Good Morning! Following this weekend's Greek election, the U.S. stock market opened down today (Monday). Greek voters elected its anti-austerity party into office, and new concerns have also emerged about the country potentially departing the Euro.
On Friday, the Dow Jones fell 141 points as weak earnings and soft economic data offset confidence spurred by another pending global stimulus package.
What to Watch Today: Keep a keen eye on Greece. Over the weekend, Greek voters gave power to its far-left, anti-austerity party Syriza. The party, which received 36% of the vote, has promised to renegotiate terms of the nation's harsh bailout terms. Leaders across Europe have shared their concerns about the state of Greece's economy and how its new leadership is expected to affect the wider Eurozone.
This morning, UK Prime Minister David Cameron tweeted "The Greek election will increase economic uncertainty across Europe. That's why the UK must stick to our plan, delivering security at home."
On the home front, the market is expected to react to a number of mergers this morning, as companies continue to consolidate in order to boost market share and reduce costs.
Here's what else you should know about the stock market today - including your "Money MorningTip of the Day" - to make it a profitable Monday:
Stocks to Watch: Telecom giant AT&T Inc. (NYSE: T) is making a huge plunge into the emerging market of Mexico. This morning, the company announced intentions to purchase Nextel Mexico from NII Holdings Inc. for approximately $1.88 billion. This is the second large acquisition that the company has made south of the border. The network will provide America's largest telecom firm with 76 million new customers in the Mexican wireless market. Shares of AT&T were down marginally in premarket hours.
Merger Mania: Packaging companies RockTenn Co. (NYSE: RKT) and MeadWestvaco Corp. (NYSE: MWV) will merge as part of a $16 billion deal. Under the terms of agreement, MeadWestvaco will own 50.1% of the new company. RockTenn shareholders will own the balance. According to a company statement, the firms expect to save $300 million in combined costs over the next three years. Shares of MeadWestaco jumped nearly 20% this morning.
Deal Day: Shares of Axis Capital Holdings Limited (NYSE: AXS) were up more than 3% this morning on news that the reinsurance firm will merge with PartnerRe Ltd. (NYSE: PRE). The firms will form a new company expected to be worth approximately $11 billion. Meanwhile, cereal giant Post Holdings Inc. (NYSE: POST) announced plans to purchase privately-held MOM Brands Co. for $1.15 billion. The acquisition will provide Post with Berry Colossal Crunch and Frosted Mini Spooners the firm's wide range of cereal brands.
Oil Prices Today: Oil prices steadied this morning on news that the Secretary-General of OPEC said he expected the market to bottom out near current levels. The news erased concerns about continued falling prices after Saudi Arabia said it will stand pat on its oil policy. The nation's King Abdullah passed away last week at the age of 90. The largest OPEC producer said it will not shed any production despite falling crude prices. Today, March 2015 futures for WTI oil increased nearly 0.8% to $45.88 per barrel. Meanwhile, Brent oil jumped about 0.5% to hit $49.07 per barrel.
Profit Play: Shares of D.R. Horton Inc. (NYSE: DHI) surged more than 7% this morning after the company reported stronger-than-expected earnings on rising home deliveries. The company said earnings for the quarter ending Dec. 31 hit $142.5 million or $0.39 per share. DHI significantly surpassed expected per-share earnings of $0.34 for the quarter.
Earnings Reports: Stay tuned for an earnings report from W. W. Grainger Inc. (NYSE: GWW), Microsoft Corp. (NYSE: MSFT), and Bank of Hawaii Corp. (NYSE: BOH).
Full U.S. Economic Calendar Jan. 26, 2015
PMI Services Flash at 9:45 a.m.
Dallas Fed Manufacturing Survey at 10:30 a.m.
4-Week Bill Announcement at 11 a.m.
3-Month Bill Auction at 11:30 a.m.
6-Month Bill Auction at 11:30 a.m.
Money Morning Tip of the Day: Looking at the "Big Four" in the U.S. banking sector, one might think the sector is undervalued. But that conclusion may be a bit misleading. Make no mistake - by traditional measures, banks look cheap, and their stocks could do fine until the next financial crisis. But that's the problem. Looking at banks that way ignores the elephant on their balance sheets, and the potential damage to our portfolios. Here's what's really driving this critical economic sector into a "buyer beware" investment category...
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.