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Dow Jones Industrial Average News, 4/8/2016: Earlier this year, Money Morning Chief Investment Strategist Keith Fitz-Gerald offered readers the most staggering number of the "so-called" economic recovery from the financial crisis. There has been a 93% correlation between what the U.S. Federal Reserve has done and said and the performance of the markets since 2008.
So, it shouldn't be any surprise that when Fed Chair Janet Yellen said yesterday that the United States "isn't a bubble economy," the markets continued to rally. She said this, by the way, while participating on a panel with former Fed chairs Ben Bernanke and Alan Greenspan. Both infamously missed the housing bubble by years and helped fuel it with low-interest-rate policy.
In fact, our Capital Wave Strategist Shah Gilani recently said that what is happening right now is similar to what happened in 2008, and it seems like everyone's ignoring the warning signs.
That said, here's today's top stock market news, stocks to watch, ways to profit and economic calendar for April 8, 2016.
What's Moving the Dow Jones Industrial Average Today: Federal Reserve Speakers
Futures for the Dow Jones Industrial Average projected a 120-point gain at open as traders digest statements by members of the Federal Reserve and see big gains for energy stocks early in the session.
Here's a breakdown of why the Dow is on the rise this morning.
- First up, the national debt. While Presidential candidates are promising trillions of dollars in new debt spending, the United States economy is facing a very dire prospect. During testimony on Wednesday, an auditor for the Government Accountability Office said that the federal government will soon owe more money than the total output of the nation's economy. "We're going to owe more than our entire economy is producing," said Gene Dodaro, "and by definition this is not sustainable." Quick! Someone tell that to the Federal Reserve and Congress.
- While Janet Yellen's featured event last night offered insights on the economy's health, the status of "Too Big to Fail," and the strength of the labor market, traders will digest statements from other members of the central bank today to determine if there is any dissent among the rank-and-file. Today, expect speeches from New York Fed President William Dudley and Dallas Fed President Rob Kaplan.
- Speaking of "Too Big to Fail," JPMorgan Chase & Co. (NYSE: JPM) is asking investors to reject efforts to break up the bank. A proxy proposal from a shareholder calls on the firm to create a committee designed to explore a possible break up of the bank. Investors will vote on the issue in May. The investor – Bartlett Naylor – has filed similar proposals with Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C).
- WTI crude oil prices were surging by more than 4% this morning after the Fed's statements. Prices are also rising on hopes that global energy producers can soon reach an agreement to freeze production and offer support for prices. Money Morning Global Energy Strategist Dr. Kent Moors just released his latest oil price forecast after returning from Abu Dhabi, and this could be a very profitable time for investors.
- On the regulatory front, eyes are on the U.S. Treasury Department. Following the agency's new rules aimed at preventing tax inversions – a deal where a firm relocates its headquarters abroad through a deal in order to avoid the American corporate tax code – Secretary Jack Lew has a new target: shell companies. The federal agency's new rules specifically target husk companies that don't have active operations or major resources but rely on a tax loophole that allows firms to hide their identities and reduce their financial burden. 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.
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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
- The deals could be heating up again. Shares of Yahoo Inc. (Nasdaq: YHOO) ticked up about 1.5% on news that Verizon Communications Inc. (NYSE: VZ) is considering a bid for the firm's core assets and possibly Yahoo Japan. AT&T Corp. (NYSE: ATT), Alphabet Inc. (Nasdaq: GOOGL), and Time Inc. (NYSE: TIME) are also considering possible bids.
- Under Armour Inc. (NYSE: UA) will employ a two-for-one stock split today. Shareholders will receive two shares of its new non-voting class "C" for every one share of the "old" UA stock.
- On the earnings front, shares of Ruby Tuesday Inc. (NYSE: RT) cratered more than 17% after the company missed both quarterly profit expectations in its third quarter and issued a weaker forecast than Wall Street anticipated. The company blamed bad weather for its earnings miss as it slashed its annual outlook.
Today's U.S. Economic Calendar (all times EDT)
- New York Fed Bank President William Dudley Speaks at 8:30 a.m.
- Dallas Fed Reserve Bank President Rob Kaplan Speaks at 9:30 a.m.
- Wholesale Trade at 10 a.m.
- Baker Hughes Rig Count at 1 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.