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Stock Futures Today
U.S. stock futures for the Dow Jones Industrial Average today forecast a 36-point decline for the Dow Jones today after the U.S. Commerce Department reported a weaker than expected first reading of Q2 GDP at 2.3%. The U.S. government also revised its report on first-quarter GDP, saying the economy retracted by 0.9%. Economists also downwardly revised GDP readings from 2012 to 2014, saying growth averaged 2.1% compared to its previous average estimate of 2.4%.
European markets were off to a good start this morning despite ongoing concerns about volatility and government intervention in the Chinese stock markets.
The DJIA gained more than 130 points yesterday after the U.S. Federal Reserve said that labor conditions and the broader U.S. economy are improving and concerns about China's stock market temporarily abated. Today's statement sets the stage for a possible rate hike when the Fed Open Market Committee meets again in September. The central bank said that the economy is poised to overcome a first quarter contraction, a decline in domestic energy process, and broader concerns in the global economy.
Here's a breakdown of the Federal Reserve's decision, including an exploration of outside events that are impacting rate policy…
Top News in the Stock Market Today
- The Stock Market Today: A day after the Fed hinted it would wait at least one more meeting before raising interest rates, the U.S. Commerce Department announced its first reading of second-quarter GDP at 2.3%. That's down from the consensus expectation for a 2.6% increase for the quarter, raising new concerns about the health of the broader recovery after a dismal first quarter. The economic calendar also features a report on weekly jobless claims and farm prices.
- Oil Outlook: Domestic oil prices climbed for a third straight morning as traders reacted to increased demand during the summer driving season. WTI crude futures for September added 0.4% to hit 48.98 per barrel. Meanwhile, Brent oil prices added 1.2% to hit $54.03 per barrel. On Wednesday, the U.S. Energy Information Administration announced that more than 4.2 million barrels were withdrawn from domestic stockpiles last week. That is more than 20 times the expected levels forecasted by oil analysts.
- Earnings Reports: Companies reporting earnings today include Anheuser-Busch Inbev SA (NYSE ADR: BUD), Colgate-Palmolive Co. (NYSE: CL), LinkedIn Corp. (NYSE: LNKD), Expedia Inc. (Nasdaq: EXPE), Electronic Arts Inc. (Nasdaq: EA), Amgen Inc. (Nasdaq: AMGN), Marriott International Inc. (NYSE: MAR), and Royal Dutch Shell Plc. (NYSE ADR: RDS.A).
Pre-Market Movers in the Stock Market Today: FB, WFM, RDS.A
- Pre-Market Movers No. 1, FB: Shares of Facebook Inc. (Nasdaq: FB) slumped more than 2.5% in pre-market trading, despite reporting that it beat Wall Street quarterly expectations after the bell on Wednesday. The stock slipped after the company reported a sharp increase in expenses. The firm reported a 9% decline in quarterly profits, reporting that it boosted spending on mobile infrastructure and the development of WhatsApp, Instagram, and virtual reality headset manufacturer Oculus Rift, all recent company acquisitions. Still, it was an impressive quarter. Here's why…
- Pre-Market Movers No. 2, WFM: Shares of Whole Foods Market Inc. (Nasdaq: WFM) slumped more than 11% after the company issued a weak earnings outlook for 2015 and reported that it missed quarterly earnings. Whole Foods' stock is down more than 19% on the year, and additional concerns are emerging over the company's expected revenue growth for the rest of 2015 and beyond. WFM stock is under increased pressure from competitors like Kroger Co. (NYSE: KR) and Wal-Mart Stores Inc. (NYSE: WMT), both of which are boosting their organic sales. The company is aiming to create a new "365" chain of stores, which will be smaller and less expensive, to boost its millennial customer base.
- Pre-Market Movers No. 3, RDS.A: Shares of Royal Dutch Shell Plc. (NYSE ADR: RDS.A) were up more than 4% this morning after the company announced weak quarterly earnings, but said it plans to lay off 6,500 employees and slash company costs in an effort to reduce liabilities. The firm said that its average oil revenue fell 48% from the same period in 2014, while natural gas revenue slipped 31%. The firm also defended the timing and cost of its $70 billion purchase of BG Group Plc. (OTCMKTS ADR: BRGYY) during its conference call.
Stocks to Watch Today: YELP, TWTR, TSLA
- Stocks to Watch No. 1, YELP: A rash of downgrades on the back of a poor earnings report sent shares of Yelp Inc. (NYSE: YELP) tumbling more than 25% yesterday. Will YELP stock recover today? It's unlikely, given that the company also reduced its 2015 profit outlook as investors blamed a surge in competition. The firm received downgrades from a number of investment firms, including Bank of America Corp. (NYSE: BAC), Morgan Stanley (NYSE: MS), Oppenheimer Holdings Inc. (USA) (NYSE: OPY), and SunTrust Banks Inc. (NYSE: STI).
- Stocks to Watch No. 2, TWTR: Shares of Twitter Inc. (NYSE: TWTR) hit a 52-week low, sinking 14.3% after the company reported a disappointing growth outlook. Twitter said that its monthly average users slipped to its lowest growth rate since it went public in 2013. The company also reported a smaller second-quarter loss compared to year ago, and would have beat Wall Street's Twitter earnings estimates for Q2 2015 had they excluded certain expenses. Here's more on why Twitter stock is getting crushed.
- Stocks to Watch No. 3, TSLA: Shares of electric car and battery manufacturer Tesla Motors Inc. (Nasdaq: TSLA) were flat this morning on news that the company will begin a sales referral program. Tesla, which has no advertising budget or traditional auto show rooms, will allow vehicle owners to earn $1,000 for every person who uses an online referral link to purchase a vehicle. The program will also allow those prospective buyers to save $1,000. The first person to refer 10 buyers in various global sales regions will also earn a free SUV Model X.
Today's U.S. Economic Calendar (all times EDT)
- MBA Mortgage Applications at 7 a.m.
- Pending Home Sales Index at 10 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.
What Investors Must Know This Week
- The Top Three High-Return Investments to Buy Today
- Is Netflix Stock a Buy After Stock Split and Earnings Beat?
- The Real Impact of the Iran Nuclear Deal on U.S. Oil Prices
Stay informed on what's going on in the markets by following us on Twitter @moneymorning.
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.