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The Dow Jones Industrial Average is surging again as traders continue to react positively to a wealth of earnings reports from the March-ending quarter. This morning, U.S. bank JPMorgan Chase & Co. (NYSE: JPM) beat expectations and sent the Dow higher. But here's the thing: The earnings report was still pretty terrible. The investment bank reported a 6.7% decline in quarterly profits and a $5.52 billion slide in net income. Their investment banking revenue cratered by a stunning 24.5%.
But JPM stock is still up 2.7% this morning because analysts set expectations even lower than this bad slate of performance. Banking stocks are off to their worst start to a year since the financial crisis. They're blaming low interest rates, exposure to falling oil prices, increased capital requirements, increased regulation, and the slowdown in the Chinese economy, among other reasons.
In fact, news is just breaking that the U.S. Federal Reserve and the FDIC have rejected the "living will" tests of five major U.S. banks. These wills are plans to bring a bank through a potential bankruptcy and eliminate the need for another U.S. taxpayer bailout. Only Citigroup Inc. (NYSE: C) passed.
Here's today's top stock market news, stocks to watch, and economic calendar for April 13, 2016.
What's Moving the Dow Jones Industrial Average Today:
Futures for the Dow Jones Industrial Average today (Wednesday) were forecasting a 97-point gain this morning as traders were optimistic that financial stocks would beat their already beaten-down quarterly earnings expectations. Traders will turn their attention to additional earnings reports this week from Bank of America Corp. (NYSE: BAC) and Wells Fargo & Co. (NYSE: WFC) on Thursday, and Citigroup on Friday.
Here's a breakdown of why the Dow Jones is up this morning.
- First up, there are split opinions among members of the Federal Reserve on the timing of the next interest rate hike. According to the central bank's March minutes, two members of the Fed Open Market Committee (the head of the Kansas City and Richmond banks) voted for a rate hike. Both bank presidents cited a stronger labor market and improving inflation figures. Despite the push for a hike, the probability of such a move on interest rates sits at just 3.5% in June.
- WTI crude oil prices retreated slightly after hitting a 2016 high on Tuesday. Prices were off 1.5%, a day after Russia and Saudi Arabia agreed to freeze output levels ahead of next week's meeting among global producers in Qatar. This announcement is critical because it indicates that any deal including additional producers will not be contingent on whether Iran decides to join the accord. In recent weeks, Iran's oil minister has said the country will not participate in a freeze as it brings oil back to the market after years of being frozen out by global economic sanctions.
- On the economic front, today offers a critical retail sales report. Other important data includes an update from the U.S. Energy Information Administration (EIA) on weekly changes in domestic crude inventories and the March Producer Price Index report.
Blue gold: Water stocks may seem "boring," but humans can't live without water. So when a company solves the critical issue of water scarcity, it's a "must-have" investment...
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
- In the War on Coal, President Barack Obama and the Environmental Protection Agency have won. Peabody Energy Corp. (NYSE: BTU), the largest privately owned coal producer in the world, announced plans to file for bankruptcy protection. The company cited sharp declines in the price of coal and its inability to finance its expansion into Australia.
- Shares of Alibaba Group Holding Ltd. (NYSE: BABA) are on the move as the e-commerce giant continues to push to create a global company with a reach in every corner of the planet. The firm announced it has purchased a controlling stake in Southeast Asian retailer Lazada Group for $1 billion. Here's where BABA stock is heading next.
- Shares of Verizon Communications Inc. (NYSE: VZ) were up slightly this morning despite news that up to 35,000 employees plan to strike over a contract dispute. This is one of the largest labor strikes in years after a critical deadline passed at midnight on Tuesday.
- On the earnings front, look for quarterly reports from Pier 1 Imports Inc. (NYSE: PIR), The Fresh Market Inc. (Nasdaq: TFM), and Titan Machinery Inc. (Nasdaq: TITN).
Today's U.S. Economic Calendar (all times EDT)
- MBA Mortgage Applications at 7 a.m.
- Retail Sales at 8:30 a.m.
- Producer Price Index-Final Demand at 8:30 a.m.
- Business Inventories at 10 a.m.
- Atlanta Fed Business Inflation Expectations at 10 a.m.
- EIA Petroleum Status Report at 10:30 a.m.
- 10-Year Note Auction at 1 p.m.
- Beige Book at 2 p.m.
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.