Dow Jones Industrial Average News, 4/22/2016: The markets continue a busy week of earnings reports, as lowered expectations have made it possible for the Dow to defy gravity.
Consensus expectations have called for S&P 500 companies to report an average 7.2% decline in profits...
That means that stocks just don't have to be as terrible as one of the worst expectations for the markets since 2009. As our Global Credit Strategist Michael Lewitt explains, we're in the middle of a Bear Market rally. And here's what you need to do to prepare for what happens when it ends.
Here's today's top stock market news, stocks to watch, ways to profit and economic calendar for April 22, 2016.
What's Moving the Dow Jones Industrial Average Today: Earnings Expectations
Dow Jones futures projected a seven-point decline on Friday as traders eyed another big day of quarterly earnings reports and a new round of data.
Here's a breakdown of why the Dow is pushing lower this morning.
First up, Alphabet Inc. (Nasdaq: GOOGL) is off 4.8% after the company badly missed earnings expectations. The company said that it suffered from a stronger dollar and from increased spending to boost traffic for its mobile advertising services. Alphabet reports adjusted per-share earnings of $7.50 on top of $20.26 billion in revenue. Wall Street expected top-line earnings of $7.97 on $20.37 billion in revenue. The firm is still an absolute behemoth in the advertising space. Alphabet said that its ad revenue surged 16.2% to $18.02 billion, while paid clicks increased by 29%.
Next, Caterpillar Inc. (NYSE: CAT) saw a slowdown in sales as the mining and energy sectors took a big hit in the wake of subdued commodity prices. The firm reported net income of $494 million. That's down from $1.70 billion in the same period of last year. The big news from its report, however, is that the firm lowered its full-year outlook, renewing concerns about global growth.
They're not going to do it again... are they? Reuters reports that the Bank of Japan is considering another interest rate cut that would drive rates negative to both levels of its two-tier lending system. The Yen fell this morning against the dollar as the nation appears paralyzed in a liquidity trap. The country has been trying to combat deflation for 20 years.
On the economic front, pay attention to the PMI Manufacturing Index this morning as traders look for more clues into the health of American factories. Yesterday, markets were stunned by news that the Philadelphia Fed Index fell well short of economist expectations and into negative territory. The Index will provide greater understanding of first-quarter GDP, which appears that it may also fall below expectations.
Crude oil prices were heading for their third-straight week of gains as traders considered the possibility that OPEC and Russia may be able to strike a production freeze deal. The International Energy Agency warned that large Western producers in the United States and Canada had slashed investment by up to 40% over the last two years. The uptick came despite news that the United States saw another huge increase in oil inventories at its key delivery point in Cushing, Oklahoma. The recent uptick in prices has been critical for many producers, who have been able to lock in production prices on the futures market.
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
It's another busy day of earnings reports. This morning, McDonalds Corp. (NYSE: MCD) shares added 2% after reporting positive fiscal first-quarter earnings. The fast-food giant surprised markets with an unexpected jump in comparable stores sales on the back of its all-day breakfast promotion. Long-term locations (those open at least 13 months) saw a 5.4% jump in sales in Q1 compared to the same period last year.
Meanwhile, General Electric Co. (NYSE: GE) shares are on the move after the industrial giant beat first-quarter profit expectations; however, the firm reported that its organic revenue slipped 1%. The firm reported earnings per share (EPS) of $0.21, beating consensus analyst expectations of $0.19. GE maintained its full-year outlook, but the weak organic growth figure raises some doubts among traders. Keep an eye on GE stock.
On the earnings front, look for additional reports from Honeywell International Inc. (NYSE: HON), SunTrust Banks Inc. (NYSE: STI) and Synchrony Financial (NYSE: SYF).
Look for the Going-Out-of-Business signs soon. Sears Holdings Corp. (Nasdaq: SHLD) announced plans to close 78 of its brand-name stores and Kmart Stores from July through September. The retail giant continues to suffer to lagging sales and fleeting foot traffic. The stock has absolutely cratered over the last 52 weeks, but it gained 6.3% on the news early this morning.
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Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.