Dow 30 Stock Roundup: AmEx, IBM, JNJ, Goldman Beat

The Dow experienced substantial gains over this week, powered primarily by strong earnings expectations and bullish results. The index ignored Trump’s hawkish comments on Iran to surge higher on Monday. The index hit a new intraday record on Tuesday and ultimately closed above 23,000 points on Wednesday. On Thursday, the index overcame the specter of the anniversary of the crash of 1987 to end in positive territory.

Last Week’s Performance

The index gained 0.1% last Friday following the release of retail sales data which posted its highest reading in more than two years. For the month of September, retail sales increased by 1.6%. Meanwhile, President Trump ‘decertified’ the Iran nuclear deal and also planned to terminate subsidies under Obamacare to health insurers.

The index gained 0.4% over last week. This was the Dow’s fifth consecutive week of gains. In the mean time, the release of the Federal Open Market Committee minutes clearly hinted at a rate hike in December. Moreover, the minutes stated that a majority of the Fed officials voted in favor of the rate hike.

Jobless claims plummeted to a six-week low after business resumed in Texas and Florida — areas pummeled by two destructive hurricanes. Moreover, broad based markets gained traction ahead of the beginning of third quarter earnings season as investors remained hopeful of a streak of strong earnings releases.

The Dow This Week

The index gained 0.4% on Monday after strong expectations from third quarter earnings led to broad based gains for the markets. The Dow amassed 85.24 points on Monday to end in positive territory. However, Trump’s comments on the Iran nuclear deal weighed on investor sentiment. Shares of JPMorgan Chase & Co. (NYSE:JPM) rallied 2% and contributed the most to the Dow’s ascent.

The index increased 0.2% on Tuesday after a slew of strong corporate earnings led gains for healthcare stocks. The Dow gained 40.48 points on Tuesday and surpassed the 23,000 psychological milestone in midday trading for the first time. The blue-chip index also hit a fresh intraday record of 23,302.20.

This also marked the Dow’s fastest ascent to 1,000-point milestone since mid July. In its history spanning over a century, the blue-chip index registered the fourth 1,000-point increase within a year for the first time.

The index gained 0.7% on Wednesday, closing above 23,000 points for the first time ever. The blue-chip index had closed above 22,000 for the first time on Aug 2. The Dow posted its fourth straight daily rise, including its 13th gain of the past 16 trading sessions. Upbeat corporate earnings results, mostly, by technology and financial companies helped the broader equity market gain traction.

The index inched marginally higher on Thursday, overcoming an initial loss of more than 100 points. The Dow was able to overcome selling pressures on the 30^th anniversary of the crash of 1987. Strong earnings results helped the index stay afloat despite the influence of political tensions from Europe and poor economic data emanating from China.

Components Moving the Index

American Express Company (NYSE:AXP) reported adjusted third-quarter earnings per share (EPS) of $1.50, beating the Zacks Consensus Estimate by 2%. Earnings witnessed a sharp 21% year-over-year improvement. American Express has a Zacks Rank #2 (Buy).

Revenues came in at $8.4 billion, 1.5% ahead of the Zacks Consensus Estimate of $8.3 billion. Top line increased 8.5% year over year on higher net interest income and Card Member spending.

The company guided its 2017 earnings per share higher to a range of $5.80-$5.90 from earlier guidance of $5.60-$5.80 to account for continued strength in business. (Read: American Express Q3 Earnings Top & Grow Y/Y, View Up)

International Business Machines Corp (NYSE:IBM) reported third-quarter 2017 non-GAAP earnings of $3.30 per share, which beat the Zacks Consensus Estimate by couple of cents. Earnings per share (EPS) were a penny better than the year-ago figure and surged 11.1% sequentially. IBM has a Zacks Rank #3 (Hold).

Revenues of $19.15 billion surpassed the Zacks Consensus Estimate of $18.62 billion but were almost flat on a year-over-year basis. At constant currency (cc), revenues declined 1%. Moreover, revenues fell 0.7% sequentially.

IBM reiterated EPS forecast for 2017. Non-GAAP EPS is expected to be at least $13.80. The company also anticipates 2017 free cash flow to remain flat over 2016. (Read: IBM Beats on Q3 Earnings & Revenues, Reiterates '17 EPS View)

Johnson & Johnson’s (NYSE:JNJ) third-quarter 2017 earnings came in at $1.90 per share, beating the Zacks Consensus Estimate of $1.80 and increasing 13.1% from the year-ago period. Including amortization expense and special items, J&J reported third-quarter earnings of $1.37 per share, down 10.5% from the year-ago period.

Sales came in at $19.65 billion, beating the Zacks Consensus Estimate of $19.28 billion by 1.9%. Sales increased 10.3% from the year-ago quarter, reflecting an operational increase of 9.5% and a positive currency impact of 0.8%.

Zacks Rank #2 rated J&J expects 2017 adjusted earnings per share in the range of $7.25 - $7.30 compared with $7.12 - $7.22 expected previously. The revenue guidance was raised to a range of $76.1 billion to $76.5 billion compared with $75.8 billion to $76.1 billion expected previously. (Read: J&J Beats on Q3 Earnings, Actelion Buyout Drives Sales)

UnitedHealth Group Inc. (NYSE:UNH) reported third-quarter net operating earnings per share of $2.66, comfortably beating the Zacks Consensus Estimate of $2.57 and increasing 22.6% year over year.

Zacks Rank #2 UnitedHealth posted net revenues of $50.3 billion, in line with the Zacks Consensus Estimate. Revenues were up 8.7% year over year. The company reported medical care ratio of 81.4%, up 110 basis points year over year.

Encouraged by its strong earnings performance, the company raised its outlook for 2017 earnings. The company now expects 2017 GAAP net earnings to approach $9.45 per share (versus $9.20 to $9.35 per share earlier) and adjusted net earnings to near $10.00 per share (versus the previous guidance of $9.75-$9.90). (Read: UnitedHealth Beats Q3 Earnings on Higher Membership)

The Goldman Sachs Group, Inc.’s (NYSE:GS) third-quarter 2017 results recorded a positive earnings surprise of 16.5%. The company reported earnings per share of $5.02, comfortably beating the Zacks Consensus Estimate of $4.31. Further, the bottom line witnessed 3% year-over-year improvement.

Goldman’s net revenues climbed 2% year over year to $8.3 billion in the quarter under review. Furthermore, revenues handily outpaced the Zacks Consensus Estimate of $7.6 billion. The stock has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

The Travelers Companies, Inc.’s (NYSE:TRV) third-quarter 2017 core income of 91 cents per share comfortably beat the Zacks Consensus Estimate of 52 cents by a whopping 75%. However, the bottom line plunged 62.1% year over year.

Total revenue of Zacks Rank #4 (Sell) Travelers improved nearly 5.2% from the year-ago quarter to $7.3 billion. Also, revenues surpassed the Zacks Consensus Estimate of $7.0 billion. (Read: Travelers Q3 Earnings Surpass Estimates, Slump Y/Y)

Verizon Communications Inc. (NYSE:VZ) reported mixed financial numbers in the third quarter of 2017. Quarterly-GAAP net income was $3,736 million compared with $3,747 million in the year-ago quarter. Adjusted earnings per share were 98 cents in the reported quarter, in line with the Zacks Consensus Estimate. Verizon has a Zacks Rank #3.

However, total revenue increased 2.5% year over year to $31,717 million beating the Zacks Consensus Estimate of $31,252 million. Total operating expenses in the quarter under review were $24,509 million, up 0.5% year over year. (Read: Verizon Q3 Earnings in Line, Revenues Beat 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 gained 1.3%.

Next Week’s Outlook

The Dow has notched up historically impressive gains this week, powered primarily by strong expectations from the third quarter earnings season. Actual reported numbers have also been impressive, by and large. This factor alone has helped markets ignore Trump’s hawkish pronouncements and dismal developments abroad. Such trends are likely to continue over next week. An encouraging GDP report, slated for release during this period, could add further positive momentum to market proceedings.

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