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Dow Jones Industrial Average News, 8/16/2016: The markets are taking a breather from their breakneck rally this morning.
On Monday, the Dow Jones, the Nasdaq, and the S&P 500 all closed at record highs for the second time in a week.
This morning, traders are eyeing another round of key earnings and economic data.
Let's get to today's top stock market news, stocks to watch, ways to profit, and economic calendar for Aug. 16, 2016.
What's Moving the Dow Jones Industrial Average Today: FOMC Meeting Minutes
The Dow Jones Industrial Average projected a 31-point decline as traders prepare for a heavy day of earnings reports. Meanwhile, expect a significant amount of speculation about tomorrow's release of minutes from the July meeting of the Fed Open Market Committee (FOMC). Though Fed leaders have suggested that an interest rate hike is possible in September, the markets remain highly skeptical of any move by the central bank. On the domestic front, inflation remains stubbornly low, despite an improving job market. This morning, the U.S. Labor Department announced a flat reading in its Consumer Price Index for the month of July. This is a setback and the weakest level for the CPI since February.
Meanwhile, the Fed must take into consideration that every other major central bank seems to be engaged in a race to the bottom as they slash interest rates, boost stimulus packages, and weaken their own currencies. According to CME FedWatch, there is just a 9% probability that the Fed increases interest rates during its September meeting.
Crude oil prices were pushing higher on increased hopes that global oil producers will take action and limit output in order to support prices. Speculation has been rampant that OPEC will reduce production targets to help bring prices back above $50 per barrel. But Money Morning Global Energy Strategist Dr. Kent Moors – who has been engaged in global energy policy for four decades – argues that investors should proceed with caution. Moors argues that OPEC isn't going to strike a deal, and it's all because of one simple reason.
The Obamacare Death Watch was in full swing this morning after a bombshell announcement by health insurance giant Aetna Inc. (NYSE: AET). The firm will pull out of 11 of 15 states where it provides coverage under the Affordable Care Act. The company argued that it has become too expensive to operate in those states and that the firm needs to reduce its financial exposure to this bill. The announcement follows similar exit strategies by insurance rivals UnitedHealth Group Inc. (NYSE: UNH) and Humana Inc. (NYSE: HUM).
It's no surprise that the "signature" healthcare bill that defined the last eight years of government expansion is collapsing into itself. This bill was sold as a solution to reduce overall health insurance costs by adding millions of people to the market through massive subsidies and enforced enrollment. Any economist who actually believed this would work or sold this bill to the public should be banned from engaging in public policy ever again.
In deal news, shares of industrial gas supplier Linde AG (ETR: LIN) are rallying on news that Praxair Inc. (NYSE: PX) is exploring a deal for the company. Reuters broke a story this morning that the two firms are in the early stages of exploring a merger. The deal would create a new international company that would be valued at more than $60 billion. PX stock was up more than 4.5% on news of the deal.
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
- In earnings news, shares of Home Depot Inc. (NYSE: HD) were up more than 0.5% in pre-market hours after the company's Q2 earnings matched Wall Street expectations. The home retailer matched earnings per share (EPS) estimates of $1.97, revenue expectations, and comparable-store sales. The company did hike its forward-looking outlook, but that was slightly below expectations.
- Keep an eye on Apple Inc. (Nasdaq: AAPL). Shares of the technology giant were moving up this morning on news that Warren Buffett's firm Berkshire Hathaway increased its stock holdings by 55% in the previous quarter. Buffett is buying Apple, while other investment titans like Carl Icahn have been reducing their stakes in recent months. We think that Buffett is buying at the right time. Here's why we think AAPL stock is poised to take off over the next few years.
- According to a regulatory filing, Buffett's firm also reduced its stake in Wal-Mart Stores Inc. (NYSE: WMT) and increased its stake in Phillips 66 (NYSE: PSX).
- Look for additional earnings reports from Urban Outfitters Inc. (Nasdaq: URBN), Cree Inc. (Nasdaq: CREE), Dicks Sporting Goods Inc. (NYSE: DKS), TJX Companies (NYSE; TJX), Advance Auto Parts Inc. (NYSE: AAP), and Popeyes Louisiana Kitchen Inc. (Nasdaq: PLKI).
Today's U.S. Economic Calendar (all times EDT)
- Consumer Price Index at 8:30 a.m.
- Housing Starts at 8:30 a.m.
- Redbook at 8:55 a.m.
- Industrial Production at 9:15 a.m.
- E-Commerce Retail Sales at 10 a.m.
- 4-Week Bill Auction at 11:30 a.m.
- 52-Week Bill Auction at 11:30 a.m.
- Atlanta Federal Reserve Chair President Dennis Lockhart speaks at 12:30 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.