were up 19% year over year to $9.4 billion in the quarter under review. Moreover, the revenue figure handily outpaced the Zacks Consensus Estimate of $8.7 billion. (Read: Goldman Sachs Q2 Earnings Impress on Record Revenues)

International Business Machines Corp IBM reported second-quarter 2018 non-GAAP earnings of $3.08 per share, which beat the Zacks Consensus Estimate by a nickel. Earnings per share increased 4.8% from the year-ago quarter.

Revenues of $20 billion outpaced the Zacks Consensus Estimate of $19.62 billion and climbed 3.7% on a year-over-year basis. Zacks Rank #3 IBM reiterated EPS forecast for 2018. Non-GAAP EPS is expected to be at least $13.80. The Zacks Consensus Estimate is currently pegged at $13.84. (Read: IBM Beats on Q2 Earnings, z14 Mainframe Aids Top-Line Growth)

UnitedHealth Group Inc.’s UNH second-quarter 2018 earnings of $3.14 per share surpassed the Zacks Consensus Estimate of $3.03. Also, the reported figure was up 28% year over year. UnitedHealth posted revenues of $56.1 billion, which came in line with the Zacks Consensus Estimate.

In addition, the figure improved 12% year over year. UnitedHealth now expects 2018 net earnings of $11.80 to $12.05, up from the earlier projection of $11.70 to $11.95 per share. The stock has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Johnson & Johnson’s JNJ second-quarter 2018 earnings came in at $2.10 per share, beating the Zacks Consensus Estimate of $2.06 and increasing 14.8% from the year-ago period. Sales came in at $20.83 billion, beating the Zacks Consensus Estimate of $20.21 billion, increasing 10.6% from the year-ago quarter.

Zacks Rank #3 J&J expects 2018 adjusted earnings per share in the range of $8.07 - $8.17 compared with $8.00 - $8.20 expected previously. Revenues are expected in the range of $80.5 to $81.3 billion, lower than $81.0 to $81.8 billion. (Read: J&J's Q2 Earnings Beat on Higher Cancer Drug Sales)

The Travelers Companies, Inc.’s TRV second-quarter 2018 core income of $1.81 per share missed the Zacks Consensus Estimate of $2.43 by 25.5%. Also, the bottom line declined 5.7% year over year.

Total revenues of Zacks Rank #3 Travelers rose nearly 4.1% from the year-ago quarter’s figure to $7.5 billion. Also, the top line beat the Zacks Consensus Estimate of $7.3 billion. (Read: Travelers Q2 Earnings Miss & Down Y/Y, Revenues Top)

Microsoft Corporation MSFT posted fiscal fourth quarter adjusted earnings of $1.13 per share, beating the Zacks Consensus Estimate of $1.07 per share. The company saw revenue figures of $30.09 billion, topping our consensus estimate of $29.21 billion.

Zacks Rank #3 Microsoft's quarterly revenues jumped roughly 17% from the year-ago period. (Read: Microsoft Tops Q4 Estimates, Intelligent Cloud Revenue Up 23%)

JPMorgan JPM reported second-quarter 2018 earnings of $2.29 per share, which outpaced the Zacks Consensus Estimate of $2.22. The figure was up 26% from the prior-year quarter. JPMorgan has a Zacks Rank #3.

Net revenues as reported were $27.8 billion in the quarter, up 8% from the year-ago quarter. Also, the tally topped the Zacks Consensus Estimate of $27.6 billion. (Read: JPMorgan Q2 Earnings Beat on Higher Trading & Loans)

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 gained 0.1%.

Next Week’s Outlook

The week’s gains were clouded by losses on Thursday. The primary trigger for these reverses was familiar concerns about trade tensions. Further, President Trump’s comments about the Federal Reserves did not go down well with investors.

However, investors have largely ignored such concerns over the past two weeks. If markets continue to focus on earnings and economic data, indices will definitely resume their upward climb in the week ahead.

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International Business Machines Corporation (IBM) : Free Stock Analysis Report
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
United Technologies Corporation (UTX) : Free Stock Analysis Report
 
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
 
American Express Company (AXP) : Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
 
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
 
Walgreens Boots Alliance, Inc. (WBA) : Free Stock Analysis Report
 
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