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Investors are optimistic about the Dow Jones in 2018 as California starts the year with legalized recreational marijuana.
Dow futures are up 83 points this morning on the first trading day of 2018. Markets are optimistic over the impact of tax reform on the U.S. economy and marijuana legalization in California.
Here are the numbers from Friday for the Dow, S&P 500, and Nasdaq:
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Now here's a closer look at today's most important market events and stocks, plus Tuesday's economic calendar.
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The Five Top Stock Market Stories for Tuesday
- A little more than a week after President Trump signed the largest tax reform law in three decades, Democrats from high-tax states are striking back. According to various reports, state legislators in New York, California, and New Jersey aim to address the cap on state and local taxes. The legislators are looking to fundamentally reclassify income taxes or shift the tax burden to employers in order to ensure that residents are able to deduct more than the $10,000 cap from the tax bill. This battle is just getting started, and it could create a slew of problems that undermine revenue generation for the federal government.
- On Monday, California officially legalized recreational marijuana, a decision that will create a multibillion-dollar market out of thin air. Anyone in California 21 years and older can walk into a dispensary and legally purchase marijuana. This isn't for those with prescriptions or medical cards. This means everyone can legally buy weed. It also means that you could be part of one of the biggest moneymaking opportunities in the 21st century. You can read our bold legal weed predictions right here.
- Gold prices continue to press higher thanks to a weakening U.S. dollar and ongoing concerns about geopolitical pressures around the globe. Over the weekend, North Korean dictator Kim Jong Un again made a series of intimidating statements and vague threats of nuclear war. Jong Un declared his country to be a nuclear power and said that a launch "button" is sitting on his desk. Meanwhile, protests in Iran are accelerating due to growing social unrest across the nation. The uprising has been led by the nation's lower class and unemployed in poorer neighborhoods in towns outside of Tehran. Here are five more shocking reasons gold will soar in 2018.
- Crude oil prices are starting 2018 at their highest levels since January 2014. The WTI crude oil price today surpassed $60.00 per barrel, while Brent crude hovered just short of $67.00 per barrel. Ongoing unrest in Iran is creating a temporary Brent premium. Heading into 2018, investors will be paying close attention to two major factors in the global oil markets. First, with WTI prices rising, more American producers are bringing their production rigs back online. However, that could affect the second factor: OPEC's efforts to cap excessive production. We could be entering the next round of a decisive battle between the United States and the world's largest energy cartel, a story that could create volatility in oil prices and a string of profitable trading opportunities in 2018.
- The price of Bitcoin hovered below $14,000 over the New Year's weekend. Bitcoin's dominance in the global cryptocurrency market has been declining over the last month. Investors have been pushing alternative coins like Ripple, Ethereum, and Stellar Lumens to new all-time highs. On New Year's Day, Stellar Lumens popped another 23%, bringing its one-week return to nearly 120%. Meanwhile, Bitcoin critics continue to pile on with their negative outlook. Former OMB Director David Stockman said over the weekend that Bitcoin's rise has been driven by "really stupid" investors and predicted that speculation will end with a crash. Here's our latest insight on cryptocurrencies.
Stocks to Watch Today: CAT, AAPL, BP
- Caterpillar Inc. (NYSE: CAT) was one of the top-performing stocks of 2017, and investors are highly optimistic about its prospects in the year ahead. With President Trump turning his attention to a large infrastructure program, Caterpillar and other construction stocks will be huge beneficiaries. But before that can happen, the company might be facing new questions from the Internal Revenue Service. The Wall Street Journal has reported that the IRS is seeking $2 billion in taxes from a Switzerland-based subsidiary. Government officials raided Caterpillar's offices last March, sparking a significant debate on how companies file taxes abroad to reduce their burden. Republicans hope that their recent tax reform bill will persuade Caterpillar and other companies with a big international presence to repatriate their foreign cash holdings.
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- Apple Inc. (Nasdaq: AAPL) has been taking a few hits in recent weeks. Analysts say that demand for the iPhone X has been weaker than expected. The news has negatively affected shares of AAPL, but investors shouldn't fret. Money Morning Chief Investment Strategist Keith Fitz-Gerald and Capital Wave Strategist Shah Gilani both recently appeared together on "Varney & Co." to explain why investors need to look beyond the iGadgets to see Apple's real value. You won't believe what they said.
- BP Plc. (NYSE ADR: BP) is the latest global company to announce plans to take a very large charge in its fourth-quarter earnings report due to the recent corporate tax overhaul. The company said it will write off about $1.5 billion in credits it had planned to use to reduce its tax burden in the future. BP joins companies like Goldman Sachs Group Inc. (NYSE: GS), Barclays Plc. (NYSE ADR: BCS), Credit Suisse Group AG (NYSE ADR: CS) and UBS Group AG (NYSE: UBS), who have all said the tax changes will cost them each more than $1 billion in one-off charges.
- No U.S. major companies are reporting earnings on Tuesday.
Tuesday's U.S. Economic Calendar (all times EST)
- PMI Manufacturing Index at 9:45 a.m.
- Three-Month Bill Auction at 11:30 a.m.
- Six-Month Bill Auction at 11:30 a.m.
- Four-Week Bill Auction at 1 p.m.
- 52-Week Bill Auction at 1 p.m.
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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.