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Dow Jones Industrial Average News, 4/7/2016: With the Federal Reserve's recent decision to hold interest rates in place for the time being, traders are looking to the upcoming decisions by other global central banks – particularly the European Central Bank and the Bank of Japan – which are slated for later this month. In a world swimming in debt and badly in need of structural reforms, central bankers continue to blast the world with negative interest rates, cheap stimulus money, and uncharted policy decisions.
Here's today's top stock market news, stocks to watch, ways to profit and economic calendar for April 7, 2016.
What's Moving the Dow Jones Industrial Average Today: Earnings Expectations
Futures for the Dow Jones Industrial Average projected an 80-point decline as investors focus on concerns about the fresh earnings season and traders dissected news that several major deals set for this year are under significant regulatory scrutiny.
Here's a breakdown of why the Dow is trending downward ahead of the opening bell.
- First up, a new fiduciary rule released by the U.S. Department of Labor is causing a stir with investors. U.S. President Barack tasked the DOL with creating a rule set to go into effect on Jan. 1, 2018. The new standard applies to financial advisors of retirement accounts, including individual accounts, and mandates that they always act in the best of their own clients. While this may sound like a positive development for investors like you, there are a few hidden traps and consequences of such a broad rule on retirement investors. Here's how the law came to be and the inevitable ways that it can impact your retirement.
- WTI crude oil prices have been ticking higher on optimism that OPEC leaders will be able to squeeze out a deal that freezes global production. However, some traders are warning that the recent rally in oil prices is premature, and that markets should exercise caution. U.S. crude prices were approaching $38 per barrel, while Brent crude prices were a few cents short of $40 per barrel.
- On the banking front, recent efforts by the U.S. Treasury Department and the Justice Department are throwing a wrench into the plans of several prominent mergers and acquisitions that were announced in recent months. The Treasury Department announced new rules aimed at preventing tax inversions – a deal where a firm relocates its headquarters abroad in order to avoid the American corporate tax code. The new rules forced pharmaceutical giant Pfizer Inc. (NYSE: PFE) to walk away from a $160 billion deal with Allergan Plc. (NYSE: AGN). Calling off the deal has cost several banks hundreds of millions of dollars in fees.
- Meanwhile, the U.S. Justice Department is suing to prevent mergers between office retailers Staples Inc. (Nasdaq: SPLS) and Office Depot Inc. (Nasdaq: ODP). It is also suing to stop the planned deal between Halliburton Co. (NYSE: HAL) and Baker Hughes Inc. (NYSE: BHI), citing antitrust rules. But what no one is talking about is why these mergers are transpiring in the first place. Aside from a costly corporate tax code here in the United States, firms are relying more and more on these mergers in order to boost market share instead of growing the companies organically.
- On the economic front, pay attention to weekly jobless claims and two events featuring prominent members of the U.S. central bank, including U.S. Federal Reserve Chair Janet Yellen. Jobless claims have remained quite low in recent months, a positive sign for the labor market. Meanwhile, Yellen is expected to take part in a conversation with other former Fed chairs Ben Bernanke, Alan Greenspan, and Paul Volcker.
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Now here's your list of top stocks to watch in today's market, plus today's economic calendar:
Companies to Watch in the Stock Market Today
- Shares of Valeant Pharmaceuticals International Inc. (NYSE: VRX) will try to keep their momentum today after rallying 18.8% on Wednesday. The Canadian drug company had its best two-day rally in two decades. The rally came after bullish statements by activist investor Bill Ackman. While Ackman's fund may be up roughly $250 million on its position in the last two days, his position is still off billions from its slide from its 52-week high. Here's what to expect next for VRX stock.
- Shares of McDonald's Corp. (NYSE: MCD) were on the move today on news that the company's Chairman Andrew McKenna will retire. McKenna has headed the fast-food giant's board of directors for 12 years. The firm will elect a new chairperson after its annual meeting in late May.
- On the earnings front, look for quarterly reports from CarMax Inc. (NYSE: KMX), ConAgra Foods Inc. (NYSE: CAG), and Ruby Tuesday Inc. (NYSE: RT).
Today's U.S. Economic Calendar (all times EDT)
- Jobless Claims at 8:30 a.m.
- Bloomberg Consumer Comfort Index at 9:45 a.m.
- EIA Natural Gas Report at 10:30 a.m.
- 3-Month Bill Announcement at 11 a.m.
- 6-Month Bill Announcement at 11 a.m.
- 3-Year Note Announcement at 11 a.m.
- 10-Year Note Announcement at 11 a.m.
- 30-Year Bond Announcement at 11 a.m.
- Consumer Credit at 3 p.m.
- Treasury STRIPS at 3 p.m.
- Fed Balance Sheet at 4:30 p.m.
- Money Supply at 4:30 p.m.
- Federal Reserve Chair Janet Yellen speaks at 5:30 p.m.
- Kansas City Federal Reserve Bank President Esther George speaks at 8:15 p.m.
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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.