Good morning!
This morning (Tuesday), stock market futures suggest an open 24 points below Monday's close as oil prices continue to fall on a rising dollar and the announcement that Saudi Arabia will slash oil prices to the United States. On Monday, markets retreated after the Dow Jones and the S&P 500 both reached record intraday highs as oil stocks and materials slipped after a sharp decline in oil prices. The decline in oil prices is weighing heavily on oil super majors. Shares of Chevron Corp. (NYSE: CVX), Exxon Mobil Corp. (NYSE: XOM), and BP Plc. (NYSE ADR: BP) are all down more than 1% in pre-market hours.
Today is midterm election day, meaning American voters will decide how Democrats or Republicans will share power in Congress over the next two years. Our Chief Investment Strategist Keith Fitz-Gerald says we can expect a modest rally if the GOP takes the Senate. However, the S&P Volatility Index (VIX) could rise this week if several races remain unresolved or require run-off elections to decide the fate of the Senate.
The other story to keep your eye on is the quarterly earnings report from e-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA). Alibaba shares retreated nearly 1% in pre-market hours despite news that the company reported $2.74 billion in revenues, besting expectations of $2.61 billion. But while Wall Street experts analyze Alibaba's earnings per share and revenue figures, there is something much more important to look for in Alibaba's Q3 earnings report.
Here's what else you should know - including our "Money Morning Tip of the Day" - in stock market news today:
- Ackman Cheers: Shares of Herbalife Ltd. (NYSE: HLF) slipped about 14% before the bell after the nutrition company issued missed analyst expectations in the third quarter. After the bell yesterday, the company reported third-quarter adjusted per-share earnings of $1.45, off from the $1.51-per-share expectations. The firm also said its profits slipped by 92% over the quarter.
- Playing Nice: In a rare move of cooperation, Apple Inc. (Nasdaq: AAPL) and Google Inc. (Nasdaq: GOOGL) have agreed to allow customers who purchase Walt Disney Co. (NYSE: DIS) films to watch their programs on either rival's operating system. If a customer purchases a film in the Apple Store, they will also be able to watch the film on an Android tablet, which was previously disallowed. The news is a win for the television and film industries, which have long argued against sales practices that lock a user into one device, a practice that wasn't possible with DVD sales.
- Sprint Slumps: The nation's third-largest mobile company, Sprint Corp. (NYSE: S) announced plans to slash 2,000 jobs as part of a broader effort to reduce costs. The company's stock fell by almost 14% in pre-market hours after the company missed earnings expectations in the fiscal fourth quarter. These disappointing results, however, did occur during a major leadership transition. In August, Marcelo Claure became the new president and chief executive officer.
- Banks Behaving Badly: It seems that JPMorgan Chase & Co. (NYSE: JPM) can't stay out of the news when it comes to banking scandals. Yesterday, the company disclosed an SEC filing that reveals the Department of Justice is conducting a criminal investigation into the firm's foreign-exchange business. The probe is examining whether a number of traders used online chat rooms to collude and set rates in the Forex market. The company has set aside $5.9 billion for potential legal costs.
- Oil Prices Today: The price of Brent crude slumped again on news that Saudi Arabia slashed prices to the United States. Brent oil slipped more than 2.7% to hit $82.46. The global benchmark, priced in London, has fallen over four straight trading sessions. Meanwhile, December contracts for WTI crude, which is priced in New York, slipped another 2.8% to hit $76.53 a barrel. This is the lowest price for WTI since October 2010.
- Earnings Reports: Stay tuned for earnings reports from Alibaba Group Holding Ltd. (NYSE: BABA), DISH Network Corp. (Nasdaq: DISH), Icahn Enterprises LP (NYSE: IEP), Potbelly Corp. Nasdaq: PBPB), and Zoetis Inc. (NYSE: ZTS).
- Economic Calendar: Today's economic calendar features the weekly ICSC-Goldman store sales update, international trade figures, and an update on U.S. factory orders.
Full U.S. Economic Calendar
- ICSC-Goldman Store Sales at 7:45 a.m.
- Gallup US ECI at 8:30 a.m.
- International Trade at 8:30 a.m.
- Redbook at 8:55 a.m.
- Factory Orders at 10 a.m.
- 4-Week Bill Auction at 11:30 a.m.
Money Morning Tip of the Day: With the end of the Federal Reserve's massive quantitative easing program, many investors are worried about the future of U.S. monetary policy. As Peter Krauth explains, the central bank's grip on managing interest rates is weakening, prompting many to worry about what happens when the jolt comes. But if you're worried about what happens when rates start to increase, there is one step you can take to avoid crisis in your portfolio.
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.