Dow Jones Industrial Average News, 5/5/2016: European markets snapped out of a four-day funk and oil prices ticked higher due to new threats to global supply.
That has investors seeing black on this Thursday as they prepare for what could be a very strong day of earnings reports and economic data for the markets.
Here's today's top stock market news, stocks to watch, ways to profit, and economic calendar for May 5, 2016.
What's Moving the Dow Jones Industrial Average Today: Rising Oil Prices
Dow Jones futures projected a 54-point gain this morning as oil prices rallied. Investors are still looking for insight into the next interest rate decision by the U.S. Federal Reserve. Later today, St. Louis Fed President James Bullard and San Francisco Fed President John Williams will speak publicly on the U.S. economy.
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Here's a breakdown of why the Dow is pushing higher this morning.
- First up, the economic race to the bottom continued on Wednesday after Japanese Prime Minister Shinzo Abe announced the Bank of Japan would take steps to weaken the yen if necessary. According to a recent poll of economists by Reuters, a consensus projects an 8% decline in the yen in 2016. Many economists blame a stronger U.S. dollar for the decline and place less emphasis on monetary policy decisions by the Bank of Japan. That said, central banks around the world are weakening their currencies in dramatic efforts to boost production and exports. For two decades, the Bank of Japan has tried every stimulus trick in the book - from printing trillions in yen to buying government bonds - in an effort to boost economic growth and curb deflation. However, the stimulus has achieved little aside from driving up the stock market and increasing the nation's balance sheet to roughly 70% of GDP.
- Donald Trump is your likely GOP nominee for President. Yesterday, John Kasich announced that he has suspended his campaign, leaving Trump the only person left standing out of 17 candidates who initially entered the race. In an interview this morning with CNBC, Trump said that he supported low interest rates unless the United States began to see an increase in inflation and that he would likely replace Janet Yellen at the end of her term should he win the presidency. Trump also said that there was a 40% chance that he would select a former GOP primary rival as his running mate, suggesting that an outsider is the most likely candidate for the position.
- Hedge fund manager David Einhorn is making a lot of noise this morning with two new positions that are moving the markets. It was just yesterday that we were talking about his decision to go long on digital firm Yelp Inc. (Nasdaq: YELP), a firm in which he foresees possible upside of 30%. Now he announced he's shorting one corporate giant and going long on an automotive firm. Einhorn is shorting Caterpillar Inc. (NYSE: CAT), citing concerns about its boom-or-bust cycle in mining and weakness in the Chinese economy. Meanwhile, he is buying General Motors Inc. (NYSE: GM), citing the firm's improved balance sheet and low multiple. CAT stock fell 1% in pre-market hours, while GM stock was up roughly 1.3% before the bell.
- Oil prices were rallying after new threats to supply spurred gains in the sector. A massive wildfire that has caused $1 billion in damage in the oil-rich Canadian province of Alberta has cause firms to shutter oil sands production, while new geopolitical problems in Libya threaten the African nation's already struggling output. WTI crude prices rallied 4.1%, while Brent crude gained 3.4%.
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 Alibaba Group Holding Ltd. (NYSE: BABA) rallied 4.6% in pre-market hours after the Chinese e-commerce giant crushed Wall Street quarterly revenue expectations as more consumers made purchases online. The firm announced that fourth-quarter revenue increased by 39%. The dramatic increase spurred optimism among analysts that Chinese consumers are still spending despite broader concerns about the world's second-largest economy.
- On the earnings front, Merck & Co. Inc. (NYSE: MRK) saw shares appreciate slightly this morning after the drug manufacturer beat Wall Street earnings expectations by $0.04; however, the firm fell just short of revenue expectations. The firm cited a decline in sales from its rheumatoid arthritis drug Remicade and a stronger U.S. dollar. The company also raised its full-year outlook.
- Today, look for additional reports from GoPro Inc. (Nasdaq: GPRO), Yelp Inc. (Nasdaq: YELP), 3D Systems Corp. (NYSE: DDD), Wynn Resorts Ltd. (NYSE: WYNN), and Herbalife Ltd. (NYSE: HLF).
Today's U.S. Economic Calendar (all times EDT)
- Challenger Job-Cut Report at 7:30 a.m.
- Jobless Claims at 8:30 a.m.
- Gallup Good Jobs Rate 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.
- St. Louis Federal Reserve Bank President James Bullard speaks at 11:50 a.m.
- Fed Balance Sheet at 4:30 p.m.
- Money Supply at 4:30 p.m.
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About the Author
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.