The Dow Jones today dove as investor uncertainty rises and Alan Greenspan – former U.S. Federal Reserve chair during the 2001 dot-com bubble – says stock and bond markets are in a bubble.
Dow futures are down 190 points this morning as tech stocks weigh on markets. The index and the S&P 500 are coming off their best month since March 2016 thanks to extreme optimism over the U.S. economy and recent tax reform.
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Here are the numbers from Wednesday 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 Thursday's economic calendar.
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The Five Top Stock Market Stories for Thursday
- Yesterday, Fed Chair Janet Yellen announced in her final conference that there would be no change for U.S. interest rates in January. Yellen will step down this week, paving the way for new Chair Jerome Powell to take over the central bank. But it wasn't Yellen or Powell who were making headlines this morning. It was former Fed Chair during the dot-com bubble Alan Greenspan, who told Bloomberg that the U.S. financial system is experiencing "two bubbles." Greenspan argues both the stock market and the bond market are overheated right now.
- According to reports, EBay Inc. (Nasdaq: EBAY) announced it was ditching its long-time payment processor PayPal Inc. (Nasdaq: PYPL) for a Dutch firm called Adyen. The deal complicates an already messy history between EBay and its former subsidiary PayPal, which it purchased in 2002 for $1.5 billion. Shares of PYPL plunged more than 7.7% after investors aggressively sold off the stock.
- The tax reform bill continues to be the gift that keeps on giving. Yesterday, the Lowes Cos. (NYSE: LOW) announced it will offer certain employees bonuses of $1,000 and expand its corporate benefits packages to include paid maternity and paternity leave. The news comes a week after its chief rival The Home Depot Inc. (NYSE: HD) announced it would give its own hourly employees a similar $1,000 bonus.
- Crude oil prices popped more than 1% this morning thanks to ongoing optimism over OPEC's deal to cap excessive production around the globe. The member nations plan to maintain its deal past 2018 in order to support global prices. With that in mind, U.S. production continues to surge. The EIA announced that in November 2017, U.S. production surged above 10 million barrels per day for the first time since 1970. The WTI crude oil price today added 1.1%. Brent crude gained 1.0%.
- Gold prices dipped slightly on Thursday ahead of tomorrow's January jobs report. The markets anticipate that the report will show strong growth and bolster existing confidence in the U.S. economy. In addition, gold prices dipped due to the Federal Reserve suggesting that it will hike interest rates several times this year.
Three Stocks to Watch Today: BABA, FB, MSFT
- Shares of Alibaba Group Holding Ltd. (NYSE: BABA) dipped more than 6.3% in pre-market hours. The Chinese e-commerce giant reported a staggering 35% jump in earnings but still fell short of Wall Street's lofty expectations. The firm reported earnings per share (EPS) of $1.63, $0.02 short of consensus expectations. The firm still hiked its 2018 forecast and announced it has invested a big stake in its financial technology firm Ant Financial. The investment will likely pave the way for Ant Financial's IPO in the future.
- Shares of Facebook Inc. (Nasdaq: FB) popped higher after the company crushed Wall Street earnings on Wednesday. Shares added 2.6% this morning after the social media giant reported EPS of $2.21 on top of $12.97 billion. Wall Street expected EPS of $1.96 on top of $12.51 billion in revenue. Despite the strong financial performance, the firm said that user activity declined in the fourth quarter by a combined 50 million hours per day.
- Shares of Microsoft Corp. (Nasdaq: MSFT) slipped this morning after the company topped Wall Street earnings expectations. The downturn was surprising given that MSFT reported EPS of $0.96, a figure that beat expectations by $0.10. The firm reported strong revenue figures bolstered by a stunning $5.3 billion in cloud computing revenue.
- Look for additional earnings reports from Visa Inc. (NYSE: V), Alphabet Inc. (Nasdaq: GOOGL), Amazon.com Inc. (Nasdaq: AMZN), GoPro Inc. (Nasdaq: GPRO), Apple Inc. (Nasdaq: AAPL), Mastercard Inc. (NYSE: MA), Amgen Inc. (Nasdaq: AMGN), Deckers Outdoor Corp. (Nasdaq: DECK), United Parcel Service (NYSE: UPS), Mattel Inc. (NYSE: MAT), Polo Ralph Lauren (NYSE: RL), Athenahealth Inc. (Nasdaq: ATHN), Altria Group (NYSE: MO), and Time Warner Inc. (NYSE: TWX).
Thursday's U.S. Economic Calendar (all times EST)
- Challenger Job-Cut Report at 7:30 a.m.
- Jobless Claims at 8:30 a.m.
- Productivity and Costs at 8:30 a.m.
- PMI Manufacturing Index at 9:45 a.m.
- Bloomberg Consumer Comfort Index at 9:45 a.m.
- ISM Manufacturing Index at 10 a.m.
- Construction Spending at 10 a.m.
- EIA Natural Gas Report at 10:30 a.m.
- Three-Month Bill Announcement at 11 a.m.
- Six-Month Bill Announcement at 11 a.m.
- Fed Balance Sheet at 4:30 p.m.
- Money Supply at 4:30 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.