The Dow Jones Industrial Average today (Wednesday) added another strong day of gains as investors seem less expectant of an interest rate hike by the U.S. Federal Reserve in the wake of weak inflation figures today. Energy stocks pushed the Dow higher as declining crude inventory levels coupled with expected declines in shale oil production around the globe boosted oil prices. The S&P energy sector was up more than 2.8% on the day. The basic materials sector was the second-best performer on the day, with shares of Dow Chemical Co. (NYSE: DOW) leading the way with a 3.1% gain.
So, will the Federal Reserve raise interest rates? Don't be surprised if it does, says Money Morning Chief Investment Strategist Keith Fitz-Gerald. They've been wrong before on the economy and the recovery, and they're prone to making mistakes again. But if they do raise rates, here is a breakdown of the best types of stocks to own in the event of a rate increase.
The S&P 500 Volatility Index (VIX), the market's fear gauge, slipped 3% on the day.
Top Stock Market News Today
Stock Market News: Economic data today indicated that U.S. consumer prices were lower than expected in August on the back of declining energy prices and a stronger U.S. dollar. The U.S. Commerce Department said the consumer price index (CPI) fell 0.1%, while consensus expectations called for a flat month. The news may suggest that inflation levels remain flat, well below the target level of 2% for the Federal Reserve. The central bank has said it is willing to take action on rates due to strength in the labor market; however, higher rates would bolster the dollar and likely lead to declining inflation levels.
Oil Prices Surge: Oil prices surged today on news U.S. crude inventory levels slipped by 12.1 million barrels last week. Today, WTI prices added 5.5% to reach $47.04. Meanwhile, Brent oil prices added 4.1% to hit $49.75 per barrel. Shares of Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX) helped push the Dow index higher, each gaining roughly 2% on the day. Shares of BP Plc. (NYSE ADR: BP) were up more than 3% on the day.
GOP Debate Set: On Wednesday night, GOP frontrunner Donald Trump will take on a full stage of Republican competitors in the second debate of the election season. One "undercard," or "kids' table," debate will be held at 6 p.m. ET and finish at 7:45 p.m. The "prime-time" battle will begin at 8 p.m. ET. Here is the full lineup of GOP debate participants.
On Tap Thursday: Tomorrow, the Fed Open Market Committee will report its decision on whether to raise interest rates for the first time since 2006. The economic calendar also includes the August report on U.S. housing starts, weekly jobless claims, weekly natural gas storage levels, and the Philly Fed Manufacturing Index. Companies reporting earnings include Adobe Systems Inc. (Nasdaq: ADBE), Rite Aid Corp. (NYSE: RAD), Tibco Software Inc. (Nasdaq: TIBX), and Marcus Corp. (NYSE: MCS).
Stocks to Watch: MO, CBRL, HPQ
Stocks to Watch No. 1, MO: Shares of Altria Group Inc. (NYSE: MO) were up more than 2% today on news that global beer maker Anheuser Busch Inbev SA (NYSE ADR: BUD) is aiming to purchase rival SABMillerPlc. (OTCMKTS ADR: SBMRY). Altria owns roughly 27% in SABMiller, which surged more than 20% today. In addition, Molson CoorsBrewing Co. (NYSE: TAP) surged more than 14% today on news of a $250 billion deal that might combine the two largest brewers in the world. The news follows an additional 55,000 layoffs that were initiated earlier this year.
Stocks to Watch No. 2, CBRL: Shares of Cracker Barrel Old Country Store Inc. (Nasdaq: CBRL) slipped roughly 3.6% today after the restaurant chain reported lackluster earnings in the fourth quarter. Though the company beat per-share earnings expectations by $0.11, it still fell short of revenue expectations.
Stocks to Watch No. 3, HPQ: Shares of Hewlett-Packard Co. (NYSE: HPQ) were up nearly 4% today on news the tech giant will slash 25,000 to 30,000 jobs as part of its restructuring and cost-saving program. The company is currently splitting its PC and printer division and is expected to reduce yearly costs by $2.7 billion. The stock is still down 25% so far this year.
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.