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This morning, stock market futures indicate a 100-point rise from yesterday's close on news that the Republican Party will control both chambers of Congress in 2015. The GOP picked up at least seven Senate seats during Tuesday's election, with the opportunity to snag an additional three in the coming weeks in Alaska, Louisiana, and Virginia. The party also shocked political pundits by winning a swath of gubernatorial elections, including the top executive spots in deep-blue states like Illinois, Maryland, and Massachusetts. The GOP is also likely to gain 14 to 18 seats in the House of Representatives. For a recap of what happens to stock markets after midterm elections, be sure to click right here.
Today, watch for the market's reaction to the ADP National Employment Report, which provides the first glimpse of job creation in the month of October. Consensus estimates call for the U.S. economy to have added 230,000 private sector jobs last month. A busy day of economic data and earnings reports also includes third-quarter results from electric vehicle giant Tesla Motors Co. (Nasdaq: TSLA) after the bell.
Here's what else you should know – including our Money Morning "Tip of the Day" – in stock market news today:
- Dollar Surge: The U.S. dollar hit a seven-year high against the yen, fueled by the results of the midterm elections and selling pressures from the Bank of Japan's announcement that it will accelerate its easing measures. The Japanese currency also hit a seven-year low against the euro one day before a pivotal meeting by the European Central Bank.
- Oui, Oui: The French government formally approved the purchase of Alstom SA's energy assets by U.S. industrial giant General Electric Co. (NYSE: GE). The 12.4 billion euro ($15.6 billion) deal was the subject of much deliberation this year, as the French government grew concerned that the acquisition could lead to job outsourcing. When the deal was announced in June, the French government said it would be taking a 20% stake in Alstrom from shareholder Bouygues.
- Excuses, Excuses: On a day when headlines focused on the excuses of politicians, few paid attention to the staunch defense of FireEye Inc.'s (Nasdaq: FEYE) poor earnings report by its Chief Executive Officer David DeWalt. Shares of the cybersecurity firm slipped by more than 20% after the company fell short of third-quarter revenue expectations. FireEye doubled its customer base and reported 168% year-over-year sales growth on $114.2 million. However, the figure fell short of analyst sales expectations and logged a fourth consecutive quarter-over-quarter slump. DeWalt said that the company's shift to cloud services placed near-term pressure on the stock, as the company shifts its business model that emphasizes up-front hardware sales to subscription services that provide reliable income streams.
- Earnings Blowout: Shares of Office Depot Inc. (NYSE: ODP) soared nearly 25% yesterday on news that the company raised its earnings outlook for 2014 and reported respectable third-quarter earnings. The office supplies chain said its merger with OfficeMax will help fuel at least $255 million in adjusted operating income this year, a steep increase from its previous forecast of $200 million. The company also reported quarterly earnings of $0.10 per share, excluding one-time items. Consensus estimates pegged Office Depot per-share earnings at $0.09.
- Oil Prices Today: Global oil prices slid again on Wednesday as the market continues to react to Saudi Arabian price cuts, concerns about oversupply, and weakness in the Eurozone. Brent crude, the global benchmark priced in London, slipped $0.60 to fall to a four-year low of $82.25. Meanwhile, December futures of WTI crude, which is priced in New York City, slipped to a three-year low of $76.81. The silver lining for producers of WTI is that the Republican Party is likely to move quickly on infrastructure projects to remove supply gluts and promote increased exporting of U.S. crude to customers around the world. A month before this election, our energy expert Dr. Kent Moors told Money Morning readers that a surge of U.S. oil exports is coming soon. Now, you can profit on it after yesterday's election.
- Earnings Reports: Stay tuned for earnings reports from American Water Works Co. Inc. (NYSE: AWK), CBS Corp. (NYSE: CBS), Continental Resources Inc. (NYSE: CLR), Molycorp Inc. (NYSE: MCP), Plains All American Pipeline LP (NYSE: PAA), Time Warner Inc. (NYSE: TWX), Chesapeake Energy Corp. (NYSE: CHK), and Covidien Plc. (NYSE: COV)
- Economic Calendar: Today's economic calendar features the ADP employment report, the EIA Petroleum Status Report, an update on U.S. job created, and a report on MBA purchase applications.
Full U.S. Economic Calendar November 5, 2014
- MBA Purchase Applications at 7 a.m.
- ADP Employment Report at 8:15 a.m.
- Gallup U.S. Job Creation Index at 8:30 a.m.
- 3-Year Note Announcement at 9 a.m.
- 10-Year Note Announcement at 9 a.m.
- 30-Year Bond Announcement at 9 a.m.
- Minneapolis Federal Reserve Bank President Narayana Kocherlakota speaks at 9:15 a.m.
- Richmond Federal Reserve Bank President Jeffrey Lacker speaks at 9:30 a.m.
- PMI Services Index at 9:45 a.m.
- Boston Federal Reserve Bank President Eric Rosengren speaks at 10 a.m.
- ISM Non-Manufacturing Index at 10 a.m.
- EIA Petroleum Status Report at 10:30 a.m.
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, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.