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The Dow Jones Industrial Average fell again Thursday after two more members of the Federal Reserve argued the case for an interest rate hike in the coming months. Both Kansas City Fed President Esther George and Dallas Fed President Robert Kaplan laid out a hawkish argument that current economic conditions warrant another interest rate hike.
But don't be necessarily fooled by the rhetoric. The Fed has been teasing a rate hike since it finally took action last December.
Money Morning Chief Investment Strategist Keith Fitz-Gerald argues two important things about the Fed. First, there are stocks you can buy that will outperform and aren't subject to the whims of the central bank. Second, the Federal Reserve has no idea what it is doing, and they are just crazy enough to raise interest rates now so they can lower them when all of their economic misfortunes come home to roost.
Let's look at the final numbers on Wednesday for the Dow, S&P 500, and Nasdaq:
Dow Jones: 18,448.41; -33.07; -0.18%
S&P 500: 2,172.47; -2.97; -0.14%
Nasdaq: 5,212.20; -5.49; -0.11%
Here's a look at today's most important market events and stocks, plus a preview of tomorrow's economic calendar.
DJIA Today: Dow Slides as Potential Rate Hike Looms, Healthcare Stocks Slip
The Dow slipped 33 points as healthcare stocks slipped 1% on the day and traders took a breath before an important speech on monetary policy from Fed Chair Janet Yellen on Friday. The head of the U.S. central bank will talk tomorrow during a symposium hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming.
Traders are starting to grow more convinced that the Federal Reserve will engage in at least one interest rate hike in 2016. According to CME FedWatch, the probability of a rate hike rose today from 21% to 24% for September. Meanwhile, a December rate hike sits at 57%. Expect a lot of speculation before and after tomorrow's speech.
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The West Texas Intermediate (WTI) crude oil price today was off nearly 3%, while the Brent crude oil price dropped 2.1%.
Oil prices have been falling on rising supply concerns and waning expectations about the size of any production freeze by OPEC. The global oil cartel is set to meet in September to discuss a possible cut to global output. However, Money Morning Global Energy Strategist Dr. Kent Moors has warned investors that it is unlikely that OPEC will reach a deal during a meeting in September.
In fact, Kent explains that the problems in the global oil market are only getting started for OPEC, just as the Second Arab Spring is underway.
Silver prices slipped by 0.2% on the day as investors await tomorrow's statement by Janet Yellen. Here's our latest 2016 silver price forecast.
Now, let's look at the stocks you need to know about today…
Top Stock Market News Today, Aug. 24, 2016
- It was a brutal day for medical technology firm Jude Medical (NYSE: STJ). The company's stock fell by more than 5% after a short-selling firm issued a critical blow on the safety of its cardiac devices. Investment firm Muddy Waters said it was betting against the company due to cybersecurity vulnerabilities that could affect consumers who use the device.
- Shares of drug maker Mylan NV (NYSE: MYL) were up 3.3% after the company responded to congressional pressure to explain its planned price increase of the allergy treatment known as EpiPen. The firm has suffered a massive PR problem after announcing plans to increase the price to $500 per treatment. Even Democratic presidential candidate Hillary Clinton took time to condemn the firm's decision, a statement that helped push the stock down 5.4% on Wednesday. Speaking of Hillary Clinton, the former secretary of state went on attack this week after arguing that her rival Donald Trump's campaign had been hi-jacked by the "alt-right." So, what is this "alt-right" and how might it affect the election? We answer that question, right here.
- On the earnings front, shares of Tiffany Inc. (NYSE: TIF) rallied more than 7% and were today's top performer for the S&P 500. The company announced a surprise increase in quarterly profits, bolstered by strong demand in the jewelry market.
- Meanwhile, shares of Dollar General Corp. (NYSE: DG) were down more than 7% in pre-market hours after the company failed to meet expectations in its earnings report. The discount retailer is now seen as an important economic health indicator for the United States. Shares of Dollar Tree Inc. (Nasdaq: DLTR) were off nearly 6% in pre-market hours after a similarly bad earnings report.
Tomorrow's U.S. Economic Calendar (all times EDT)
- GDP at 8:30 a.m.
- International Trade in Goods at 8:30 a.m.
- Corporate Profits at 8:30 a.m.
- Consumer Sentiment at 10 a.m.
- Federal Reserve Chair Janet Yellen speaks at 10 a.m.
- Baker Hughes Inc. (NYSE: BHI) Rig Count at 1 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.