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The Dow Jones Industrial Average paired yesterday's minor gains with a 105-point decline in Tuesday's pre-market trading. Markets are under pressure after the International Monetary Fund slashed its global growth forecast by 0.2% to 3.7% in 2018 and 2019.
The global fund cited ongoing trade tensions between the United States and its trade partners as a leading factor in the decline. The IMF said that changes to NAFTA and Britain's upcoming departure from the EU are creating greater economic uncertainty while aggressive American trade policies are hampering Chinese economic expansion.
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Here are the numbers from Monday for the Dow, S&P 500, and Nasdaq:
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Now here's a closer look at today's Money Morning insight, the most important market events, and stocks to watch.
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The Top Stock Market Stories for Tuesday
- In addition to slashing its global growth forecast, the IMF also cut expectations for the economies of Argentina, Brazil, Mexico, Iran, and Turkey. Emerging economies are facing higher capital outflows, rising interest rates, and increased debt pressures. The ongoing rise of the U.S. dollar has raised the borrowing costs of emerging markets as their currencies depreciated against the greenback. The IMF also had said America's international trade policies could slow global growth by an additional 0.8% in 2020.
- Italian populists are raising red flags over the new coalition government's 2019 budget and expected deficit targets. The government has said that it will target a 2.4% GDP deficit next year, followed by declines to 2.1% and 1.8% in 2020 and 2021, respectively. Italian bonds surged to their highest levels since 2014.
- U.S. President Donald Trump is expected to fulfill a campaign promise to eliminate a ban on ethanol blending during summer driving season. The policy is aimed at providing a boost to Corn Belt Republicans, who are facing tight Congressional races. Trump's ongoing trade battle with China and Europe has suppressed corn and soybean prices due to China's retaliatory tariffs on U.S. agricultural commodities.
Stocks to Watch Today: PZZA, FB, GOOGL
- This morning, shares of Papa John's International Inc. (NASDAQ: PZZA) jumped 12% on speculation that a major hedge fund could buy more than just a slice of the company. Multiple reports indicate that Trian Fund Management is considering a bid to purchase the company. The company remains in a massive spat after booting its founder and former CEO John Schnatter, who was ousted earlier this year after making controversial statements during a conference call. Schnatter still owns 30% of the company.
- Critics are piling on Facebook Inc. (NASDAQ: FB). The company announced Monday that it has a strategy to bolster its audience in Africa and to help bring faster and stronger internet speeds to the continent. However, critics argue that the company's plans will funnel traffic onto Facebook's platform and hurt domestic providers. The news came the same day that the social media giant released a new smart speaker designed for Messenger video calls. The new Facebook Portal uses a Facebook branded speaker and video camera. This could be troublesome for potential buyers given that Facebook has been engulfed in two major private data scandals in 2018 alone.
- Alphabet Inc. (NASDAQ: GOOGL) is the latest Silicon Valley giant exposed to a major data breach. The company announced it has shut down its Google Plus social media site after data from up to 500,000 users was likely exposed to external developers. The flaw was present for more than two years in the company's network systems.
- Look for earnings reports from Helen of Troy Ltd. (NASDAQ: HELE) and AZZ Inc. (NYSE: AZZ).
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.