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Dow Jones Industrial Average News, 6/01/2016: For the better part of seven years, global economies have been spending too much money and getting too little in return for it.
In this case, the ultra-loose monetary policies that fueled massive quantitative easing programs, extended low interest rates, and massive devaluations in currencies have done their damage.
The United States, for example, hasn't had a year of GDP growth higher than 3% for the duration of the Obama administration's two terms.
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Today, the Organization for Economic Cooperation and Development warned countries to stop falling into a "low-growth trap."
The global watchdog is too late. If the world wants to turn itself around, it's going to need some radical change. To get it started, our Global Credit Strategist Michael Lewitt offers his insight into what needs to happen to get America back on track, curb future debt, and get the conversation started about the future of growth in the world economy.
Here's today's top stock market news, stocks to watch, ways to profit, and economic calendar for June 1, 2016.
What's Moving the Dow Jones Industrial Average Today: Weak Chinese Economic Data
Dow Jones futures were down 60 points this morning as traders weighed another bad month of Chinese economic data. This morning, China's official purchasing managers index (PMI) registered at 50.1, indicating a slight expansion for the month of May. Despite that small bit of optimism, the nation saw its services sector slipping. The Caixin China PMI – which measures production and activity at smaller firms across the country – contracted to a level of 49.2. At a time that many investors thought that China's economic problems had abated, these figures reveal just how volatile its economy is.
Here's a breakdown of why the Dow is pushing higher this morning.
Automotive stocks are in focus Wednesday, a day after a critical report indicated that consumer spending jumped 1% in April. Investors are wondering if that momentum carried into May, as vehicle manufacturers announce monthly sales figures.
Billionaire investor Carl Icahn said his firm has built a big position in Allergan Plc. (NYSE: AGN). The head of Icahn Enterprises LP (Nasdaq: IEP) said that he supports CEO Brent Saunders and expects bigger things for the manufacturer of Botox.
Meanwhile, e-commerce giant Amazon.com Inc. (Nasdaq: AMZN) saw shares rise to a new all-time high. The stock has risen more than 70% over the last year, while shares have rallied more than 20% in the second quarter. Yesterday, AMZN CEO Jeff Bezos predicted that the United States was on the verge of a digital renaissance thanks to artificial intelligence. As we predicted in January, this is the year that AI will dramatically alter the existence of humanity. Here's what you need to know about the upcoming revolution that will change the world.
Crude oil prices were sliding due to broader concerns about the Chinese economy, increased global output, and on concerns about Thursday's OPEC meeting in Vienna. Officials will meet to discuss production levels. Iran threw a wrench into helping to develop a support price after announcing no intentions to take part in a production freeze. Given that no OPEC nation can really afford to reduce its production level, traders remain concerned that a major rise in supply could hit the markets again at any point.
WTI oil prices fell 1.2%, below $49 per barrel. Brent crude prices fell 1.3% this morning.
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) is in focus on reports it will be shifting to a three-year product cycle for its iPhones. That's a year longer than its current cycle of product upgrades. Analysts expect the decision was based on the lack of dynamic upgrades and new features that can be added to a phone. Japan's Nikkei reports a slowing market for new phones is also a big factor in the firm's decision. However, RBC Capital Markets analyst Amit Daryanani raised some doubts about the reports during an interview on CNBC.
- Shares of Starbucks Corp. (Nasdaq: SBUX) are in focus as the Seattle-based firm doubles down on the iced coffee and cold brew coffee industry. The company announced plans to include nitro-cold brew products to its line of products this summer in seven cities.
- Another day, another deal. Shares of Salesforce.com Inc. (NYSE: CRM) slipped 2% on news that the company is purchasing website software provider Demandware Inc. (NYSE: DWRE) for $2.8 billion. DWRE – whose clients include Lands' End and L'Oreal – saw its stock rally more than 56% early this morning.
- Shares of Under Armour Inc. (NYSE: UA) slipped in pre-market hours on news that the Baltimore-based apparel maker cut its sales outlook for the year. The firm blamed the ongoing bankruptcy of retailer Sports Authority and said that the upcoming liquidation of the firm's inventory will reduce its expected revenue from the retailer by almost 75%. UA stock is off more than 9% since the beginning of the year.
- Shares of Alibaba Group Holding Ltd. (NYSE: BABA) are sliding in pre-market hours on news that SoftBank Group Corp. will be selling nearly $8 billion in BABA stock. The firm says it is taking this action to reduce its leverage. The Japanese investment firm is still expected to stay the Chinese e-commerce giant's largest shareholder. SoftBank will still hold about a 28% stake in the firm.
- On the earnings front, shares of Michael Kors Holding Ltd. (NYSE: KORS) rallied more than 7.5% after the retailer reported stronger than expected quarterly earnings. The firm reported earnings per share (EPS) of $0.98, beating consensus expectations by $0.02. The firm also announced a $1 billion buyback program to boost shareholder value.
- Look for additional earnings reports from Cracker Barrel Old Country Store Inc. (Nasdaq: CBRL), Box Inc. (NYSE: BOX), Vera Bradley Inc. (Nasdaq: VRA), and Semtech Corp. (Nasdaq: SMTC).
Today's U.S. Economic Calendar (all times EDT)
- MBA Mortgage Applications at 7 a.m.
- Gallup U.S. Job Creation Index at 8:30 a.m.
- Redbook at 8:55 a.m.
- PMI Manufacturing Index at 9:45 a.m.
- ISM Manufacturing Index at 10 a.m.
- Construction Spending at 10 a.m.
- Beige Book at 2 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.