The Dow Jones Industrial Average cratered on Friday due to rising fears that the Federal Reserve will hike interest rates in September. It was the worst single day of trading since the Brexit vote in June.
Investors have been waiting for a 1% decline in stocks for some time, and they finally received it in a sell-off on Friday afternoon. Volatility surged. The VIX – typically viewed as the market's fear gauge – rose by 27% and hit 16.36. That was the single largest jump in volatility since June 24 and highest level since June 29.
Let's look at the final numbers on Friday for the Dow, S&P 500, and Nasdaq:
Dow Jones: 18,085.45; -394.46; -2.13%
S&P 500: 2,127.81; -53.49; -2.45%
Nasdaq: 5,125.91; -133.57; -2.54%
Here's a look at today's most important market events and stocks, plus a preview of Monday's economic calendar.
DJIA Today: Dow Slumps More Than 2.1% as Rate Hike Speculation Swirls
The Dow Jones fell 394 points as the markets increased the odds of a rate hike in September. According to CME FedWatch, the probability of a rate hike on Friday increased from 18% to 24%. Meanwhile, geopolitics were in focus after North Korea conducted its fifth and largest nuclear device test this morning. The rogue nation says it has successfully mounted a nuclear warhead to a missile. That has drawn significant scorn from the United States and China.
Oil prices were sliding a day after investors digested a surprise decline in U.S. crude stocks. Yesterday, the Energy Information Administration announced a massive drawdown of crude inventories. Last week, U.S. inventory levels fell by 14.5 million barrels. That is the single largest weekly decline in crude stocks since January 1999.
The WTI crude oil price today fell 3.5%. Meanwhile, the Brent crude oil price slipped 3.8%. Oil prices have been rising in recent sessions after Russia and Saudi Arabia announced plans to rebalance the global markets. Meanwhile, the International Energy Agency announced that it anticipates that oil demand will outpace crude supply in the third quarter of 2016.
Meanwhile, gold prices fell as the dollar strengthened on expectations of an interest rate hike. Here's where gold prices are heading in the future.
But the big news today was taking place at Amazon.com Inc. (Nasdaq: AMZN). The technology behemoth aims to expand into live sports production in its never-ending quest to rule the world. According to Bloomberg, the firm is looking into buying rights to stream live soccer, tennis, golf, and several other sports.
Top Stock Market News Today, Sept. 9, 2016
- It was a tough day for the automotive industry. Shares of Ford Motor Co. (NYSE: F) fell more than 1.2% after the company lowered its 2016 fiscal year profit forecast. The firm announced that it was boosting its vehicle recall total by another 1.5 million vehicles. Shares of rival General Motors Co. (NYSE: GM) fell 1.8% on the day.
- Shares of Wells Fargo & Co. (NYSE: WFC) were off 1.1% on news that the investment bank will pay a record fine – $190 million – after thousands of employees created fake accounts and charged customers for fees that they didn't authorize. According to reports, the firm has fired 5,300 employees after they created 1.5 million bank accounts and applied for 565,000 credit cards without authorization. This is the largest fine ever collected by the Consumer Financial Protection Bureau. This afternoon, Rafferty Capital analyst Dick Bove turned heads today by saying that the company engaged in "outrageous behavior" and that investors should dump the stock on moral principle.
- On the earnings front, shares of The Kroger Co. (NYSE: KR) were off nearly 1% after the grocery giant announced second-quarter earnings. The firm reported an EPS of $0.47, topping Wall Street expectations of $0.45. However, it fell just shy of bottom-line revenue estimates, leading to a small sell-off in pre-market hours.
Monday's U.S. Economic Calendar (all times EDT)
- Atlanta Federal Reserve Bank President Dennis Lockhart speaks at 8 a.m.
- 4-Week Bill Announcement at 11 a.m.
- 3-Month Bill Auction at 11:30 a.m.
- 6-Month Bill Auction at 11:30 a.m.
- Minneapolis Federal Reserve Bank President Neel Kashkari speaks at 1 p.m.
- 3-Year Note Auction at 1 p.m.
- 10-Year Note Auction at 1 p.m.
Up Next: North Korea's nuclear test this morning has raised concerns about international peace and stability in Eastern Asia. And while everyone is talking about the prospect of World War III, they've already failed to understand that the war is well underway. Investors need to know about the real battle taking place in cybersecurity. Money Morning Director of Tech & Venture Capital Michael A. Robinson tells readers about the best stocks to own for the World War III cyber arms race that is well underway.
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.