Dow Jones Industrial Average Today Slides After Fed Inflation Warning

Garrett Baldwin

The Dow Jones Industrial Average today is sliding in premarket hours after a tough round of retail reports from the holiday season.

Investors are also digesting a warning about the impact of expected fiscal policies of President-elect Trump on the U.S. dollar.

On Wednesday, the Dow climbed higher and put the index within 100 points of 20,000. The uptick came after the Federal Reserve released minutes from the December FOMC meeting. The Fed has forecasted at least three interest rate hikes this year.

According to the minutes, the central bank increased its benchmark rate in response to the market reactions to President-elect Trump and his planned fiscal policies. The central bank is increasingly concerned about inflation and thus the possibility of more interest rate hikes. This is a stark contrast from the last few years. Lagging inflation had been a key reason why the central bank only raised interest rates one time in ten years prior to last month's rate hike.

Let's look at the numbers from Wednesday for the Dow, S&P 500, and Nasdaq:

Dow Jones: 19,942.16; +60.40; +0.30%

S&P 500: 2,270.75; +12.92; +0.57%

Nasdaq: 5,477.00; +47.92; +0.88%

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

What's Ahead for the Dow Jones Industrial Average Today

The Dow projected an 18-point decline as Wall Street prepares for a very busy day of economic data. This morning, ADP announced that the private sector created 153,000 jobs in December, a figure that is below analyst expectations of 170,000 positions. The release puts tomorrow's December unemployment rate and jobs report from the U.S. Labor Department in focus. Any disappointment could cool off the red-hot market that has surged since the Nov. 8 election.

In oil price news today, crude prices are ticking higher after the Federal Reserve released minutes from its last meeting in December and OPEC continues to make progress in its deal to cap excessive global supply.

The WTI crude oil price today was up  0.7% ahead of today's inventory report by the Energy Information Administration. Energy analysts anticipate that crude stocks decreased last week by 1.7 million barrels.

Don't Miss: My (Bold) 2017 Oil Price Forecast – and Today's Most Profitable Energy Play

Meanwhile, Brent Crude added roughly 0.7% after Saudi Arabian leaders showed their commitment to OPEC's deal to cut excessive supply. The largest producer in the global oil cartel has informed its customers of its planned production cuts.

Although the mainstream press is focusing on Saudi Arabia's actions, Money Morning Global Energy Strategist Dr. Kent Moors says that everyone should instead consider what is happening in the offices of another OPEC titan. Dr. Moors explains that a big development in Iran is expected to shake up the global oil markets, but not in the way that you think. Here's his latest insight.

But the big story is happening in Washington where Republicans are looking to overhaul the regulatory efforts of the Obama Administration in the last eight years. The GOP and President-elect Donald Trump are specifically eyeing the repeal of the Dodd-Frank Act.

One provision in particular is stirring the ire of Congressional leadership: the Volcker Rule.

The rule was adopted in the wake of the 2008 financial crisis. It was passed to prevent the negative effects of risky proprietary trading and hedge fund ownership by big banks on everyday investors. So, how likely is it that this provision will be rolled back? Money Morning Capital Wave Strategist Shah Gilani breaks down the probability that the Trump administration repeals the Volcker rule and what it means to your money, right here.

Stocks to Watch Today, Jan. 5, 2017

• Shares of Ford Motor Company (NYSE: F) are still ticking higher after the company reported a huge sales report for the month of December. But yesterday's jump of 4.6% is just the beginning of something big. Ford stock will break out in 2017, says Money Morning Executive Editor Bill Patalon. In an exclusive video for our readers, Bill breaks down just how high Ford stock will head in 2017. Check out Bill's latest winning prediction, right here.
• Shares of Macy's Inc. (NYSE: M) plunged more than 10.6% after the company reported weaker-than-expected Holiday season results. The company also announced plans to shutter 68 stores and eliminate 10,000 positions.
• In other retail news, shares of Kohl's Corporation (NYSE: KSS) fell more than 14% after the company slashed its forward guidance for the full fiscal year. Like Macy's, the retailer reported weak Holiday shopping results. This is just another sign that brick-and-mortar stores are succumbing to competitive pressures from online sites like com Inc. (Nasdaq: AMZN).
• Shares of Walgreens Boots Alliance (NYSE: WBA) were off slightly after the company reported a surprise decline in quarterly sales. The company topped Wall Street earning expectations by reported $1.10 per share, which was a penny better than estimates. However, the firm fell short on revenue forecasts. Despite the downturn, Wall Street seemed unfazed after the benefits manager increased its fiscal 2017 earnings expectations and said it expects to complete its takeover of Rite Aid (NYSE: RAD) in the early part of 2017.
• In earnings news, look for quarterly reports from Monsanto Co. (NYSE: MON). Constellation Brands (NYSE: STZ), Ruby Tuesday (NYSE: RT), PriceSmart (Nasdaq: PSMT), RPM International (NYSE: RPM), and Helen of Troy (Nasdaq: HELE).

Today's U.S. Economic Calendar (all times EST)

• Challenger Job-Cut Report at 7:30 a.m.
• ADP Employment Report at 8:15 a.m.
• Jobless Claims at 8:30 a.m.
• Gallup Good Jobs Rate at 8:30 a.m.
• Bloomberg Consumer Comfort Index at 9:45 a.m.
• PMI Services Index at 9:45 a.m.
• ISM Non-Manufacturing Index at 10 a.m.
• EIA Natural Gas Report at 10:30 a.m.
• EIA Petroleum Status Report at 11 a.m.
• Six-Month Bill Announcement at 11 a.m.
• Six-Month Bill Announcement at 11 a.m.
• 3-Year Note Announcement at 11 a.m.
• Three-Year Note Announcement at 11 a.m.
• 30-Year Bond Announcement at 11 a.m.
• Fed Balance Sheet at 4:30 p.m.
• Money Supply at 4:30 p.m.

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Garrett Baldwin

About the Author

Browse Garrett's articles | View Garrett's research services

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.

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