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Stock market news today, March 12, 2015: Good morning! U.S. stock futures forecasted a 27-point decrease from yesterday's close. The DJIA Index dropped 27 points Wednesday, a day after markets saw their broadest sell-off in two months over concerns of a pending interest rate hike. The dollar rose again yesterday, gaining more than 1%. It's now at a 12-year high against the euro.
Today, the markets will react to weekly unemployment claims and a monthly update on retail sales. Two events could drive the DJIA up or down: crude oil prices, and the Federal Reserve's expectations for when it might raise interest rates. Next week, the Fed Open Market Committee will meet to discuss monetary policy and begin its "meeting-by-meeting" approach to interest-rate hike consideration.
Here are the top headlines in stock market news today – and your "Money Morning Tip of the Day":
- Now You See Me: E-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA) announced plans to invest $200 million in Snapchat, a photo app that allows users to send photos that disappear within moments. The investment valuates the tech startup at roughly $15 billion, a massive leap from the $3 billion offer from Facebook Inc. (Nasdaq: FB) in 2013.
- An Apple a Day: Shares of Apple Inc. (Nasdaq: AAPL) continue to slide, despite news that the company will soon join the Dow Jones and replace icon AT&T Inc. (NYSE: T). Apple will debut on the index after the closing bell March 18. Money Morning Chief Financial Strategist Keith Fitz-Gerald recently appeared on FOX Business to talk about what Apple's move to the DJIA means for AAPL stock – watch that interview here…
- Stress Test: Also in stock market news today is a carry-over of the Fed's annual stress test announcement after closing bell Wednesday. Its findings influence whether a bank will be able to increase its stock buybacks or hike its dividend. The Fed was unimpressed by Bank of America Corp. (NYSE: BAC), which now must refile its program by the end of September. The Fed said internal controls are a concern. It also said both the U.S. units of Deutsche Bank (NYSE: DB) and Banco Santander S.A. (NYSE ADR: SAN) failed their stress tests. Finally, U.S. mega financial institutions Goldman Sachs Group (NYSE: GS), JPMorgan Chase (NYSE: JPM) and Morgan Stanley (NYSE: MS) passed, although each must cut back plans to boost returns to shareholders.
- Oil Prices Today: A downturn in the dollar is driving oil prices up a bit this morning. Brent crude, priced in London, added 1.5% this morning to hit $58.41. Meanwhile, April 2015 futures for U.S. crude, priced at the NYMEX in New York City, were up 1% to $48.66 per barrel.
- Earnings Reports: Today's earnings reports include Aeropostale Inc. (NYSE: ARO), Dollar General Corp. (NYSE: DG), El Pollo Loco Holdings Inc. (Nasdaq: LOCO), JA Solar Holdings Co. Ltd. (Nasdaq: JASO), Kratos Defense and Security Solutions Inc. (Nasdaq: KTOS), Vail Resorts Inc. (NYSE: MTN), and Tekmira Pharmaceuticals Corp. (Nasdaq: TKMR).
Full U.S. Economic Calendar March 11, 2015 (NYSE: all times EST)
- Jobless Claims at 8:30 a.m.
- Retail Sales at 8:30 a.m.
- Import and Export Prices at 8:30 a.m.
- Bloomberg Consumer Comfort Index at 9:45 a.m.
- Business Inventories 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.
- 10-Year TIPS Announcement at 11 a.m.
- 30-Year Bond Auction at 1 p.m.
- Treasury Budget at 2 p.m.
- Fed Balance Sheet at 4:30 p.m.
- Money Supply at 4:30 p.m.
Today's tip comes from Money Morning Chief Investment Strategist Keith Fitz-Gerald:
Wall Street wants you believe a return to "normal rates" via a hike of any kind will lead to a massive market correction.But the historical precedent is much more nuanced. In fact, the most recent examples point to the opposite happening – rate hikes causing rallies in their aftermath.
Back in 1980, inflation soared. Yet the stock market was in the middle of an impressive bull run, showing strength that was widely out of step with almost every other economic indicator (much like today).
Then, in the spring of 1980, Fed Chairman Paul Volcker began a rate hike that would see rates climb to 19.03%… and stocks rallied through December.
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.