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The DJIA today surged 259 points, gaining back most of Tuesday's losses. Nine of the S&P 500's 10 indices were on the rise this afternoon, with the energy sector the lone decliner.
Dow: 17,895.22, +259.83, +1.47%
S&P 500: 2,065.95, +25.71, +1.26%
Nasdaq: 4,893.29, +43.35, +0.89%
The S&P 500 Volatility Index (VIX), the market's fear gauge, fell 8.7% on the day.
What Moved the DJIA Today: Markets surged today despite disappointing retail sales and a falling dollar. The declining dollar fueled optimism about global corporate profits and abated concerns about the Federal Reserve's pending interest rate increase.
As noted, retail sales fell sharply in February, with the government blaming wintry weather for the decline. According to the U.S. Department of Commerce, sales declined 0.6%, well below the expected 0.4% increase forecasted by economists. On a positive note, weekly jobless claims dropped from last week, slipping by 36,000 to a seasonally adjusted level of 289,000.
Now, check out the other top market stories – plus get our new profit tip for investors:
- Oil Prices Today: Oil prices declined this afternoon after the expiration of front-month contracts and oversupply concerns continued to rattle the domestic market. April 2015 futures for U.S. crude, priced at the NYMEX in New York City, dropped 2.2% to $48.66 per barrel. Meanwhile, Brent crude, priced in London, dipped 0.6% to hit $57.22.
- 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 (Nasdaq: FB) in 2013.
- Biotech Boom: Shares of Salix Pharmaceuticals Ltd. (Nasdaq: SLXP) were up roughly 1% this afternoon on news that a bidding war for the company has emerged between two pharmaceutical giants. Six analysts have issued research notes stating that they believe Valeant Pharmaceuticals Intl Inc. (NYSE: VRX) is poised to win with an all-cash offer of $158 per share, even though it is much lower than the $170 stock-and-cash bid offered by rival Endo International Plc. (Nasdaq: ENDP).
- Chip Chatter: Shares of Intel Corp. (Nasdaq: INTC) dove more than 5% on news that the tech giant has cut roughly $1 billion from its first-quarter revenue forecast. The company said its small business clients have delayed their personal computer upgrades, which has taken a toll on its computing chips.
- Shellacked: Shares of Shake Shack (Nasdaq: SHAK) took a beating this morning, falling more than 8% after the company reported weaker than expected earnings. The burger joint has been hammered by rising beef costs. SHAK recovered in afternoon trading to close up 1.9%. Meanwhile, shares of Krispy Kreme Donuts (NYSE: KKD) fell 6.54%, continuing its unimpressive streak of poor earnings reports.
- An Apple a Day: Shares of Apple Inc. (Nasdaq: AAPL) were up 1.81% today. 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.
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.
In mid-1983, the Fed decided to increase rates again in pursuit of an even more ambitious 11.44% target over the 8.50% it had already achieved.
The result? The S&P 500 surged immediately. It was still up 6.1% a year later compared to its pre-rate hike levels.
According to Sid Riggs, Money Morning's Director of Research and Performance Measurement, the markets actually went up during six of the last seven periods when the Fed raised rates, gaining an average of 13.47%.
The only time the S&P 500 didn't rise alongside rising rates was back in 1970. That's when the Fed Funds Rate increased from 3.71% to 12.92%. But the Fed hardly has the gall to jack rates by that much today.
For all of the power that stimulus has to artificially juice the markets, traders have forgotten that getting the financial house in order is really the great hope here.
That means panic selling – like what happened Tuesday when the Dow Jones fell 333 points – is an opportunity to buy.
Keith Fitz-Gerald is a seasoned market analyst and professional trader with more than 30 years of experience. For more investing tips and stock picks from Fitz-Gerald, go here…
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.