The Dow experienced another difficult week, weighed down again by disappointing earnings and international concerns. The blue-chip index declined on Monday following a selloff in Chinese markets. Stocks rebounded on Tuesday, following a barrage of positive earnings results.
The Dow ended higher on Wednesday after Fed's policymakers kept key interest rates unchanged and acknowledged that the economy and job market are strengthening. The blue-chip index dropped marginally on Thursday following positive GDP numbers and mixed corporate earnings results. The Dow has lost nearly 1% during the first four trading days.
Last Week's Performance
Declines in biotech and commodity related stocks dragged benchmarks down to the red on Friday. The Dow lost 0.9% as global growth concerns had a negative impact on commodity related stocks. In China the Caixin Markit flash general manufacturing PMI dropped to 48.2 in July, a 15-month low. Separately, the Eurozone flash PMI for July came in at 52.2, a 2-month low.
Oil prices also fell on Friday amid global supply glut, concerns about demand in China and increase in oil-drilling rigs in the u.s. Dow components Exxon Mobil Corp. (XOM – Analyst Report) and Chevron Corp. (CVX – Analyst Report) dropped 1.5% and 2.5%, respectively. Investors also grappled with disappointing data on new home sales, which declined 6.8% in June.
The Dow also registered its biggest weekly decline since January, losing 2.9%. Quarterly results from seven of its major components, including apple (AAPL –Analyst Report) and Microsoft (MSFT – Analyst Report) had a negative impact on the blue-chip index last week. Continuous slump in gold prices resulted in a selloff in mining stocks.
The Dow This Week
The blue-chip index lost 0.7% on Monday following a selloff in Chinese markets. Further decline in commodities also dented markets. The Dow closed about 127 points lower on Monday to hit its lowest level since Feb 2. The Shanghai Composite Index tanked 8.5% to close at 3,725.56, its worst one-day slide since Feb 2007. The Shenzhen Composite also declined 7% to 2,160.09, while the small-cap ChiNext ended 7.4% lower.
Adding to the list of concerns was Chinese industrial profits that dropped in June after it had gained on an annual basis in the prior two months. Chinese stock market rout along with continued concern about oversupply of oil negatively impacted crude oil prices on Monday. Exxon Mobil and Chevron dropped 0.9% and 1.6%, respectively.
Meanwhile, durable orders rose 3.4% in June, exceeding the consensus estimate of a 3.1% rise. Higher aircraft orders were cited to be the reason behind this increase.
The Dow rebounded on Tuesday, gaining 1.1%. A barrage of positive earnings results helped benchmarks snap a five straight session losing streak to end in the green on Tuesday. Pfizer's (PFE – Analyst Report) second quarter earnings and revenues came in above estimates. Shares of the drug manufacturer gained 2.9%. However, DuPont's (DD – Analyst Report) second quarter earnings and revenues fell short of expectations due to weakness in agricultural business and currency headwinds. Shares of DuPont declined 1.5%.
