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For Monday, Jan. 4, 2016, here's the top stock market news and stocks to watch...
Stock Futures Today
Dow Jones Industrial Average futures today (Monday) forecast a 316-point drop after Asian stocks and currencies tanked. "Circuit breakers" designed to suspend trading during massive volatility closed trading 90 minutes early. Mainland Chinese stocks dropped more than 7% before trading was suspended. Global markets remained on alert after the latest evidence of a stalling Chinese economy.
Chinese factory activity fell for the 10th consecutive month, renewing concerns about the world's second-largest economy. The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) fell in December to 48.2. That figure missed economists' expectations of 49.0.
Last Thursday, the Dow Jones Industrial Average dropped 178 points on the final day of trading for 2015. The S&P 500 fell nearly 1% in 2015, ending a long year of volatility, big gains for tech giants, and a huge downturn for many energy stocks. Shares of Apple Inc. (Nasdaq: AAPL) fell nearly 2% and were the largest weight on all three major indexes. AAPL stock had its first down year since 2008, falling 4%.
This morning, Apple stock was down 2% due to its exposure to China's cratering markets...
Top News in the Stock Market Today
- The Stock Market Today: On Monday, domestic markets kick off 2016 with a busy economic calendar that includes the December ISM manufacturing report and the November construction spending report. But the bigger news is happening in Asia, where manufacturing declines reignited concerns that stimulus efforts by the Peoples' Bank of China have failed to boost demand while economic growth continues to cool. Meanwhile, Saudi Arabia cut diplomatic ties with Iran, a decision that pushed oil prices higher.
- Obama Gun Grab: Fresh off his holiday vacation to Hawaii, President Barack Obama is expected to issue an executive order to close the so-called "gun show loophole" and increase background checks on buyers of guns and ammunition. Despite the President's goals, 2015 was a record year for gun sales. Shares of gun manufacturer Smith & Wesson Holding Corp. (Nasdaq: SWHC) climbed more than 100% in 2015, while shares of Sturm, Ruger and Co. (NYSE: RGR) surged from $34.63 to $59.61.
- Oil Outlook: Oil prices fell by 31% in 2015, a downturn fueled by a global supply glut and an unwillingness by OPEC to cut production as the global oil cartel attempts to maintain its market share. Now, tensions between Saudi Arabia and Iran threaten to extend the downturn after Saudi Arabia executed Shiite cleric Sheikh Nimr al-Nimr. Iranian protestors stormed the Saudi Embassy in Tehran, and the markets reacted on rising geopolitical tensions that could signal intense fallout across the Middle East. February WTI prices gained 0.5% to reach $37.23 per barrel. Meanwhile, Brent oil crude - priced in London - was up 1.5% at $37.84.
Earnings Outlook: TISI
- Earnings Report No. 1, TISI: Monday features a very light day of earnings reports, with just Team Inc. (NYSE: TISI) set to report from the New York Stock Exchange. Wall Street anticipates that the apparel company will report quarterly earnings per share of $0.84.
Stocks to Watch: VRX, GM, BABA, CMRX, EMC
- Stocks to Watch No. 1, VRX: Shares of Valeant Pharmaceuticals Intl. Inc. (NYSE: VRX) slipped 4.8% this morning on news that activist hedge fund manager Bill Ackman has decreased his holdings in VRX. Ackman said that he sold 5 million shares of VRX in order to "generate a loss" for investors for tax purposes. Here's where VRX stock is headed in 2016.
- Stocks to Watch No. 2, GM: Shares of General Motors Co. (NYSE: GM) slid 1.8% on news that a federal judge rejected GM's attempt to block a court case over faulty ignition switches. The class-action suit is expected to proceed as planned in New York City and will feature hundreds of claims of ignition switches in Chevy Cobalts and other small cars. The problem fueled a massive recall in 2014.
- Stocks to Watch No. 3, BABA: Shares of Alibaba Group Holding Ltd. (NYSE: BABA) dropped 4.5% as Chinese stocks cratered earlier this morning and triggered circuit breakers. Investors may be nervous, but there's a lot of opportunity for this stock over the long run. Here's why BABA stock is poised to continue its rebound in 2016.
- Stocks to Watch No. 4, CMRX: Shares of Chimerix Inc. (Nasdaq: CMRX) fell 5% despite news that activist hedge fund manager Steven Cohen's family office firm announced a 5.3% stake in the biotech company. The announcement came the same week that Chimerix stock fell more than 81% in a single day after announcing negative results during a late-stage drug trial.
- Stocks to Watch No. 5: EMC: Shares of EMC Corp. (NYSE: EMC) are moving after the company announced plans to slash jobs as part a $850 million restructuring effort tied to its acquisition by computer giant Dell Inc. The storage company will begin its workforce reduction in the coming months.
Today's U.S. Economic Calendar (all times EST)
- PMI Manufacturing Index at 9:45 a.m.
- ISM Manufacturing Index at 10 a.m.
- Construction Spending at 10 a.m.
- 4-Week Bill Announcement at 11 a.m.
- 3-Month Bill Auction at 11:30 a.m.
- 6-Month Bill Auction at 11:30 a.m.
- TD Ameritrade IMX at 12:30 p.m.
- Gallup US Consumer Spending Measure at 2 p.m.
What Investors Must Know This Week
- The Best Market Crash Insurance You Can Buy
- Grab Triple-Digit Gains from This "Stealth" Tech Star
- The Real Reason for China's Insatiable Gold Lust
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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.