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The Dow Jones Industrial Average took Thursday off – falling 23 points – after two consecutive strong sessions saw markets rally on the backs of energy and financial stocks. Meanwhile, the S&P 500 barely ticked lower, while the Nasdaq saw a small gain.
The markets seem to be easing into the reality that the U.S. Federal Reserve may hike interest rates in June or July. That being said, a number of risks remain in focus, particularly in Europe, with the U.S. presidential election, and in the global commodity sectors. In fact, Japanese Prime Minister Shinzo Abe shocked investors today with an alarm about the state of the global economy. He even invoked the name… Lehman Brothers.
Here's what else you need to know about the markets on May 26, 2016.
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First up, check out the results for the Dow Jones, S&P 500, and Nasdaq:
Dow Jones: 17,828.29; -23.22; -0.13%
S&P 500: 2,090.10; -0.44; -0.02%
Nasdaq: 4,901.77; +6.88; +0.14%
Now, here's the top stock market news today…
DJIA Today: Keystone Dreams, Rate Hike Schemes, and $50 Crude Oil
First up, Federal Reserve Governor Jerome Powell said that the U.S. economy is on a "solid footing" and projected that the central bank could raise interest rates in either June or July. Despite the optimism, Powell explained that there are global macroeconomic risks tied to the upcoming vote by United Kingdom voters on whether to remain in the European Union. The so-called "Brexit" would send shockwaves across the world's largest economic bloc.
The most boring debate from the seven-year tenure of the Obama administration is back in focus. Republican front-runner Donald Trump said that he would reverse regulatory decisions and approve the Keystone XL Pipeline should be voted president. Trump said that energy dominance would be central to his administration's economic and foreign policy efforts.
As we have explained here on numerous occasions, the idea is completely irrelevant. The pipeline will not reduce crude oil prices in the United States and the environmental impact of the project is negligible. This means that both the pro and against arguments regarding the pipeline have been flawed from the beginning. That being said, shares of TransCanada Corp. (USA) (NYSE: TRP), the firm that would operate the full pipeline, rose nearly 0.5% on the day.
Crude oil prices retreated below $50 per barrel, but traded above the barrier for the first time since November earlier in the session. Crude prices have been rallying in recent weeks as supply concerns abate and investors continue to enjoy the price rally in the global commodity sector. WTI fell 0.5%, while Brent crude dipped 0.7% at market close.
That $50 mark could face pressure very soon. The psychological barrier could drive U.S. producers in the shale industry to return to operations after months of being shut down. Meanwhile, a possible deal among OPEC producers to provide a floor to prices remains in jeopardy due to Iran's unwillingness to participate.
But the big news today was the speculation that Apple Inc. (Nasdaq: AAPL) may one day consider a deal to take over streaming giant Netflix Inc. (Nasdaq: NFLX). Though it's a pure Wall Street dream right now, the Financial Times reported that Apple had made a bid last year for Time Warner Inc. (NYSE: TWX), the firm that owns key content channels like HBO and Warner Brothers studios. The report cited several bankers who said that Apple would be better off buying a streaming firm like Netflix, which has technological infrastructure and content development behind it. Shares of NFLX added 2.2% thanks to the rumors.
Now, let's look at the day's biggest stock movers and the must-own stock for today…
Top Stock Market News Today
- Discount chains Dollar General Corp. (NYSE: DG) and Dollar Tree Inc. (Nasdaq: DLTR) topped Wall Street earnings expectations. DG stock and DLTR stock added roughly 4.6% and 12.7%, respectively. While it's positive for both companies, it also offers some jarring insight into the economic realities of Americans. While specialty and apparel retail companies – once staples of brick-and-mortar malls that served the middle class – are disappearing, retail chains that typically serve lower-income households are thriving.
- Also on the earnings front, Hollywood titan Lions Gate Entertainment Corp. (NYSE: LGF) topped Wall Street expectations on earnings and revenue. Despite disappointments from its film production unit, the firm cited strong revenue in its TV development with shows like "Orange Is the New Black."
- Meanwhile, shares of Abercrombie & Fitch Co. (NYSE: ANF) cratered more than 16% after the teen retailer issued a dire earnings report. The firm's EPS share loss came in at negative $0.59, missing Wall Street's already dreadful forecast by $0.08. The retail sector continues its free fall as consumers turn away from brick-and-mortar stores and transition their spending toward online and mobile channels. In fact, Abercrombie isn't even the worst of the worst. Our Global Credit Strategist Michael Lewitt foresees six other retail companies' demise in the near future. Here are all six, right here.
- Finally, here is your stock pick of the day. Money Morning Director of Tech & Venture Capital Michael A. Robinson wants to offer you some insight into the explosive growth poised for a $165 billion industry. In just the next few years, we're going to see growth in this technology industry balloon by a stunning 57%. The best part: You can grab your share of this growth with one of the oldest, most stable dividend payers on the market right now…
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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.