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Dow Jones Industrial Average News, 5/31/2016: All eyes are on U.S. Federal Reserve Chair Janet Yellen as usual.
On Friday, the central bank chair told the nation that an interest rate hike this summer would be appropriate. Citing the health of the labor market and other improving economic data, Yellen dismissed concerns about the weak growth levels experienced during the first quarter of the year.
Last week, the expectations of a hike surged from a probability of 4% to 28%, according to CME FedWatch. It will be a busy day of economic data, setting the tone for more rate hike speculation.
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Here's today's top stock market news, stocks to watch, ways to profit, and economic calendar for May 31, 2016.
What's Moving the Dow Jones Industrial Average Today: Interest Rate Expectations
The rate hike expectation has investors in a bit of a holding pattern this morning. Yesterday, St. Louis Fed President James Bullard said that the markets are "well prepared" for a rate hike.
Dow Jones futures were up 35 points as investors eye the central bank and a very important meeting by members of OPEC.
Here's a breakdown of why the Dow is pushing higher this morning.
First up, investors are keeping a close eye on the monthly consumer spending figure, as any uptick in inflation in April will provide the Federal Reserve with more justification to increase interest rates during its June meeting. Economists anticipate that consumer spending increased by 0.2% in April.
Meanwhile, in deal news, Great Plains Energy Inc. (NYSE: GXP) – the firm that owns Kansas City Power & Light – announced plans to purchase Westar Energy Inc. (NYSE: WR). Westar is the largest utility firm in Kansas, and the deal was worth roughly $8.6 billion. The announcement pushed shares of Westar up more than 12% in early this morning.
Crude oil prices were mixed thanks to output data released by the global cartel known as OPEC. According to Reuters, oil output in the Middle East surged last week, and Iran has said it will boost its supply levels to at least 5 million barrels per day by June. The country refuses to join its cartel partners in a possible production freeze, hiking concerns about the return of a global supply glut. Brent crude prices were off 0.3% as traders eye the June 4 meeting among OPEC producers in Vienna, where they will discuss ways to provide support to global oil prices. OPEC's key partners are widely expected to aim for a price level of $65 per barrel in the months ahead.
Meanwhile, a gain in WTI prices of 0.6% corresponded with the start of the summer driving season in the United States. Drivers hit the road for Memorial Day weekend, prompting a decline in short options for the 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
- Apple Inc. (Nasdaq: AAPL) stock was back below $100 per share this morning. Shares fell 0.6% as traders eye details about its upcoming Siri-based personal assistant. The device is expected to compete with Amazon.com Inc.'s (Nasdaq: AMZN) revolutionary personal Echo assistant.
- Shares of Sodastream International Ltd. (Nasdaq: SODA) rallied more than 10% after the company announced plans to expand sales of its at-home beer production kit. The soda maker launched the kit in Germany, and it plans to expand to Switzerland later this year. The "Beer Bar" allows users to create their own beer in just seconds by combining sparkling water and a beer concentrate. It is expected to hit the U.S. market by 2017.
- Another day, another deal. Shares of Celator Pharmaceuticals Inc. (Nasdaq: CPXX) surged more than 70% after the firm agreed to a deal. The pharmaceutical firm will be purchased by Jazz Pharmaceuticals Plc. (Nasdaq: JAZZ) for roughly $1.5 billion.
- Shares of Verizon Communications Inc. (NYSE: VZ) are in focus this morning after the firm said it has resolved its labor dispute with its unions. The telecommunications giant will offer raises to roughly 10% of its workforce. Verizon will also create more than 1,200 new positions.
- On the earnings front, shares of Medtronic Plc. (NYSE: MDT) were up 0.6% after the medical products manufacturer topped per-share profit expectations by a penny. The firm also beat revenue expectations. That said, investors are not very happy about its 2017 profit outlook, which fell below Wall Street's consensus expectation.
- Meanwhile, look for reports from Workday Inc. (NYSE: WDAY), Ascena Retail Group Inc. (Nasdaq: ASNA), TiVo Inc. (Nasdaq: TIVO), and YY Inc. (NYSE ADR: YY).
Today's U.S. Economic Calendar (all times EDT)
- Personal Income and Outlays at 8:30 a.m.
- S&P Case-Shiller HPI at 9 a.m.
- Chicago PMI at 9:45 a.m.
- Consumer Confidence at 10 a.m.
- State Street Investor Confidence Index at 10 a.m.
- Dallas Fed Mfg Survey at 10:30 a.m.
- 4-Week Bill Announcement at 11 a.m.
- 4-Week Bill Auction at 11:30 a.m.
- 3-Month Bill Auction at 11:30 a.m.
- 6-Month Bill Auction at 11:30 a.m.
- Farm Prices at 3 p.m.
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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.