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Dow Jones futures today forecasted a 24-point decrease from yesterday's close on concerns that rising oil prices are fading. The DJIA surged another 305 points Tuesday after oil prices rose for a fourth consecutive trading session. Improving auto sales and hopes for a Greek debt deal also lifted stocks on the day.
Today will be another busy day of earnings reports, but investors should be keeping an eye on the January private payroll employment growth from Automatic Data Processing, two days ahead of the latest U.S. unemployment report.
Despite rosy projections about employment in the United States, yesterday the polling firm Gallup's CEO Jim Clifton wrote a scathing editorial on his company's site that shamed U.S. data collectors for lying about the official unemployment rate, which currently sits at 5.6%. In the editorial titled "The Big Lie," Clifton explained that his company's research indicates that just 44% of Americans have a full-time job with an organization that pays 30 hours a week. He explained the tricks and bogus calculations used by the U.S. Department of Labor to massage its data and mislead Americans. Gallup projects the real unemployment rate has increased 1% since December.
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:
- Oil Prices Today: Yesterday, oil bulls were out in force after crude oil prices surged for the fourth straight day. But hopes for a continued rally seem to be fading. This morning, March 2015 WTI crude futures were down more than 3%, hovering near $51.50 per barrel. Meanwhile, Brent crude, priced in London, slipped more than 2% to hit $56.65 per barrel.
- A Small (Profitable) World: Shares of Walt Disney Co. (NYSE: DIS) surged more than 4.4% after the bell yesterday on news that the company shattered quarterly revenue and profit expectations, while last year's animated film "Frozen" boosted home video and toy sales. The firm reported quarterly per-share earnings of $1.27, beating consensus estimates of $1.07 per share. Disney said its park-and-resort operating income jumped by 20% in the fiscal first quarter. The company will be opening its Shanghai Disneyland park in the spring of 2016, a move that stands to boost its presence in the massive China market.
- Merger Mania: Shares of Office Depot Inc. (Nasdaq: ODP) were up another 7% this morning on news that the company has agreed to be purchased by rival Staples Inc. (Nasdaq: SPLS) for $6.3 billion. Both companies' stocks soared by double digits yesterday as rumors continued about a possible deal in the works. Last month, we reported that 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.
- Feeding Frenzy: The bears were out for Chipotle Mexican Grill Inc. (NYSE: CMG) after the bell on Tuesday. Chipotle stock plunged more than 5% after the company beat quarterly earnings expectations but raised concerns about the company's future growth levels. The company reported that higher food costs are cutting into profit gains. Still, the company plans another 205 new store openings in 2015 to boost sales.
- Dodgy Dealings: Credit rating firm Standard & Poor's has announced it will pay $1.5 billion to settle several lawsuits over its ratings policies on mortgage securities that fueled the 2008 financial crisis. The company also agreed to "withdraw its assertion that the Justice Department lawsuit was political retaliation for the ratings firm's 2011 downgrade." The news has led to significant criticism from watchdogs and members of Congress who argue that the company's business model of selling ratings to banks is still flawed and hasn't been fully addressed since 2008.
- Earnings Reports today include Yum! Brands Inc. (NYSE: YUM), Ralph Lauren Corp. (NYSE: RL), Plains All American Pipeline LP (NYSE: PAA), Motorola Solutions Inc. (NYSE: MSI), Noble Corp. Plc. (NYSE: NE), Merck & Co. Inc. (NYSE: MRK), Keurig Green Mountain Inc. (Nasdaq: GMCR), Humana Inc. (NYSE: HUM), General Motors Co. (NYSE: GM), and Clorox Inc. (NYSE: CLX).
Full U.S. Economic Calendar February 4, 2015
- 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.
- Treasury Refunding Announcement at 9 a.m.
- 3-Yr Note Announcement at 9 a.m.
- 10-Yr Note Announcement at 9 a.m.
- 30-Yr Bond Announcement at 9 a.m.
- PMI Services Index at 9:45 a.m.
- Federal Reserve Gov. Jerome Powell speaks at 10 a.m.
- ISM Non-Manufacturing Index at 10 a.m.
- EIA Petroleum Status Report at 10:30 a.m.
- Global Composite PMI at 11 a.m.
- Global Services PMI at 11 a.m.
- Cleveland Federal Reserve Bank President Loretta Mester speaks at 12:45 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.