Dow Jones Industrial Average Today Gains as September Rate Hike Expectations Fade

By Garrett Baldwin, Executive Producer, Money Morning • September 6, 2016

The Dow Jones Industrial Average today pushed higher despite concerns about U.S. economic growth and waning expectations for a rate hike in 2016. So what pushed the markets higher today? A flurry of mergers and acquisitions, with a major deal in the energy sector.

Energy stocks rallied after a huge merger between two of North America's largest energy infrastructure companies. Shares of Spectra Energy Corp. (NYSE: SE) jumped more than 5% on news it will merge with Enbridge Energy Partners (NYSE: EEP) in a deal valued at roughly $127 billion.

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

Dow Jones: 18,538.12; 46.16; 0.25%

S&P 500: 2,186.48; 6.50; 0.30%

Nasdaq: 5,275.91; 26.01; 0.50%

Here's a look at today's most important market events and stocks, plus a preview of tomorrow's economic calendar.

DJIA Today: Economic Growth Concerns Reduce Case for September Rate Hike

The Dow Jones added 46 points on Tuesday. The case for an interest rate hike in September dwindled on news that U.S. services sector activity fell to a 6 1/2-year low in August. According to ISM, the U.S. economy experienced a sharp decline in manufacturing orders and production, particularly in the automotive sector.

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The odds of a rate hike in September fell from 21% to 15% on the back of weak economic data. Meanwhile, the probability for a hike in December slipped from 51% to 47%, according to CME FedWatch. The declining odds of a hike battered the financial sector on Tuesday. Wells Fargo & Co. (NYSE: WFC) and Bank of America Corp. (NYSE: BAC) both fell more than 1.1% on the day and weighed heavily on the S&P 500.

Crude oil prices have been pushing higher in recent trading sessions as investors speculate that Russia and Saudi Arabia could announce either a production freeze or reduction. The WTI crude oil price rose today despite news that the world's two largest oil producers only made unclear promises of "cooperation," instead of an actual plan. The WTI crude oil price today gained 0.3%. Meanwhile, the Brent crude oil price was off 1.1% as expectations for a production freeze this month have cooled.

Gold prices today gained more than 2% after a sustained pullback in August. Money Morning Resource Specialist Peter Krauth offers more insight on gold prices, right here. Meanwhile, silver jumped more than 3.8% today after prospects for a rate hike declined. Here is the one chart that tells us where the silver price is headed next...

Meanwhile, shares of biotech firm Cepheid (Nasdaq: CPHD) rallied more than 52% after the firm announced plans to sell itself to Danaher Corp. (NYSE: DHR) for $4 billion.

Top Stock Market News Today, Sept. 6, 2016

• Tech giant Apple Inc. (Nasdaq: AAPL) will host a product presentation tomorrow. Analysts anticipate that AAPL stock could rally should the firm unveil its iPhone 7 or a new Apple Watch. Investors are still weighing last week's ruling by the European Commission that the company must pay $14.5 billion in back taxes and penalties to Ireland. Despite the ruling, investors have very little to worry about when it comes to AAPL stock. Apple is one of the best and most profitable companies in the world. [Editor's note: Here's why we are ranking AAPL stock a "Buy."]
• On the earnings front, shares of Marvell Technology Group Ltd. (Nasdaq: MRVL) slipped more than 5.5% after the firm reported a sharp decline in annual revenue. The firm also fell short of profit expectations and issued a guidance statement below Wall Street expectations. After the bell, look out for additional earnings reports from Dave & Buster's Entertainment Inc. (Nasdaq: PLAY) and Casey's General Stores (Nasdaq: CASY).
• Shares of 3D Systems Corp. (NYSE: DDD) pushed up more than 5.8% thanks to two major deals that could boost the 3-D industry. U.S. manufacturing giant General Electric Co. (NYSE: GE) announced that it has purchased two European 3-D companies for $1.4 billion. GE is buying equipment suppliers Arcam and SLM Solutions.
• Shares of Barnes & Noble (NYSE: BKS) rallied more than 10% after an optimistic report on the stock. Over the weekend, Barron's wrote that the company's stock was undervalued, creating a wave of buying in early market hours.

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

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• MBA Mortgage Applications at 7 a.m.
• Gallup U.S. Job Creation Index at 8:30 a.m.
• Redbook at 8:55 a.m.
• Kansas City Federal Reserve Bank President Esther George speaks at 10 a.m.
• JOLTS at 10 a.m.
• Beige Book at 2 p.m.

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Garrett Baldwin

About the Author

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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.

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