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The Dow Jones Industrial Average pushed higher on Tuesday as investors continue taking a "wait-and-see" approach to the Federal Reserve's policy announcement tomorrow. The Fed Open Market Committee (FOMC) has largely held the markets hostage over the last 12 months with continued speculation over the timing of the next rate hike.
The meeting comes at a tough time for the Federal Reserve. On Wednesday, the Atlanta Federal Reserve Bank downgraded the U.S. third-quarter GDP estimate to 2.9%.
Let's look at the final numbers on Tuesday for the Dow, S&P 500, and Nasdaq:
Dow Jones: 18,129.89; +9.72; +0.05
S&P 500: 2,139.75; +0.63; +0.03
Nasdaq: 5,241.35; +6.33, +0.12
Here's a look at today's most important market events and stocks, plus a preview of Wednesday's economic calendar.
DJIA Today: Healthcare Stocks Rally on M&A News, Oil Prices
The Dow Jones gained 49 points, fueled by a rally in healthcare stocks and optimism that the Fed will hold off on its next interest rate hike until later this year. In addition to a big acquisition of a liver disease treatment by Allergan Plc. (NYSE: AGN), healthcare stocks received a big boost from Gilead Sciences Inc. (Nasdaq: GILD), which has a number of similar drugs in its pipeline.
It was a busy day for housing stocks. This morning, investors weighed the August report on housing starts and building permits. In August, housing starts slumped more than economists expected thanks to flooding in the Southern part of the nation. The weak report is more bad news for the Federal Reserve as the central bank prepares to discuss monetary policy. Meanwhile, shares of Lennar Corp. (NYSE: LEN) fell 4.7% even though the firm topped Wall Street earnings expectations.
Of course, the big news today comes from the Federal Reserve and the Bank of Japan.
Both central banks will be offering their latest updates on monetary policy this Wednesday. Markets are expecting that the Bank of Japan is poised to slash its interest rate into further negative territory as leaders desperately attempt to spur growth in the world's third-largest economy. Negative interest rates are killing savers all around the world. And if you want to protect yourself from the damage, be sure to read the latest from Money Morning Chief Investment Strategist Keith Fitz-Gerald, right here.
Some have argued that the Federal Reserve isn't ever going to press into negative interest rates. But the chatter today is that the U.S. central bank is about to slash its forecast again on how high rates must go to bolster output, inflation, and productivity.
Oil prices were on the move as investors continue to speculate on whether OPEC and other non-OPEC producers would engage in a production freeze. U.S. oil prices were also reacting to news that Colonial Pipeline announced plans to restart transporting more than 1.3 million barrels per day after it shut town transport to address its largest leak in two decades.
The WTI crude oil price today added 0.6%. Meanwhile, the Brent crude oil price fell 0.5%. Money Morning Global Energy Strategist Dr. Kent Moors has just issued his latest oil price prediction. Be sure to check out where we see oil prices heading into 2017.
Top Stock Market News Today, Sept. 20, 2016
- In earnings news, shares of Ascena Retail Group Inc. (Nasdaq: ASNA) fell more than 25% after the company fell short of fourth-quarter earnings expectations and issued a very weak Q1 forecast.
- This morning, Wells Fargo & Co. (NYSE: WFC) CEO John Stumpf testified before Congress about his firm's alleged fraud that led to the creation of 2 million bogus customer accounts and charged millions in phantom fees. Stumpf said that he accepts "full responsibility for all unethical sales practices." The company has paid $190 million to settle the case with the CFPB. Sen. Elizabeth Warren tore into Stumpf, accusing the firm's executives of engaging in "gutless leadership."
- Another day, another deal. Shares of Tobira Therapeutics Inc. (Nasdaq: TBRA) surged a staggering 725% on news that it will be purchased by Botox manufacturer Allergan Plc. (NYSE: AGN).
- That wasn't the only deal making headlines on Tuesday. Shares of audio-equipment giant DTS Inc. (Nasdaq: DTSI) surged more than 22% on news that it will be purchased for $850 million by Tessera Technologies Inc. (Nasdaq: TSRA). Shares of TSRA stock gained more than 2.5%.
- It's a busy day of earnings reports. After the bell, look out for quarterly updates from Adobe Systems Inc. (Nasdaq: ADBE), FedEx Corp. (NYSE: FDX), and KB Home (NYSE: KBH).
Tuesday's U.S. Economic Calendar (all times EDT)
- MBA Mortgage Applications at 7 a.m.
- EIA Petroleum Status Report at 10:30 a.m.
- FOMC Meeting Announcement at 2 p.m.
- FOMC Forecasts at 2 p.m.
- Fed Chair Press Conference at 2:30 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.