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DJIA futures were flat this morning from yesterday's Dow close. The Dow Jones Industrial Average added 92 points to close Tuesday at a new record high on news that Eurozone partners accepted Greece's bailout plan and U.S. Federal Reserve Chairwoman Janet Yellen offered insight on future interest rate hikes.
Today (Wednesday), DJIA futures indicate that investors remain on guard, awaiting a second day of testimony from Janet Yellen before Congress. Yesterday, Yellen said the central bank will not raise interest rates for several more committee meetings. During her testimony before the Senate, Yellen said the Federal Open Market Committee will consider future rate hikes "on a meeting by meeting basis." The Fed futures market now prices in the likelihood of a September rate increase at roughly 50%.
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:
- Earnings Week: Shares of Hewlett-Packard Co. (NYSE: HPQ) slipped more than 6% after the company reported weaker-than-expected earnings due to declining desktop computer sales and a stronger U.S. dollar. The company also slashed its 2015 per-share earnings outlook by $0.30, blaming the negative effects of Forex rates.
- Keystone Cops: On Tuesday, President Barack Obama vetoed a bill that would have approved the final construction of the Keystone XL oil pipeline. For nearly six years, Congress and the president have sparred over this political football, which we've long exposed to be little more than a national embarrassment. Republican Senate Majority Leader Mitch McConnell said this afternoon that Congress would begin efforts to override the veto, although it's unclear if Republicans will be able to gain the required two-thirds majority to do so.
- Flying Blind: Shares of Southwest Airlines Co. (NYSE: LUV) slipped 1.2% this morning on news that the airline giant is pulling 20% of its current airline fleet out of service due to missed inspections. The company said it has canceled dozens of flights and that it is postponing the operations of 128 of its 737 aircraft carriers. The company suggested that inadvertent omissions on paperwork were the reason for the oversight.
- Oil Prices Today: Oil prices were on the rise this morning ahead of U.S. inventory data and on word from Saudi Arabia that demand is back on the rise. April 2015 futures for U.S. crude, priced at the NYMEX in New York City, jumped 0.5% to hit $49.55 per barrel. Meanwhile, Brent crude, priced in London, added another 1.1% to hit $59.39 per barrel.
- Retailer Rout: Shares of retail giant Target Corp. (NYSE: TGT) rose more than 0.4% this morning on news that the company bested quarterly earnings expectations. The company announced per-share earnings of $1.46, topping last year's quarterly earnings of $0.90 per share. The company cited its strengthening online business over the holiday season. This is a big boost for the retailer compared to last year's same quarter figures. Last year, the firm announced that it was departing the Canadian market and dealing with the aftermath of a cyberattack on consumer data.
- Earnings Reports: Today, expect earnings results from Bill Barrett Corp. (NYSE: BBG), Campbell Soup Co. (NYSE: CPB), Chesapeake Energy Corp. (NYSE: CHK), Dollar Tree Inc. (Nasdaq: DLTR), HollyFrontier Corp. (NYSE: HFC), Howard Hughes Corp. (NYSE: HHC), Lowe's Companies Inc. (NYSE: LOW), MarkWest Energy Partners LP (NYSE: MWE), Sturm Ruger & Co. Inc. (NYSE: RGR), Transocean Ltd. (NYSE: RIG), and Wendy's Co. (NYSE: WEN)
Full U.S. Economic Calendar Feb. 25, 2015
- MBA Purchase Applications at 7 a.m.
- New Home Sales at 10 a.m.
- Federal Reserve Chair Janet Yellen speaks at 10 a.m.
- EIA Petroleum Status Report at 10:30 a.m.
- 2-Year FRN Note Auction at 11:30 a.m.
- 5-Year Note Auction at 1 p.m.
A number of analysts just made bearish cases for Boeing Co. (NYSE: BA) because oil prices have skidded about 50% since their peak in June. On Monday, Goldman Sachs downgraded BA from "Neutral" to "Sell" and slashed its price target from $147 to $132. The news sent BA down 2.26% to $154.68.
But don't be fooled…
"Boeing remains a favorite of ours – it's the beneficiary of a boom in commercial aviation that's going to last for a decade or more," Money Morning Executive Editor Bill Patalon told his "Private Briefing" investment service readers Monday.
Thanks to growing income levels in the world's emerging economies, global air traffic is projected to grow at an average 5% annual growth rate over the next two decades. The worldwide airliner fleet will need to double to 42,000 airplanes by 2033. And that doesn't even account for replacement jetliners.
Patalon dismissed concerns about low oil prices. "Oil prices will rebound, and air carriers will buy new jets based on a multi-decade lifespan."
Patalon first recommended BA stock to his readers in September 2011. It was trading at just $61.92 at the time. Now he sees BA heading to $200.
Patalon's bottom line: "Boeing is a company that's going to deliver strong revenue and profit growth in the years to come. It's also going to look for ways to continue rewarding shareholders via additional buybacks and dividend increases."
Get this full Boeing stock outlook – plus access to all of Bill Patalon's "Private Briefing" stock picks – here: Why Boeing Is Still Growing – Next Stop: $200 a Share
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.