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Dow futures today (Wednesday) forecasted a 20-point slide from the Dow close yesterday. The DJIA index dipped 104 points Tuesday after expectations for an accelerated rate increase by the Federal Reserve outweighed improving economic data.
Today, keep an eye on oil inventory levels from the Energy Information Administration. The surge in U.S. crude stocks is weighing down domestic crude oil prices and raising concerns about storage availability in the years ahead. The United States has seen inventory levels reach a new record on top of ten-straight weeks of rising crude storage.
Investors will also want to look abroad to Germany, where the IFO sentiment index will measure the mood of the nation's business leaders. As Europe's largest economy, Germany remains the most vital indicator of financial health in the region. News is also breaking that European nations and financial institutions are beginning to raise concerns about Greece's ability to repay a $500 million loan to the International Monetary Fund by its mid-April deadline.
Here are more of the pre-market movers in the stock market today – including your "Money Morning Tip of the Day" – to make it a profitable Wednesday:
- Merger Mania: Shares of Kraft jumped more than 27%- and will open at an all-time high – on news that the company will merge with H.J. Heinz Co. This Kraft merger will create a publicly traded company called The Kraft Heinz Group. The deal is being financed with a $10 billion investment by Brazilian private equity giant 3G Capital Partners LP and Warren Buffett's Berkshire Hathaway (NYSE: BRK.A). The merger will combine two iconic brands to create the third-largest company in the U.S. food and agribusiness sector.
- Deal Downer: This morning's biggest loser in the Kraft Heinz Group merger is global brewery SABMiller Plc. (NYSE: SAB), which slid more than 1.1%. There had been speculation that private equity giant 3G Capital was considering a bid for the brewery and combining the firm with Anheuser Busch InBev (NYSE: ABI). 3G is a large shareholder of ABI. The Kraft-Heinz deal effectively takes any SABMiller offer off the table.
- Social Surge: Shares of Facebook Inc. (Nasdaq: FB) are up 0.5% this morning ahead of the company's two-day F8 conference in San Francisco. During the event for developers, the company will likely unveil a suite of new tools and provide insight into where the company will maintain its focus for the duration of 2015. The conference will also feature a keynote address later today by CEO Mark Zuckerberg. Last week, the Facebook stock price had its biggest weekly gain in eight months, and yesterday's new record has made Facebook the 16th-largest company in the world by market capitalization.
- Printing Pays: Shares of enterprise software firm Kofax Ltd. (Nasdaq: KFX) were up more than 45% on news that the firm will be acquired by printer company Lexmark International Inc. (NYSE: LXK) for roughly $1 billion. The printing industry has struggled in recent years, and Lexmark is looking to shift into new sectors. Shares of Lexmark are up more than 6% this morning.
- Oil Prices Today: Crude oil prices steadied this morning on news that Chinese storage rose to historic highs. Brent crude, priced in London, rose roughly 0.9% to $55.65 per barrel. WTI crude, priced in New York City, slipped 0.3% this morning to settle just above $47 per barrel. Oversupply concerns are gripping the markets. On Tuesday, the American Petroleum Institute reported that the U.S. added 4.8 million barrels to inventory levels in the week to March 20. U.S. crude oil stockpiles are at record highs above 450 million barrels.
- Earnings Reports: Investors can expect earnings reports today from Paychex Inc. (Nasdaq: PAYX), Progress Software Corp. (Nasdaq: PRGS), PVH Corp. (NYSE: PVH), Red Hat Inc. (NYSE: RHT), Lindsay Corp. (NYSE: LNN), and Five Below Inc. (Nasdaq: FIVE)
Full U.S. Economic Calendar March 25, 2015
- Chicago Federal Reserve Bank President Charles Evans speaks at 6:30 a.m.
- MBA Mortgage Applications at 7 a.m.
- Durable Goods Orders at 8:30 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.
Money Morning Tip of the Day: Small-cap stocks are crushing the broader market. And the best way to profit from them right now is with a small-cap ETF…
Small-cap stocks are soaring. Over the last five months, the Russell 2000 has gained 20%. In the same time, the Dow Jones Industrial Average has gained just 9.6%. The S&P 500 is up 10.5% in that time.
Many investors have missed out on this run because they think small-cap stocks are too volatile. But a small-cap exchange-traded fund (ETF) is a safer way to collect as these stocks keep rising.
Money Morning Small-Cap Investing Specialist Sid Riggs suggests buying an ETF that taps into a strong sector – like biotech.
This sector in particular has been extremely lucrative for investors in 2015. The Nasdaq Biotechnology Index is up nearly 21% in 2015. The S&P Biotech Select Industry Index has done even better, up 27%.
Riggs' small-cap biotech ETF recommendation is the PowerShares S&P SmallCap Health Care ETF (Nasdaq: PSCH). It offers exposure to high-profit small-cap stocks without the risk of picking just one tech startup.
PSCH has 71 stock holdings, all U.S. companies. More than 95% of the fund's holdings are invested in either small-cap or micro-cap firms.
The PowerShares S&P SmallCap Health Care ETF is up 16.3% in 2015 and opened March 24 at $69.48 per share. The Dow is up just 1.14% in 2015.
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.