Today's stock market news, Feb. 12, 2014: The Dow Jones Industrial Average soared more than 192 points on Tuesday after new Fed chair Janet Yellen stressed that monetary policy is unlikely to change under her leadership. The Dow ticked above 16,000 for the first time since Jan. 24. The S&P rose 1.1% to close at 1,819.75 and the Nasdaq increased 1% to 4,191.04.
Promising continuity of her predecessor Ben Bernanke's policies, Yellen outlined her goal of continuing to taper so long as "incoming information" showed improvements in job markets and pushed inflation toward the Fed's goals. Meanwhile, gold prices hit their highest levels since November 2013, rallying $16 yesterday to as high as $1,290.50 an ounce.
Five Biggest Stories in Today's Stock Market, Feb. 12, 2014:
Kicking the Can Down the Road: The Republican-controlled House of Representatives voted on Tuesday to raise the government's borrowing limit until March 2015, without any preset conditions. The voted passed 221 to 201, relying mostly on Democrats, with only 28 Republicans in support. The Senate could vote on the bill to raise the debt ceiling as early as today, although Sen. Ted Cruz (R-TX) may demand a 60-vote threshold.
Emerging Market Problems Rage On: The Procter & Gamble Co. (NYSE: PG), the world's largest manufacturer of consumer products, slashed its global earnings estimate for 2014. Citing unfavorable foreign exchange rates and currency devaluation in Argentina, Turkey, Venezuela, and other developing countries, the company expects a wide impact on its profitability. The New York Times reports that P&G now foresees its growth in the 3% to 5% range, down from a previous forecast of 5% to 7%. The stock is down less than 1% in early-morning trading.
Get Ready for a Proxy War:Charter Communications (Nasdaq: CHTR) has nominated 13 people to replace the entire board at Time Warner Cable (NYSE: TWC) in an aggressive takeover strategy. In January, Charter offered a cash-and-stock deal of nearly $38 billion, or about $132.50 per share, to Time Warner Cable shareholders. However, Time Warner's board rejected the offer, with its CEO demanding $160 per share. By replacing the board with Charter loyalists, the "lowball" deal would likely see approval.
Interest Rate Problems May Lie Ahead: President of the Federal Reserve Bank of Philadelphia Charles Plosser warned that interest rates could become problematic for Fed Chair Janet Yellen. Plosser said he is concerned that the Fed may wait too long, resisting the urge to raise interest rates in a timely manner. As a result, he foresees that the Fed may have to chase the market when raising rates. In her testimony to Congress yesterday, Yellen said it would be detrimental to raise interest rates in a poor economy, despite the fact that the U.S. is nearing the 6.5% unemployment rate target for a rate increase.
Minimum Wage Hike Today: U.S. President Barack Obama will sign an executive order today, raising the minimum wage for federal contract workers to $10.10 an hour beginning in 2015.
Note: The Fed's 2014 taper means volatility lies ahead. But there's still a way to find profits in a volatile market - like triple-digit gains in just days -if you start with this strategy...
U.S. Economic Calendar Feb. 12, 2014:
MBA Purchase Applications at 7:00 a.m.
St. Louis Federal Reserve Bank President James Bullard Speaks at 8:35 a.m.
Atlanta Fed Business Inflation Expectations at 10:00 a.m.
EIA Petroleum Status Report at10:30 a.m.
10-Yr Note Auction at 1:00 p.m.
Treasury Budget at 2:00 p.m.
Key Companies Reporting Earnings Feb. 12, 2014:
Consensus earnings per share for Cisco Systems Inc. (Nasdaq: CSCO) is $0.46.
Consensus earnings per share for Deere & Company (NYSE: DE) is $1.51.
Consensus earnings per share for Enbridge Energy Partners L.P. (NYSE: EEP) is $0.25.
Consensus earnings per share for Lorillard Inc. (NYSE: LO) is $0.86.
Consensus earnings per share for MetLife Inc. (NYSE: MET) is $1.30.
Consensus earnings per share for Morningstar Inc. (Nasdaq: MORN) is $0.77..
Consensus earnings per share for Whole Foods Market Inc. (NYSE: WFM) is $0.44.
Others Reporting Earnings:
TAL International Group, Inc. (TAL), Taubman Centers, Inc. (TCO), SPX Corporation (SPW), Qualstar Corp. (QBAK), Manchester United plc (MANU), Equifax Inc. (EFX), Forrester Research Inc. (FORR), CenturyLink, Inc. (CTL) B&G Foods Inc. (BGS), CBS Corp. (CBS), Vonage Holdings Corp. (VG), Zillow Inc. (Z)
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.