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Good morning! Dow futures for Wednesday, Dec. 17, forecasted a 75-point increase from yesterday's close. The Dow Jones fell more than 100 points on Tuesday in another volatile trading session. The markets erased triple-digit gains from earlier in the session, while economic deterioration in Russia accelerated and oil prices slumped.
Today, investors will keep an eye on the Federal Reserve's statements after the conclusion of the FOMC meeting this afternoon. The markets will continue to react to falling oil prices and deteriorating economic conditions in Russia, where the ruble collapsed more than 11% yesterday. With Russia's economy now facing its worst crisis since 1998, there is growing concerns about what President Vladimir Putin will do under pressure. Meanwhile, Pacific Investment Management Co. (PIMCO) is reeling on news that the company is facing significant losses on Russian bonds. According to reports, almost every bullish option on the Russian currency is now worthless due to the crash and Forex brokers in both the U.S. and London are refusing to accept trades in the ruble.
Here's what else you should know about the stock market today – including your "Money Morning Tip of the Day" – to make it a profitable Wednesday:
- Russian Fallout: The economic situation in Russia has eroded share value for a number of U.S. companies that rely on the market for sales growth. Yesterday, shares of Apple Inc. (Nasdaq: AAPL) slipped on news that the company will halt sales from its online store in Russia in the face of a collapsing ruble. Meanwhile, shares of PepsiCo Inc. (NYSE: PEP) slipped more than 1.6% on the day. The company relied on the Russian market for 7.4% of its company revenues in 2013.
- Energy Fallout: Shares of Tesla Motors Co. (Nasdaq: TSLA) slipped another 3%, falling below $200 per share for the first time since May 20. The stock is now down more than 30% since hitting a record of $286.04 on Sept. 4. Despite the downturn, the company has not faced one downgrade from a major investment bank. This signals that many analysts believe the company is simply a victim of declining energy prices in the United States and China.
- Tech Struggles: Shares of Google Inc. (Nasdaq: GOOGL) fell to a 14-month low this afternoon, sliding more than 3.4%. The slump came after a JP Morgan Chase & Co. (NYSE: JPM) analyst slashed his estimates on Google's financial performance and lowered his price target to $600. The decline came on the same day that the company announced a new "buy now" button on its shopping sites designed to target the "one click" sale icon of Amazon.com Inc. (Nasdaq: AMZN). Shares of Amazon were down 3.5%. A tech sell-off rattled the sector in the afternoon. Shares of Twitter Inc. (Nasdaq: TWTR) slipped 4.6%; Apple Inc. (Nasdaq: AAPL) slipped 1.3%; and Yelp Inc. (Nasdaq: YELP) slumped more than 6%.
- So Long Dov: Shares of American Apparel Inc. (NYSE: APP) rose more than 8.6% in post-market hours on news that the company terminated the job of its CEO Dov Charney. The company's board of directors will install veteran fashion expert Paula Schneider as Charney's successor and the firm's first CEO in its history. Charney had been suspended since June 18.
- Restaurant Rumblings: Shares of Darden Restaurants Inc. (NYSE: DRI) were up nearly 1.6% in post-market hours on news that the company reported better-than-expected quarterly earnings. Meanwhile, Ruby Tuesday Inc. (NYSE: RT) slipped nearly 4% on news that the company saw same-restaurant sales slip by 1.1% in the second quarter.
- Oil Prices Today: In the wake of falling energy prices, industrial giant General Electric Co. (NYSE: GE) cut its 2015 profit forecast, saying that slumping oil prices will affect its energy tech business. This morning, January 2015 futures for U.S. crude, priced at the NYMEX in New York City, slipped almost 2% to $54.84 per barrel. Meanwhile, Brent crude, priced in London, retreated again by more than 1% to$59.38 per barrel.
Earnings Reports:Stay tuned for earnings reports from FedEx Corp. (NYSE: FDX), General Mills Inc. (NYSE: GIS), and Oracle Corp. (NYSE: ORCL).
- Economic Calendar: Today's economic calendar features the FOMC meeting announcement, the EIA Petroleum Status Report, and an update to the consumer price index.
Full U.S. Economic Calendar December 17, 2014
- MBA Purchase Applications at 7 a.m.
- Consumer Price Index at 8:30 a.m.
- Current Account at 8:30 a.m.
- EIA Petroleum Status Report at 10:30 a.m.
- FOMC Meeting Announcement at 2 p.m.
- FOMC Forecasts at 2 p.m.
- Chair Press Conference at 2:30 p.m.
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.