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Investors weighed fluctuations in the U.S. dollar and its effect on global commodity prices.
Dow: 18,116.04, -11.61, -0.06%
S&P 500: 2,104.42, -3.68, -0.17%
Nasdaq: 5,010.97, -15.44, -0.31%
What Moved the Stock Market Today: The markets were relatively muted this afternoon as investors are still digesting monetary policy decisions from the U.S. Federal Reserve. Stanley Fischer, who is second-in-command at the Federal Reserve, said this morning that the bank is "widely expected" to raise interest rates later this year and that the decision could come after any FOMC meeting when policy makers feel the time is right.
Brent crude oil prices gained roughly 1.1% on the day, despite increased concerns about global oversupply. Saudi Arabia announced today it is pumping more than 10 million barrels of crude per day, a new record for the region. Domestic oil prices gained 1.5% on a weaker dollar. Investors will be keeping a tight eye on inventory reports due out later this week.
Now, check out the other top market stories – plus get our new profit tip for investors:
- Cyber Surge: Israeli-tech security firm Cyberark Software Ltd. (Nasdaq: CYBR) was today's big winner. Shares jumped more than 12% on news that Merrill Lynch has initiated coverage of the company and set a price target of $60 per share, a little more than 10% from where the price settled at the closing bell.
- Biotech Bust: Shares of Gilead Sciences Inc. (Nasdaq: GILD) retreated 2% on negative news over its hepatitis C drugs. According to reports, nine patients taking the drug in coordination with a heart medication began to develop very slow heartbeats, with one patient dying from the symptoms.
- Cutting Back: Shares of Kansas City Southern (NYSE: KSU) plunged nearly 8% this afternoon, making it the worst performer on the S&P 500. Shares of the railroad giant slumped after the company announced cuts to its full-year revenue projections. The news dragged down the broader railroad sector, with shares of CSX Corp. (NYSE: CSX) down 4.15%, Norfolk Southern Corp. (NYSE: NSC) down 3.5%, and Canadian National Railway (NYSE: CNI) down 1.65% on the day.
- Merger Mania: Shares of Staples Inc. (Nasdaq: SPLS) gained nearly 4% this afternoon on news that the company was upgraded by UBS. The bank said investors are underestimating the chances that the firm completes its acquisition of rival Office Depot (Nasdaq: ODP). UBS analyst Michael Lasser said the markets only project a 35% chance that the deal will be approved by the Federal Trade Commission. UBS projects the deal is about 65% likely to happen.
- Apple a Day: Shares of Apple stock were up more than 1% this afternoon as the company continues to recover from a mini-flash crash of its stock after joining the Dow Jones Industrial Average. Shares of Apple Inc. (Nasdaq: AAPL) plunged roughly $2 in the final 10 minutes of trading Friday. The stock hasn't seen much momentum since the firm announced the launch date of the new Apple Watch. Investors have soured a bit on the project launch since rivals Google Inc. (Nasdaq: GOOG, GOOGL) and Intel Corp. (Nasdaq: INTC) announced plans to partner with Swiss watch maker Tag Hauer to create its own smart watch.
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.
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 March 10 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.