Dow Jones Industrial Average Slides Today on Future Rate Hike Worry

dow futuresDow Jones Industrial Average News, 5/18/2016: The Fed is back in focus on Wednesday, as the central bank prepares to release minutes from its April FOMC meeting.

Yesterday, the Dow cratered more than 200 points after consumer prices rose by its highest monthly level since early 2013.

Markets are growing more concerned that the FOMC is set to be more hawkish about the possibility of a second rate hike in 2016, which was the sentiment yesterday during speeches by both San Francisco Fed President John Williams and Atlanta Fed President Dennis Lockhart.

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The Federal Open Market Committee minutes will be released at 2 p.m.

Here's today's top stock market news, stocks to watch, ways to profit, and economic calendar for May 18, 2016.

What's Moving the Dow Jones Industrial Average Today: Fed Minutes in Focus

Dow Jones futures projected a 16-point decline as investors attempt to determine the timing of the next interest rate hike.

Here's a breakdown of why the Dow is pushing lower this morning.

First up, Japan's economy surprised investors by growing by 1.7% during the first quarter of 2016. The nation announced that Q1 GDP grew more than economists had anticipated thanks to stronger consumer demand and an increase in exports. The news that the nation avoided a recession could reduce pressure on the country's Prime Minister Shinzo Abe to further loosen monetary policy. But Japan has still been plagued by slow growth and deflationary pressures for nearly two decades.

On the deal front, it's the end of the line for Microsoft Corp.'s (Nasdaq: MSFT) controversial phone business. The company plans to sell its phone division to FIH Mobile (OTC: FXCNY), a subsidiary of Foxconn, and to Finland's HMD Global for $350 million. It's the last remnants of the software giant's purchase of Nokia in 2013 that never quite aligned with the Microsoft's mobile software strategy. Microsoft had been slashing thousands of jobs in the phone division.

GOP presidential front-runner Donald Trump has a new public enemy that he intends to take down: The Dodd-Frank Act. Calling the law a "very negative force," Trump said he plans to dismantle the financial reform regulations. Further details of how Trump plans to unwind the law remain unclear.

WTI crude oil prices stabilized this morning as supply problems in Canada, Nigeria, and Venezuela continue to loom around the globe. Oil prices have been ticking toward $50 per barrel as the supply and demand balance shift toward global equilibrium. Traders have cheered the ongoing uptick in prices, but the prolonged period of lower prices compared to their 2014 levels has left many energy companies across the United States in peril. A wealth of energy bankruptcies still looms for the country.

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

  • Goldman Sachs Group Inc. (NYSE: GS) shocked the markets today by downgrading equities to "Neutral" over the next year. The investment bank raised concerns about economic growth and stock valuations. The bank says it doesn't recommend anyone take risks with equities until we "see sustained signals of growth recovery."
  • It was another good day for the home retail sector. Shares of the Lowe's Companies Inc. (NYSE: LOW) ticked up more than 1% after the firm announced that quarterly sales beat analyst expectations. The retailer said that its same-store sales surged 7.3% over the quarter, a sharp beat of the 4.4% level expected by analysts.
  • Shares of Staples Inc. (Nasdaq: SPLS) pushed higher than 1.4% this morning after the firm topped Wall Street's expectations. The company is still reeling from the recent decision by a federal judge to block a merger with Office Depot Inc. (Nasdaq: ODP). However, this morning's earnings report, which saw the firm beat top-line expectations by a penny, is a positive sign for sales in the business-to-business market.
  • Shares of Apple Inc. (Nasdaq: AAPL) are in focus today after the firm recently received a huge boost from investment legend Warren Buffett, who purchased 9.8 million shares of AAPL. Today, the company announced plans to create a new lab in India, where it will allow companies and developers to integrate the firm's iOS operating system. Apple CEO Tim Cook is about to visit the country, which could open a massive market. In fact, that is just one reason why AAPL stock is considered one of the biggest value opportunities of the year.
  • On a light day of earnings, look for additional reports from Inc. (NYSE: CRM), Cisco Systems Inc. (Nasdaq: CSCO), Target Corp. (NYSE: TGT), Urban Outfitters Inc. (Nasdaq: URBN), and Hormel Foods Corp. (NYSE: HRL).

Today's U.S. Economic Calendar (all times EDT)

  • MBA Mortgage Applications at 7 a.m.
  • Atlanta Fed Business Inflation Expectations at 10 a.m.
  • EIA Petroleum Status Report at 10:30 a.m.
  • FOMC Minutes at 2 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.

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