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Strap on your seatbelt because the Dow Jones Industrial Average rollercoaster could be taking another wild ride after Chinese stocks slumped earlier today. The Shanghai Composite was off 6.4% as economic concerns rise ahead of the upcoming G20 meeting on Friday and Saturday. That is the single largest decline for the Chinese stock market in a month.
With volatility in focus on this Thursday, let's tackle your top stock market news, stocks to watch, and economic calendar for Feb. 25, 2016.
Dow Futures Today: Global Economic Weakness Takes Center Stage
Dow Jones futures forecast a 15-point gain as earnings reports and rising gasoline demand offset oil oversupply concerns and worries about economic growth in China.
Here's a breakdown of why the Dow is slumping and what you need to watch later today.
- Focus on earnings reports and domestic economic data. Is the economy as healthy as U.S. Federal Reserve members have argued it is right now? Keep an eye on this monthly report of durable goods orders. A strong gain in capital goods could boost the nation's economic outlook. A bad report… well… you know… more reassurances from the Fed.
- Two more Federal Reserve members argued that the U.S. economy is healthy. Dallas Federal Reserve President Robert Kaplan said in a speech yesterday that he doesn't expect the United States to enter recession this year. St. Louis' James Bullard reiterated those sentiments this morning. But the central bank is closely monitoring weakness in global markets around the world. Yesterday, the International Monetary Fund announced that it may soon cut its global economic forecast, while encouraging nations around the globe to increase government spending (read: hike taxes or increase debt) in order to boost economic growth. Meanwhile, investment bank Citigroup Inc. (NYSE: C) announced yesterday that the risk of a global recession is increasing due to weakening economic fundamentals.
- Traders are remaining cautious ahead of this weekend's G20 meeting. Leave it to central bankers and centralized planners to gather and try to dig the global economy out of a hole that they created. So far, their only proposals are more of the same bad medicine: more stimulus, higher taxes, and increased debt spending. Japan is already chattering today about further loosening of monetary policy and boosting stimulus. The Pacific nation has lost an entire decade to a liquidity trap, so what's another ten years of this insanity, I guess?
- Yesterday, the Dow was up 53 points after a battle between the Apple Inc. (Nasdaq: AAPL) stock bulls and the oil bears. Meanwhile, the one place that was supposed to be the stronghold of the U.S. economy showed weakness on Wednesday after a bleak housing report from the U.S. Commerce Department. The Federal agency announced a 9.2% decline in single-family home sales last month, nearly reversing all gains shown in December.
- In a stunning announcement that transcends party lines, news broke yesterday afternoon that the White House is considering Republican Gov. Brian Sandoval of Nevada for the Supreme Court. So who is Brian Sandoval? Here's his bio and why everyone is talking about Brian Sandoval in the news.
- Oil prices again fell this morning on concerns about oversupply and weakening economic growth. Both WTI and Brent crude slipped marginally. Yesterday, the Energy Information Administration reported that U.S. crude levels jumped by 3.5 million barrels last week to put inventory levels at an all-time high of 507 million barrels. Meanwhile, the Saudi-Russian "production freeze" plan remains under increased criticism due to the lack of any plan to reduce output to ameliorate broader concerns about the global glut of crude oil. However, rising gasoline demand offset such concerns this morning.
Now here's your list of top stocks to watch in today's market, plus today's economic calendar:
Earnings and Stocks to Watch in Today's Market
- Merger mania is on hold. In a statement raising concerns about the future of the defense industry, Airbus Group CEO Tom Enders said that a merger between Honeywell International Inc. (NYSE: HON) and United Technologies Corp. (NYSE: UTX) failed to meet his company's strategic interests. It is likely that the deal would fail due to significant concerns about regulatory issues or because it would destroy significant shareholder value due to the number of divestitures that might be required to obtain approval. The question, however, is how companies plan to boost shareholder value given an earnings recession, stagnant organic growth, and a strong U.S. dollar affecting international profits. However, reports indicate that Honeywell is not deterred.
- On the earnings side, shares of Salesforce.com Inc. (NYSE: CRM) rallied more than 8% in pre-market hours after the firm announced stronger revenue and hiked its 2016 forecast.
- With earnings reports coming in fast, also keep an eye out on reports from companies including Kraft Heinz Co. (NYSE: KHC), Kohl's Corp. (NYSE: KSS), Domino's Pizza Inc. (NYSE: DPZ), and Herbalife Ltd. (NYSE: HLF).
- This morning, shares of Best Buy Corp. (NYSE: BBY) fell 1.5% after the firm reported a decline in corporate profits and warned of weakening sales in the future. The firm said that falling demand in mobile and tablet devices undercut growth expectations. The stock is now off more than 20% from its 52-week high.
Today's U.S. Economic Calendar (all times EST)
- Atlanta Federal Reserve Bank President Dennis Lockhart speaks at 8:15 a.m.
- Durable Goods Orders at 8:30 a.m.
- Jobless Claims at 8:30 a.m.
- FHFA House Price Index at 9 a.m.
- Bloomberg Consumer Comfort Index at 9:45 a.m.
- EIA Natural Gas Report at 10:30 a.m.
- Kansas City Fed Manufacturing Index at 11 a.m.
- 3-Month Bill Announcement at 11 a.m.
- 6-Month Bill Announcement at 11 a.m.
- 52-Week Bill Announcement at 11 a.m.
- San Francisco Federal Reserve Bank President John Williams Speaks at 12 p.m.
- 7-Year Note Auction at 1 p.m.
- Fed Balance Sheet at 4:30 p.m.
- Money Supply at 4:30 p.m.
What Investors Must Know This Week
- The $600 Million Signal That Oil Prices Are About to Rise
- How to Prepare for a Global Recession in 2016
- This Easy Investing Strategy Can Lead to 2,426% Profits
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.