Dow 30 Stock Roundup: Cisco To Buy Acacia, Microsoft & ServiceNow Partnernership

The index endured a turbulent week but gained after the Fed Chair indicated that a rate was likely later this month. Last Friday’s strong jobs numbers spooked investors on the first two trading days of the week since they dampened hopes of a near-term rate cut. However, Jerome Powell’s testimony to Congress allayed such fears, assuring investors that a reduction in rates was nearly certain.

Last Week’s Performance

The index lost 0.2% last Friday despite robust job additions in June. The U.S. economy added 224,000 jobs last month compared with a revised 72,000 in May, exceeding the consensus estimate of 161,000. Investors’ fears that strong labor market data will delay a rate cut by the Fed, scheduled to meet on July 30-31, led to these losses. With these losses, the Dow ended a four-day winning streak.

The index gained 1.2% last week. Last week’s rally was primarily fueled by strong expectations of a rate cut by the Fed in July. The resumption of trade talks between the United States and China also boosted investors’ confidence. Notably, the two sides agreed not to impose further tariffs on each other at least for the time being.

The Dow This Week

The index declined 0.4% on Monday as investors awaited Jerome Powell’s testimony later in the week. Further, stronger-than-expected jobs data for June dampened hopes for a rate cut by the Fed after its next meeting. Shares of Boeing (NYSE:BA) declined 1.3% and weighed on the Dow. The aerospace giant lost out to Airbus on a $5.5 billion deal with a Saudi Arabian airlines company.

The index lost 0.1% on Tuesday as investors awaited Powell’s testimony. Market watchers expected that the Fed Chief would shed some light on the future of the U.S. monetary policy. Shares of 3M (NYSE:MMM) declined 2.1% and weighed on the Dow.

The index gained 0.3% on Wednesday following Powell’s testimony before Congress. The Fed Chief stated that the central bank would act appropriately to support the country’s economic growth. Further, minutes from the Fed’s latest meeting also hinted at a softer policy stance.

The index surged 0.9% to hit a record high on Wednesday, crossing the 27,000-mark for the first time. Investors were reasonably confident after this week’s comments from the Fed Chair that a rate hike will take place later this month. Shares of UnitedHealth (NYSE:UNH) gained more than 5% after the Trump administration backed off from a proposal to do away with drug rebates.

Components Moving the Index

Cisco Systems (NASDAQ:CSCO) recently expressed its intention to acquire Acacia Communications (NASDAQ:ACIA) , an optical networking technology company, for $2.6 billion in cash and marketable securities. Consequently, Acacia shareholders will obtain $70 per share in cash, approximately a premium of 46% over the $64.91 price on Jul 8, 2019.

Cisco anticipates the acquisition to close in the second half of next year subject to customary closing conditions. Post deal closure, Acacia will join Cisco's Optical Systems and Optics group — networking and security business.

Massachusetts-based Acacia designs, develops, manufactures and markets communication equipment. The company offers coherent optical interconnect products for cloud infrastructure operators and content and communication service providers.

It operates primarily in the Americas, Europe, the Middle East, Africa, and the Asia Pacific region. The stock has a Zacks Rank #2 (Buy). You can see Zacks Investment Research

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Written By: Zacks Investment Research