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Janet Yellen and her merry band of central bankers are hinting that the U.S. Federal Reserve won't increase interest rates in April, fueling a Dow Jones Industrial Average rally today. It's become increasingly clear that the central bank's chatter about four interest rate hikes in 2016 was little more than nonsense. Traders certainly never fell for it. The CME FedWatch projects just a 7% chance of a rate hike in April, and the probability of the next hike doesn't rise above 50% until December.
Here's what you need to know about the markets on Wednesday, March 30, 2016.
First up, check out the results for the Dow Jones, S&P 500, and Nasdaq:
Dow Jones: 17,716.66; +83.55; +0.47%
S&P 500: 2,063.95; +8.94; +0.44%
Nasdaq: 4,869.29; +22.67; +0.47%
Now, here's the top stock market news today…
DJIA Today: The Dow Jones Rallies as the Fed Dilly-Dallies on Interest Rates
In deal news, State Street Corp. (NYSE: STT) announced plans to purchase General Electric Co.'s (NYSE: GE) asset management division for up to $485 million. The deal will hike State Street's asset management levels by another $100 billion.
WTI crude oil prices started the day strongly in positive territory but retreated quickly on news U.S. crude inventory levels rose again to a new record. U.S. crude inventories increased by another 2.3 million barrels last week. Despite the gain, oil prices remained defiant as the build was less than what economists expected by roughly one million barrels.
On the economic front, the private sector added 200,000 jobs in March, according to Automated Data Processing. That's slightly lower than what economists had forecast, but is another strong showing for the U.S. economy. With the Fed in focus, investors will be keeping a close eye on the March jobs report, which will be released by the U.S. Labor Department on Friday.
Despite the positive figures in the U.S. economy, there was more bad news for the health of the global economy. The Organization for Economic Cooperation and Development – which represents the world's most advanced economies – lowered its forecast for global growth and warned about global governments' abilities to fulfill pensions and pay bondholders. The OECD lowered its 2016 outlook from 3.3% to 3%. That decline could reduce the amount of revenue collected by governments needed to pay debt holders and fund pensions.
But the big talk – as always these days – was on the Fed and the timing of the central bank's next interest rate hike. Markets around the globe rallied after Yellen's speech on Tuesday suggested another rate hike was not imminent in April. Even though the rally has been strong in recent weeks, traders on the floor are discussing the upcoming earnings season – which they see as the real test for the markets. Chicago Federal Reserve Bank President Charles Evans said inflation levels are too low to justify a rate hike.
Now, let's look at the day's biggest stock movers and today's must-own investment…
Top Stock Market News Today
- It was a good day for insurance stocks – but a bad day for U.S. regulators. A court ruled today that life insurance giant Metlife Inc. (NYSE: MET) is not considered "too big to fail." That designation had previously been assigned by regulators who argued MetLife is "systemically important" to the nation's financial system. The judge said the government can no longer use this designation and means that MetLife will not be subject to regulation and oversight from the Federal Reserve. The news pushed up shares of other insurance firms like Prudential Financial Inc. (NYSE: PRU) and American International Group Inc. (NYSE: AIG). Shares of MET stock surged 5.4%.
- Shares of Apple Inc. (Nasdaq: AAPL) gained 1.8% after the technology giant received a stock upgrade from investment firm Cowen. The analyst raised the price target to $135 and cited expected strong sales from the iPhone 7 launch. Apple's gain today offered the strongest boost to the Nasdaq and the S&P 500.
- Shares of Valeant Pharmaceuticals International Inc. (NYSE: VRX) fell another 6.6% after the company faced more bad news surrounding its debt. The company has pitched a deal to lenders to prevent a default that would allow it to wait until late May to file its annual 10-K. As we have said multiple times, avoid VRX stock at all costs in 2016.
- On the earnings front, shares of Lululemon Athletica Inc. (Nasdaq: LULU) popped 10.7% after the company beat earnings expectations pretty easily and reported an 11% jump in same-store sales. There was some caution, however, after the firm issued a soft outlook for the March-ending quarter.
- Finally, here's your must-own investment of the day. Every day, we're finding you the best stocks to own right now. But every now and then, a new opportunity opens up that investors need to know about in these uncertain times. Today, Money Morning Chief Investment Strategist Keith Fitz-Gerald highlights a "must-own" investment fund that caters to the most important commodity on Earth. You'll be glad to know that this fund exists, and happier from the returns it offers. Read more about it, right here.
Negative Interest Rates Will Kill America's Free Market… Negative interest rates are the latest central bank "flavor of the month," and the fact that this disastrous policy hasn't worked in Europe – or anywhere – won't stop the Federal Reserve from taking NIRP for a spin in the United States. Now's your chance to gain immediate protection from the downside – and even position yourself to profit – when Team Yellen takes rates negative. Don't delay…
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.