Dow 30 Stock Roundup: Pfizer's Big Buy, Boeing's Big Win

The Dow suffered losses over the week, weighed down by a number of factors. The specter of falling crude prices returned to haunt investors, following the release of data which raised concerns about oversupply. Meanwhile, a major pharma manufacturer faced allegations of overpricing, leading to losses for the entire healthcare sector. The only saving grace was the gain that came on Tuesday from a favorable home sales report and better-than-expected data on Europe.

Last Week’s Performance

The index lost more than 0.2% last Friday following concerns over chances of a sooner-than-expected rate hike. Fears regarding a rate hike heightened following hawkish comments from San Francisco Fed President John Williams.

Williams said that a “sooner rather than later” rate increase might be appropriate as the domestic economy is strengthening and is maintaining “good momentum.” Williams’ comments weighed on debt heavy sectors like utilities and telecom. Shares of Dow component Verizon (NYSE:VZ) lost 0.8%.

The Dow also lost 0.1% over last week. Rise in rate hike possibilities following hawkish comments from key Fed officials weighed on benchmarks. However, factors including crude hitting one month high, Fed’s July meeting minutes, and a rise in industrial output and home building curtailed some of the weekly losses.

The Dow This Week

The index slipped 0.1% on Monday after a decline in crude prices weighed on the energy sector. Analysts of Morgan Stanley (NYSE:MS) said that any agreement between major oil producing nations to freeze crude production is "highly unlikely." Moreover, China’s exports of gasoline and diesel last month advanced 145.2% and 181.8% year over year to 970,000 tons and 1.53 million tons, respectively.

Also, U.S. oil rig counts rose for eight straight weeks and the possibility of an increase in crude exports in Nigeria and Iraq also surfaced. All these factors had a negative impact on crude prices. Moreover, investors remained cautious ahead of Fed Chief Janet Yellen’s speech on U.S. economic policy at Jackson Hole, Wyoming on Friday.

The Dow gained 0.1% on Tuesday on upbeat new-home sales data and better-than-expected European private sector data. New home sales jumped 12.4% to a seasonally adjusted annual rate of 654,000 in July, reaching its highest settlement since October 2007. July’s reading beat the consensus estimate of 575,000 and soared 31.3% year over year.

Moreover, economic data indicated that the Eurozone’s economic recovery has improved this month, reducing concerns over the impact of “Brexit”. IHS Markit Ltd. reported that Europe’s composite Purchasing Managers Index increased to 53.3 in August from 53.2 in July. Also, manufacturing and service PMI came in at 51.8 and 52.8, respectively.

The index lost 0.4% on Wednesday following a decline in Mylan’s (NASDAQ:MYL) shares, which had a negative impact on biotech stocks and eventually on the broader healthcare sector. Strong political pressure on Mylan for over-pricing its life saving drug, EpiPen, led shares of the company to fall. The Dow reached its lowest settlement level since early August.

Moreover, a bigger-than-expected rise in crude inventories also weighed on investor sentiment. Moreover, sales of existing homes declined 3.2% in July from June to a seasonally adjusted rate of 5.39 million.

The index decreased 0.2% on Thursday as investors refrained from placing big bets ahead of Yellen’s Jackson Hole speech. Moreover, losses in healthcare and consumer discretionary stocks also weighed on investor sentiment. Poor earnings results from some retailers pulled down the consumer discretionary sector.

Meanwhile, Kansas City Fed President Esther George said that after observing the job market, inflation and Fed’s forecast for the same, she considers “that it would be appropriate” to raise rates gradually. Further, Dallas Fed President Robert Kaplan said that following “very good, healthy financial conditions,” it would be appropriate to raise rates.

Components Moving the Index

Pfizer Inc. (NYSE:PFE) and Medivation, Inc. (NASDAQ:MDVN) announced that they have entered into a definitive merger agreement under which Pfizer will acquire Medivation for $81.50 per share in cash or a total enterprise value of about $14 billion.

The acquisition, slated to close in the third or fourth quarter, is expected to be immediately accretive to Pfizer’s earnings by about 5 cents in the first full year after close with additional accretion and growth expected thereafter. Pfizer does not expect the deal to affect its guidance for 2016. (Read: Zacks Investment Research

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Written By: Zacks Investment Research