Good Morning! Stock market futures today (Tuesday) forecast a 43-point increase for the Dow from yesterday's close. New hopes for a Greek debt deal, rising oil prices, and surprise earnings reports are pushing markets higher this morning.
The Dow Jones jumped 196 points Monday in a volatile trading session. Why the rise? Oil prices surged again after a massive strike at U.S. refineries created supply concerns and speculation continued over production cuts from domestic oil firms.
What to Watch Today: This morning, optimism for a debt deal between Greece's new left-wing leadership and the European Union boosted the markets. According to Reuters, Greek Finance Minister Yanis Varoufakis traveled to London to offer reassurances to private investors that the country would honor obligations to privately held bonds in an effort to reduce losses. The minister said he was not attempting to begin a fight against Brussels for a new debt agreement.
Investors will also react to planned production cuts from one of the world's largest energy companies. Finally, they'll look for clues on when the U.S. Federal Reserve could raise interest rates during two speeches by members of the central bank.
Here's what else you should know about the stock market today - including your "Money MorningTip of the Day" - to make it a profitable Tuesday:
Oil Prices Today: Were the Saudi Arabia oil ministers right about who would blink first between themselves and U.S. producers? Crude oil prices are on the rise on speculation that U.S. producers are beginning to slash production for 2015. Today, March 2015 futures for WTI crude jumped nearly 2.5% hit $50.77 per barrel. Meanwhile, Brent oil rallied another 2.6% to hit $56.19 per barrel. Shares of energy giant BP Plc. (NYSE ADR: BP) were up roughly 1.5% this morning after the company reported earnings and said it will slash its capital expenditures for 2015 by 13%. Last week, its rival Chevron Corp. (NYSE: CVX) announced a 13% cut to Capex for the year.
Merger Mania: Shares of Office Depot (Nasdaq: ODP) were up more than 17% this morning on news the company is in advanced discussions to merge with rival Staples Inc. (Nasdaq: SPLS). Shares of Staples were up more than 10% on the news. Rumors of a possible deal had been brewing since activist investor Starboard Value LP disclosed large stakes in both office supply retailers in December. According to the filings, the investor holds a 5.1% stake in Staples and a 10% stake in Office Depot.
BABA Buy: Shares of Lending Club Corp. (NYSE: LC) were up more than 10% on news that the peer-to-peer lending company has partnered with Alibaba Group Holding Ltd.'s (NYSE: BABA) wholesale marketplace. The partnership will provide financing to American businesses looking to purchase products from Chinese suppliers. Alibaba has been seeking innovative ways to attract more U.S. customers. It's just one reason why Alibaba is an attractive stock to buy right now. Last week, investors overreacted when the company reported a small quarterly revenue miss. But that's a huge mistake, because Alibaba is a great long-term stock.
Daily Deal: U.S. e-commerce giant Amazon.com Inc. (Nasdaq: AMZN) is reportedly in discussions to purchase a portion of RadioShack Corp. (NYSE: RSH) as the struggling retailer files for bankruptcy, according to Bloomberg. A source said Amazon would consider using former RadioShack stores as pickup and drop-off centers and as a showcase center for hardware products like the Kindle. Amazon is among other bidders for the locations, including an investment group at BlackRock and Sprint Corp. (NYSE: S). Shares of RadioShack are down another 33% this morning and are now worth a paltry $0.16.
Earnings Reports today include United Parcel Service Inc. (NYSE: UPS), Walt Disney Co. (NYSE: DIS), Emerson Electric Co. (NYSE: EMR), BP Plc. (NYSE ADR: BP), Aetna Inc. (NYSE: AET), Archer-Daniels-Midland Co. (NYSE: ADM), Eaton Corporation Plc. (NYSE: ETN), National Oilwell Varco Inc. (NYSE: NOV), Pentair Plc. (NYSE: PNR), New York Times Co. (NYSE: NYT), Church & Dwight Co. Inc. (NYSE: CHD), and Airgas Inc. (NYSE: ARG).
Gallup U.S. Consumer Spending Measure at 8:30 a.m.
Gallup U.S. ECI at 8:30 a.m.
Redbook at 8:55 a.m.
Louis Federal Reserve Bank James Bullard speaks at 10 a.m.
Factory Orders at 10 a.m.
4-Week Bill Auction at 11:30 a.m.
52-Week Bill Auction at 11:30 a.m.
Minneapolis Federal Reserve Bank Narayana Kocherlakota speaks at 12:45 p.m.
Money MorningTip of the Day: A falling oil rig count plus steadily growing demand will trigger higher oil prices.
Baker Hughes reported Friday that the U.S. oil rig count dropped to a three-year low of 1,223. That's a 94-rig decline - the biggest weekly drop since the oilfield services company started collecting data in 1987. This news contributed to Friday afternoon's 8% spike in oil prices.
Meanwhile, demand for crude oil has been steadily climbing since 2009. Worldwide liquid fuel use will grow to 119 million barrels per day by 2040, according to the Energy Information Administration. That's a 30% gain over the next 25 years.
Given the increase in future demand, something has got to give. As the rig count falls, supply will become stretched too thin. At that point, higher oil prices are a given. Friday's 8% rally is just the beginning.
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.