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Dow Jones Industrial Average News, 5/18/16 – It was a wild day on Wall Street, and not just the usual boring speculation on interest rate hikes or oil volatility. Today, the New York Stock Exchange had a major technical issue that affected 199 tickers and forced the exchange to suspend trading of the related companies.
Apple Inc. (Nasdaq: AAPL) offered the largest boost to the Nasdaq and the S&P 500 as investors continue to follow Warren Buffett after his recent announcement of a 9.8 million share stake. Meanwhile Goldman Sachs Group Inc. (NYSE: GS) offered the biggest boost to the Dow as investors grow more expectant of an interest rate hike in the coming months.
Here's what else you need to know about the markets on May 18, 2016.
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First up, check out the results for the Dow Jones Industrial Average, S&P 500, and Nasdaq:
Dow Jones: 17,526.62; -3.36; -0.02%
S&P 500: 2,047.63; +0.42; +0.02%
Nasdaq: 4,739.12; +23.39; +0.50%
Now, here's the top stock market news today…
DJIA Today: Rising Inflation Sets Path for June/July Interest Rate Hike
The U.S. Federal Reserve is back in focus this afternoon. Financial stocks pushed higher on the possibility that the central bank could boost interest rates sooner than markets previously expected. Following Tuesday's report indicating that consumer prices increased at a surprise rate in April, the central bank released minutes from its meeting last month. According to the minutes, the central bank said that the possibility of another rate hike is on the table during the next FOMC meeting – set for June 14-15.
Yesterday, Dallas Fed President Robert Kaplan said during a speech that he will push for a rate increase in June or July. Other Fed officials have advocated for up to three increases this year. Shares of JPMorgan Chase & Co. (NYSE: JPM) pushed up 3.5%, while Morgan Stanley (NYSE: MS) gained 3.2%. But interest rates are not what financial sector investors should be focused on. With one prominent member of the Fed suggesting that it's time to break up the banks, and politicians in Washington wanting to end "Too Big to Fail," that day may soon come. But our Shah Gilani warns that the banks could collapse before that day of reckoning happens.
The rise in financial stocks offset weakness again in the retail sector. Investors can partially blame Target Corp. (NYSE: TGT), which saw shares crater by nearly 9% after the firm fell well short of quarterly sales expectations. The firm's same-store sales were lower than analysts projected. The poor earnings report pulled down shares of Wal-Mart Stores Inc. (NYSE: WMT) – which reports earnings tomorrow – and Costco Wholesale Corp. (Nasdaq: COST), which both fell more than 2.5%.
Meanwhile, crude oil prices pushed lower as rate chatter pushed up the value of the U.S. dollar. Given that global crude oil is priced in dollars, any strengthening of the currency leads to weakness in oil prices. In addition, the U.S. Energy Information Administration reported a 1.3 million barrel increase in domestic supplies last week. WTI prices fell 1.1%, while Brent crude slipped 1.5%. In the energy sector, shares of Chevron Corp. (NYSE: CVX) and Exxon Mobil Corp. (NYSE: XOM) rose 0.3% and 0.4%, respectively.
But the big news today was the stock market downgrade from investment bank Goldman Sachs Group Inc. (NYSE: GS). The firm downgraded its 12-month outlook for equities to "Neutral." "Until we see sustained signals of growth recovery, we do not feel comfortable taking equity risk, particularly as valuations are near peak levels," wrote analysts at Goldman Portfolio Strategy Research. The firm said that it sees stocks being too expensive, particularly in Europe and North America.
Now, let's look at the day's biggest stock movers and the must-own stock for today…
Top Stock Market News Today
- The Lowe's Companies Inc. (NYSE: LOW) was one of the few bright sides of the retail sector after the firm beat earnings expectations. Shares popped more than 3%. Improving numbers in the housing sector have played well for home-retailer investors. Rival Home Depot Inc. (NYSE: HD) slipped 0.4%.
- Another retail surprise was Staples Inc. (Nasdaq: SPLS). Shares retreated 0.8% despite news that the office supplies retailer beat Q1 earnings expectations. The stock was hurt by news that same-store sales fell 4% over the period. The firm has seen its stock plunge in May after a federal judge blocked the firm's planned merger with Office Depot Inc. (Nasdaq: ODP).
- It was a big day for Tesla Motors Inc. (Nasdaq: TSLA). Shares of TSLA stock popped nearly 2.8% after the firm received an upgrade to "Buy" from Goldman Sachs. The investment firm is bullish on the electric-car manufacturer's share value due to its recent 23% decline in its price since it unveiled the new Model 3. Goldman "does not believe Tesla shares are fully capturing the company's disruptive potential."
- Look out Facebook Inc. (Nasdaq: FB)… one of your biggest rivals is targeting your WhatsApp messaging service. During a keynote address at Alphabet Inc.'s (Nasdaq: GOOGL) annual development conference, CEO Sundar Pichai announced that the firm is creating its own "smart-messaging" service called Allo. The company also announced plans to release Google Home, a voice-activated home device that will compete with the com Inc. (Nasdaq: AMZN) Echo. Shares of GOOGL stock and FB stock were both off marginally this afternoon. AMZN stock was up 0.2% on the day.
- Finally, here is your stock pick of the day. If you want to grow your wealth by 13% over the next five years, this is the stock to own. These are safe, reliable returns that you won't find anywhere else these days. Be sure to check out this can't-miss stock, right here.
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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.