Dow Jones Industrial Average Rallies Today on Fading Hopes of September Rate Hike

Dow Jones Industrial Average

The Dow Jones Industrial Average gained 72 points on Friday after the August jobs report came in much weaker than economists had anticipated. The weak report zapped remaining hopes for an interest rate hike in September.

The odds of a September rate hike fell from 27% to as low as 12% on Friday, according to CME FedWatch.

Last month, the U.S. economy added 151,000 new jobs. That's well short of the 180,000 expected by Wall Street. While the unemployment rate remained at 4.9%, the strongest areas of job growth were found in bars and restaurants - not the most high-paying positions.

That doesn't inspire too much confidence in the U.S. economy.

The Federal Open Market Committee will kick off its next meeting on September 20. Both Fed Chairwoman Janet Yellen and Vice Chair Stanley Fischer have suggested that the central bank could hike rates by the end of the year. However, Chicago Fed President Charles Evans said last week that conditions do not suggest the Fed should rush the normalization of interest rates.

Let's look at the final numbers on Tuesday for the Dow, S&P 500, and Nasdaq:

Dow Jones: 18,491.72, +72.53, +0.39%      

S&P 500:  2,179.98, +9.12, +0.42%

Nasdaq:  5,249.90, +22.69, +0.43%

Now here's a look at today's most important market events and stocks, plus a preview of Tuesday's economic calendar. On Monday, the U.S. markets will be closed in observance of Labor Day.

DJIA Today: Weak August Jobs Report Fuels Markets, Lowers Rate Expectations

The Dow Jones rallied after the odds of a September rate hike plunged after a weak August jobs report. Meanwhile, oil prices pushed higher as optimism grows about a production freeze. Crude had been falling in recent days over a rising supply glut in the continental United States.

Oil prices were on the rise after Russian President Vladimir Putin called on global oil producers to cap production levels. The statement comes just weeks before OPEC plans to meet in Algeria discuss oil prices. Despite today's gains, oil prices had their worst weekly decline in eight months. The WTI crude oil price was up 2.5%, while Brent crude was up 2.7%.

But the big story that slipped under the radar was a warning from Jack Ma, the CEO of Alibaba Group Holding Ltd (NYSE: BABA)...

The Chinese billionaire said that globalization has a challenge. In the event that trade flows shut down, Ma projects that global war will break out. The statement appears to be a shot directly at Republican Presidential nominee Donald Trump, who has taken direct shots at China over trade deals and currency manipulation. Ma is also in the process of pushing a new electronic trade platform to help companies expand their global customer base.

Now, let's look at the stocks you need to know about today...

Top Stock Market News Today, Sept. 2, 2016

  • In deal news, McDonald's Corp. (NYSE: MCD) is planning to sell its restaurant outlets in China and Hong Kong. According to The Wall Street Journal, the firm could sell its stores to private-equity giants Carlyle or TPG for up to $3 billion.
  • Meanwhile, Hewlett Packard Enterprise Co. (NYSE: HPE) is exploring a deal to sell software unit for up to $10 billion.
  • Apple Inc. (Nasdaq: AAPL) is in focus after Ireland supported the company after the European Commission's ruling that the firm must pay roughly $14.5 billion in unpaid taxes and penalties. Despite this ruling, Apple is one of the best and most profitable companies in the world.

Don't Miss: Here's why we are ranking AAPL stock a "Buy."

  • Shares of Ambarella Inc. (Nasdaq: AMBA) fell more than 6% after the semiconductor giant and supplier of GoPro Inc. (Nasdaq: GPRO) announced that the firm fell short of quarterly sales and profit expectations.

Tuesday's U.S. Economic Calendar (all times EDT)

[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

  • Gallup US Consumer Spending Measure at 8:30 a.m.
  • PMI Services Index at 9:45 a.m.
  • ISM Non-Manufacturing Index at 10 a.m.
  • Labor Market Conditions Index at 10 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.
  • TD Ameritrade IMX at 12:30 p.m.
  • Gallup US ECI at 2 p.m.
  • San Francisco Federal Reserve President John Williams speaks at 8:30 p.m.

Follow Money Morning on Facebook and Twitter.

Up Next: Get the Best Investing Research Today to Grow Your Money

About the Author

Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.

Read full bio