The Dow had a largely positive week after the Fed hinted that there would be no sooner-than-expected rate hike. The blue-chip index gained on Monday despite losses made by tech and small-cap stocks. Indications that the Fed would not raise rates sooner-than expected helped the Dow register an increase on Tuesday.

The Dow gained on Wednesday after the Fed said it would continue with low rates for a “considerable time.” Promising initial claims data and a spillover effect of the Fed statement helped the blue chip index notch up gains once again on Thursday. The Dow has gained 1.4% during the first four trading days.

Last Week’s Performance

The Dow lost 0.4% last Friday following a drop in energy shares and a rise in U.S. bond yields. Investors also remained apprehensive about Fed providing clues on a sooner-than-expected rate hike. Upbeat retail sales and positive consumer sentiment data showed signs of economy gaining traction, intensifying speculations about the rate hike.

The U.S. Department of Commerce reported that seasonally adjusted sales of retail and food services rose 0.6% in August, its biggest gain in four months. The University of Michigan and Thomson Reuters’ preliminary reading of consumer sentiment touched 84.6, its highest level in September since July 2013.

Over the week, the blue-chip index lost 0.9%. This marked the end of the five week winning run for the Dow as well as other benchmarks. Energy stocks dragged the S&P 500 and the Dow down to the red on Monday. The drop in energy shares came after crude prices extended their losses to hit multi-month low.

On Tuesday, benchmarks dropped to their lowest levels in weeks as concerns about sooner-than-expected rate hike raised bond yields to a record level. Decline in Apple Inc.’s (AAPL) shares also impacted markets negatively. However, markets ended in the green on Wednesday after a rally in Apple’s shares boosted the technology sector.

Thursday saw a choppy trading session as renewed geopolitical tensions and disappointing jobless claims dented sentiment. However, gains in small-cap stocks and oil prices offset most of the day’s initial losses.

The Dow This Week

The Dow gained 0.3% on Monday despite declines in technology and small-cap stocks. Investors refrained from placing big bets ahead of the much-awaited Federal Reserve’s two-day policy meeting. They remained apprehensive that the Fed would provide clues on a sooner-than-expected key interest rate hike. Investors also remained cautious ahead of the public debut of Alibaba Group and the Scottish independence vote. Disappointing economic data out of China too led to cautious trading.

Benchmarks settled in the green on Tuesday following a report from The Wall Street Journal stating Fed might not raise interest rate sooner-than-expected. Investor sentiment improved when Jon Hilsenrath said the central bank might not amend the words “considerable time” in its guidance for a while, but qualify them.

Meanwhile, investors awaited the outcome of the Federal Reserve’s two-day policy meeting that started on Tuesday to gain further insight into what could possibly be the Fed’s next move. Gains in energy shares due to rise in oil prices also had a positive impact on benchmarks. Further, People’s Bank of China’s decision to provide loans to its biggest banks added to the bullish sentiment. The Dow increased 0.6%.

The Dow had hit an intraday record high of 17,221 on Wednesday but closed at 17,156.85, still up 0.2%. Benchmarks eked out small gains on Wednesday following Fed’s decision to continue with low rates for a “considerable time.” Meanwhile, strong homebuilder confidence along with better-than-expected quarterly results of Lennar (LEN) helped housing stocks outperform the broader markets.

The Fed pledged not to hike rates immediately after the end of the quantitative easing program. Separately, economic projections that were released on Wednesday showed that the Fed believes federal funds rate will be at 1.375% by the end of 2015. Meanwhile, the National Association of Home Builders/Wells Fargo (WFC) said the U.S. homebuilders’ sentiment touched the highest level since Nov 2005. The sentiment gauge went up to 59 in September from August’s reading of 55.

Benchmarks settled in the green on Thursday a day after Fed pledged to keep short-term interest rates near zero for a “considerable time.” Investors were also buoyed by a drop in initial claims numbers that indicated labor market is gaining traction.

The U.S Department of Labor reported that seasonally adjusted initial claims decreased 36,000 to 280,000 in the week ending Sep 13. This decrease in applications for unemployment benefits reached the second-lowest level in 14 years. The blue-chip index gained 0.6% to close at a record-high.

Components Moving the Index

The Boeing Co. (BA) and Elon Musk's Space Exploration Technologies Corp., or SpaceX, has been selected by NASA to transport U.S. crews to and from the International Space Station or ISS. The contracts, worth $6.8 billion in total, strive to end the nation's sole reliance on Russia.

Boeing is to receive a $4.2 billion contract from the government while SpaceX has been awarded a $2.6 billion contract. Though NASA did not divulge details relating to the contracts, it however maintained that both the companies would have to meet safety and operating standards. The space taxi is slated to transport its first astronaut to the orbiting laboratory by 2017.

Additionally, United Launch Alliance (:ULA) — a joint venture of Lockheed Martin Corp. (LMT) and The Boeing Co. — won a sizable contract, worth $938.4 million, from the U.S. Air Force for Evolved Expendable Launch Vehicle or EELV launch capability for the Delta IV and Atlas V families of rockets.

In a separate development, Boeing said the leasing company Avalon has honored its commitment made during the 2014 Farnborough Airshow in July. Avolon has finalized the order for six 787-9 Dreamliners and five 737 MAX 9s, valued at more than $2.1 billion at list price.

Cisco (CSCO) expressed its intent to acquire Pasadena, CA-based, privately-held, Metacloud. Financial terms of the deal were not disclosed.

The acquisition is targeted at accelerating Cisco’s Intercloud strategy, which aims to connect private, public and hybrid clouds in collaboration with its partners.

Metacloud's OpenStack-based cloud platform will step up Cisco's strategy to assemble the Intercloud.

Cisco's acquisition of Metacloud's OpenStack Private Cloud-as-a-Service platform will play a critical role in accelerating the journey of Cisco’s customers to the cloud.

Merck & Co. Inc. (MRK) announced encouraging data from a pivotal phase III fracture outcomes study evaluating the use of odanacatib in postmenopausal women suffering from osteoporosis.

The study met the primary endpoint. Odanacatib significantly reduced the risk of new and worsening morphometric vertebral fractures (54%), clinical hip fractures (47%), clinical non-vertebral fracture (23%) and clinical vertebral fractures (72%) compared with placebo.

In another development, Merck entered into a worldwide licensing agreement with Sun Pharmaceutical Industries Ltd. The agreement is for Merck’s late-stage dermatology candidate, tildrakizumab, (MK-3222). Tildrakizumab is being evaluated for the treatment of chronic plaque psoriasis.

According to the agreement, Sun Pharma will have worldwide rights to tildrakizumab for use in various indications for an upfront payment of $80 million, while Merck will remain responsible for all clinical development and regulatory activities. These activities, however, will be funded by Sun Pharma.

In exchange, Merck is entitled to receive milestone payments along with tiered royalties ranging from mid-single digit through teen percentage rates on its sales.

American Express Company (AXP) credit cards will no longer be accepted by Costco Wholesale Corporation in Canada from next year. Costco’s credit card ties with American Express is set to expire at the end of this year, post which it will not be renewed.

However, the Costco will continue to accept American Express credit cards at its U.S. warehouses and gas stations from Jan 1, 2015. At the same time, Costco will not accept TrueEarnings and American Express Platinum Cash Rebate cards issued in Canada.

American Express was the sole credit card which was accepted by the warehouse chain. Also, back in 2010, both Costco and this leading U.S. credit card issuer announced plans to introduce special reward cards for their Canadian customers. Hence, this announcement is likely to bring in huge losses for American Express Canada.

Wal-Mart Stores, Inc. (WMT) has been accused of running false advertisements and overcharging customers in New York for products of The Coca-Cola Co, as per Bloomberg. The retail giant will thus have to pay a penalty of $66,000 according to the New York Attorney General.

Per the accusation, Walmart has been charging higher prices for Coca-Cola (KO) soft drinks than stated during promotions. The company charged $3.50 for 12-packs of the soft drinks in New York stores instead of $3.00 as stated in advertisements, per the state attorney general. Not only this, reportedly one store staff falsely told a customer that the extra charge was due to a sugar tax.

Walmart, for its part, neither admitted nor denied the accusations but agreed to improve its practices to avoid such issues in the future.

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 1.4%.

Next Week’s Outlook

The Fed statement has overshadowed most other events this week, emerging as the single most important factor guiding markets. Ultimately, the central bank’s pledge to continue with lower interest rates for “considerable time” has reassured investors to a great extent. The spectre of plunging oil prices has also diminished significantly.

Next week features a series of key economic reports. This includes data on home sales, consumer confidence, durable orders and initial claims. Friday will witness the release of the crucial final GDP numbers for the second quarter. Taken together, these reports may well guide the markets in the days ahead.

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