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Dow Jones Industrial Average News, 6/03/2016: The month of June is off to a wild start.
OPEC failed to reach an accord on oil production – a factor that could push oil prices and energy stocks down in the near future due to supply concerns.
And now, the U.S. economy just experienced a terrible jobs report for the month of May, with job creation falling well below economist expectations.
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With interest rate hikes and Brexit speculation in focus, Friday should be a busy day on Wall Street.
Here's today's top stock market news, stocks to watch, ways to profit, and economic calendar for June 3, 2016.
What's Moving the Dow Jones Industrial Average Today: May Jobs Report
Dow Jones futures indicated a 25-point decline after Friday's dismal jobs report. The odds of an interest rate hike in June plunged from 21% to just 6% in a matter of seconds, according to CME FedWatch.
In May, the U.S. economy created just 38,000 jobs, falling well short of economist expectations. Forecasts called for 158,000 new positions. Economists argued that numbers were likely going to be held down due to the massive strike by workers at Verizon Communications Inc. (NYSE: VZ). However, this large of a miss is hard to blame just on one factor.
Here's a breakdown of why the Dow is pushing lower this morning.
The weak jobs report puts the U.S. Federal Reserve back in focus, as the central bank looks ahead to its June 14-15 meeting to discuss monetary policy. It was widely expected that the Fed was planning on delaying any rate hike until after voters in the United Kingdom voted on a referendum to leave the European Union.
On the deal front, is there a big merger or just a big rumor? The New York Post reports that executives at Twitter Inc. (NYSE: TWTR) met with Marissa Mayer, the CEO of Yahoo! Inc. (Nasdaq: YHOO), to discuss a potential merger. Shares of both stocks were up marginally early this morning.
Meanwhile, shares of Qlik Technologies Inc. (Nasdaq: QLIK) were off slightly this morning, despite news that it was selling itself to private equity firm Thoma Bravo for $3 billion. The company had been under pressure from activist hedge fund Elliott Management to improve shareholder value and consider a deal.
Finally, shares of Latin American airline company Avianca Holdings SA (NYSE ADR: AVH) rallied in pre-market hours on news that the firm is considering a deal to sell itself in the coming weeks. The Wall Street Journal cited two possible suitors: Delta Air Lines Inc. (NYSE: DAL) and United Continental Holdings Inc. (NYSE: UAL).
Yesterday, the Organization of the Petroleum Exporting Countries (OPEC) met in Vienna to debate its oil output policy. The global oil cartel failed – for the second time this year – to reach an accord, raising new concerns about global supply and a potential race to the bottom. Our Global Energy Strategist Dr. Kent Moors has said that OPEC's war on U.S. shale producers in recent years has led to a situation where the cartel could end up destroying itself. Virtually no member of OPEC can afford to cut production, but an accord is needed to help boost prices.
Crude oil prices stabilized around $50 per barrel following the OPEC meeting. WTI oil prices slipped 0.1% after this morning's jobs report.
Now, here is your list of top stocks to watch in today's market, plus today's economic calendar:
Companies to Watch in the Stock Market Today
- On the earnings front, shares of Broadcom Ltd. (Nasdaq: AVGO) were up more than 7.5% after the semiconductor manufacturer topped earnings expectations. The firm reported earnings per share (EPS) of $2.53, beating forecasts by $0.15. The company also announced plans to hike its dividend.
- It's been a wild ride this year for semiconductor manufacturer Ambarella Inc. (Nasdaq: AMBA), one of the primary component manufacturers for camera giant GoPro Inc. (Nasdaq: GPRO). The stock rallied more than 9.7% this morning after announcing that it beat top-line earnings estimates by $0.06. Despite the gains, the stock is still off roughly 63% from its 52-week high, and the company predicted headwinds for the wearable camera market. GPRO stock was up 2.8% this morning after the AMBA report.
- Shares of Gap Inc. (NYSE: GPS) were up more than 3.7% in pre-market hours despite news that the retailer announced a 6% decline in same store sales last month at its Banana Republic, Old Navy, and flagship locations. The company was upbeat about its recent Memorial Day weekend sales.
- Shares of Valeant Pharmaceuticals International Inc. (NYSE: VRX) are in focus this morning after the company received yet another default notice from bondholders. The stock has lost half its value since a March rally, and it's down roughly 90% from its 52-week high. Money Morning Global Credit Strategist Michael Lewitt warned readers last fall that the company's operations were based on questionable business practices. Don't expect a rally any time soon. In fact, Michael has made the case on several occasions that Valeant is headed toward bankruptcy.
- Look for additional earnings reports from Authentidate Holding Corp. (Nasdaq: ADAT), Piedmont Natural Gas Co. (NYSE: PNY), and Yingli Green Energy Holding Co. Ltd. (NYSE ADR: YGE).
Today's U.S. Economic Calendar (all times EDT)
- Chicago Federal Reserve Bank President Charles Evans speaks at 3:45 a.m.
- Employment Situation at 8:30 a.m.
- International Trade at 8:30 a.m.
- PMI Services Index at 9:45 a.m.
- Factory Orders at 10 a.m.
- ISM Non-Manufacturing Index at 10 a.m.
- Federal Reserve Gov. Lael Brainard speaks at 12:30 p.m.
- Baker Hughes Rig Count at 1 p.m.
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.