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Pre-market trading today (Thursday) shows DJIA futures posting a 44-point increase from the Dow close yesterday. An announcement by European Central Bank (ECB) President Mario Draghi and yet another huge deal in the pharmaceutical sector have investors optimistic this morning. On Wednesday, The Dow Jones Industrial Average shed 106 points after a slew of mixed economic data stoked investor caution ahead of Friday's unemployment report. Nine of 10 S&P 500 sectors were in the red.
This morning, the pre-market trading suggests investors are keeping a sharp eye on a meeting by the European Central Bank in Cyprus. The European bank today maintained a deposit interest rate of negative 0.2%, which means that depositors must pay banks to hold their money. With the Euro falling to an 11-year low this morning, the central bank is expected to begin its 1 trillion euro ($1.1 trillion) bond-buying program on March 9 and end it in September 2016. The world's largest economic bloc is also scheduled to release financial forecasts for 2017.
This morning, U.S. monthly job benefits claims increased 7,000 to hit a seasonally adjusted 320,000. This is higher than expected. Investors remain cautious about tomorrow's U.S. jobs report.
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 Thursday:
- Earnings Surprise: Costco Wholesale Corp. (Nadsaq: COST) is a pre-market mover this morning, rising more than 2% on news that it bested quarterly earnings expectations. The nation's third-largest retailer said that net income jumped to $598 million, or $1.35 per share, for the second quarter. This is a nice bump from last year's earnings report of net income at $463 million, or $1.05 per share.
- Deal Day: Yesterday, incoming PayPal CEO Dan Schulman told an audience that the company plans to partner with credit card and wireless communications firms when its spins off from eBay Inc. (Nasdaq: EBAY). During a speech on Wednesday, Schulman commented on the infancy of e-commerce, and provided significant optimism for the mobile sector. PayPal, he said, is hoping for "the democratization of money across the world."
- Biotech Boom: Shares of AbbVie Inc. (Nasdaq: ABBV) slipped more than 5% this morning on news that the pharmaceutical giant will purchase Pharmacyclics Inc. (Nasdaq: PCYC) for $21 billion. The deal will give AbbVie access to the very promising blood cancer drug, Imbruvica, although Johnson & Johnson (NYSE: JNJ) currently receives half of the drug's revenue thanks to to a prior deal.
- Oil Prices Today: Crude oil prices were on the rise this morning as investors kept an eye on rising tensions in Iraq and Libya. April 2015 futures for U.S. crude, priced at the NYMEX in New York City, jumped nearly 0.2% to hit $51.17 per barrel. Meanwhile, Brent crude, priced in London, added another 0.8% to hit $61.50 per barrel.
- An Apple a Day: Shares of Apple Inc. (Nasdaq: AAPL) were on the rise this morning on rumors that the tech firm might be partnering with entertainment giant HBO to launch the latter firm's highly anticipated streaming service. HBO now is expected to begin streaming in April and will cost customers $15 per month to access popular shows like "Game of Thrones."
- Earnings Reports: Today, expect earnings results from Canadian Solar Inc. (Nasdaq: CSIQ), Costco Wholesale Corp. (Nasdaq: COST), Diamond Foods Inc. (Nasdaq: DMND), Kroger Co. (NYSE: KR), and Fresh Market Inc. (NYSE: TFM).
Full U.S. Economic Calendar March 5, 2015 (NYSE: all times EST):
- Challenger Job-Cut Report at 7:30 a.m.
- Jobless Claims at 8:30 a.m.
- Productivity and Costs at 8:30 a.m.
- Gallup US Payroll to Population at 8:30 a.m.
- Bloomberg Consumer Comfort Index at 9:45 a.m.
- Factory Orders at 10 a.m.
- EIA Natural Gas Report at 10:30 a.m.
- 3-Month Bill Announcement at 11 a.m.
- 6-Month Bill Announcement at 11 a.m.
- 3-Yr Note Announcement at 11 a.m.
- 10-Yr Note Announcement at 11 a.m.
- 30-Yr Bond Announcement at 11 a.m.
- Treasury STRIPS at 3 p.m.
- Fed Balance Sheet at 4:30 p.m.
- Money Supply at 4:30 p.m.
- San Francisco Federal Reserve Bank President John Williams speaks at 11:15 p.m.
Money Morning Tip of the Day: Don't panic when markets are down. Look for profit opportunities instead using these strategies.
The Dow Jones fell 168 points Wednesday morning after losing 85 points Tuesday. This prompted a slew of panic-inducing headlines around the web.
People get nervous when markets plunge, but stock market downturns are just a fact of investing. They're very rarely anything more than a short-term adjustment.
Rather than dwell on short-term losses, investors should be on the hunt for opportunities. Here are three of the best ways to profit when markets are down.
No. 1. Buy Stocks on Sale: This is the most obvious way to take advantage of a market downturn. Maintain a wish list of stocks you'd like to buy if they were just a little cheaper. A market downturn is the perfect chance to use such a list.
No. 2. Sell Stocks Short: In short selling, you borrow shares from your broker and sell them at the current market price. The idea is to profit by buying the shares back at a lower price once the stock drops. If all goes well, you return the shares to the broker and keep the difference as profit (minus a small margin fee). Learn more on how to short stocks here.
No. 3. Profit When an Index Falls: A reverse index fund rises when the market falls and falls when the market rises. It's essentially a hedge against any downturn. Options include the Rydex Inverse S&P 500 Strategy Fund (MUTF: RYURX), which tracks the S&P 500 and rises 1% for every 1% the index falls, and the ProShares Short Dow30 ETF (NYSE Arca: DOG), which tracks the Dow Jones.
Finally, prepare your portfolio ahead of any market downturns by using trailing stops. This tool limits losses, be they from a single lousy earnings report from a company or a stock market crash.
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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.