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For Jan. 11, 2016, here's the top stock market news and stocks to watch…
Stock Futures Today
Futures for the Dow Jones Industrial Average for today (Monday) forecast a 73-point gain although the 2016 China stock market crash continued. Stocks on the Shanghai Composite Index fell another 5.2% this morning in heavy trading volume. The China Securities Journal reported that Li Wei, president of the State Council's Development Research Centre, believes that annual growth of 6.5% from 2016 to 2020 will be very difficult for the nation moving forward.
On Friday, the Dow slumped 167 points, ending the worst first week of trading since 1928. For last week, the S&P 500 fell 6%, while the tech-heavy Nasdaq slipped 7.3%. The U.S. Labor Department reported the American economy added 292,000 jobs in December. The U.S. unemployment report remained unchanged at 5%.
Top News in the Stock Market Today
- The Stock Market Today: Today, domestic markets will continue to eye the Chinese markets and the People's Bank of China as the central bank considers further guidance on its currency, the yuan. A light economic calendar features speeches by two members of the U.S. Federal Reserve – Dennis Lockhart (Atlanta) and Rob Kaplan (Dallas) – and the December update to the Labor Market Conditions Index.
- Earnings Recession: The earnings season unofficially kicks off today, and expectations are underwhelming. Analysts anticipate that U.S. companies are stuck in an earnings recession, with energy and materials companies experiencing the harshest fates.
- IPO Bonanza: State-owned oil titan Saudi Aramco confirmed it is exploring the possibility of filing an initial public offering (IPO). Such a move would instantly make the mega-producer of crude oil the world's largest public company by market capitalization by an incredible margin. According to some estimates, the market capitalization of a firm that produces more than 10 times the amount of oil produced by Exxon Mobil Corp. (NYSE: XOM) could be worth anywhere from $2.5 trillion to $10 trillion. That market cap smashes the market cap of the world's largest company – Apple Inc. (Nasdaq: AAPL) – which is currently sitting at a value of a little more than $500 billion.
- Oil Outlook: Oil prices fell for the sixth-straight trading session as the ongoing economic slowdown in China weighs on trader sentiment. February WTI prices fell 1.2% to reach $32.73 per barrel. Meanwhile, Brent oil crude was down 1.6% at $32.99.
Earnings Outlook: AA, APOL, TISI, SHLM
- Earnings Report No. 1, AA: After the bell, earnings season officially kicks off with the quarterly update from alumina producer Alcoa Inc. (NYSE: AA). Wall Street anticipates the company will report earnings per share (EPS) of $0.04 on top of $5.217 billion in revenue. Over the weekend, news broke that the company has earned a $1.5 billion contract from global manufacturing giant General Electric Co. (NYSE: GE).
- Earnings Report No. 2, APOL: Shares of Apollo Education Group Inc. (Nasdaq: APOL) jumped 10% this morning despite the company falling short of fiscal first-quarter earnings expectations. The company reported an EPS of $0.29 on $586.02 million in revenue. Wall Street anticipated that the company would report per-share earnings of $0.31 on top of $608.57 million in revenue. Shares rose after the firm said it would consider a number of strategic alternatives that may lead to a change in company leadership.
- Additional companies reporting quarterly earnings include Team Inc. (NYSE: TISI) and Schulman Inc. (Nasdaq: SHLM).
Stocks to Watch: GS, AAPL, UA
- Stocks to Watch No. 1, GS: Investment banking giant Goldman Sachs Group Inc. (NYSE: GS) issued an ominous warning about the state of the energy sector. According to Goldman data, the entire energy sector is set to report a decline in operating earnings per share for 2015. This is the first time that the metric has fallen into the negative since the investment firm began keeping records in 1967.
- Stocks to Watch No. 2, AAPL: Shares of Apple Inc. (Nasdaq: AAPL) gained nearly 1% as the company looks to recover from a brutal five-day stretch last week in which the stock fell 8%. In positive news, the tech giant announced that its streaming music service obtained its 10-millionth subscriber in six months.
- Stocks to Watch No. 3, UA: Shares of Shares of Under Armour Inc. (NYSE: UA) slipped more than 4% after the sports apparel giant received a downgrade from "equal weight" to "underweight" from investment firm Morgan Stanley (NYSE: MS). The investment bank also slashed its price target for the stock from $103 per share to $62 per share.
Today's U.S. Economic Calendar (all times EST)
- Labor Market Conditions Index 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.
- Atlanta Federal Reserve Bank President Dennis Lockhart speaks at 12:40 p.m.
- Dallas Federal Reserve Bank President Rob Kaplan speaks at 7:50 p.m.
What Investors Must Know This Week
- Where We'll Find Our Biggest Profits This Year
- What a Chinese Stock Market Crash Means for Investors
- Your "Buy List" to Profit from Volatility in 2016
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.