Dow Jones Industrial Average Falls 112 Points as Markets Await Guidance on Interest Rates

Garrett Baldwin

The Dow Jones Industrial Average pulled back from yesterday's 548-point gain as investors waited for the U.S. Federal Reserve to release minutes from September's meeting on monetary policy. In September, the Fed raised rates for the third time in 2018. Today's report will provide additional clues on whether the central bank has committed to a fourth rate hike later this year.

U.S. President Donald Trump has been highly critical of the central bank's efforts to normalize rates, and the uptick on borrowing costs could slow growth in the U.S. economy. Last week, markets were rattled after the 10-year Treasury bond hit its highest level in seven years.

Here are the numbers from Tuesday for the Dow, S&P 500, and Nasdaq:

Now, here's a closer look at today's Money Morning insight, the most important market events, and stocks to watch.

The Top Stock Market Stories for Wednesday

• Earnings season is in full swing, and investors are cheering strong gains from blue-chip stocks like Goldman Sachs Group Inc. (NYSE: GS), Johnson & Johnson (NYSE: JNJ), and more. Yesterday's 548-point gain was the top daily performance from the Dow since March, as calmer bond markets and less geopolitical tension gave markets a boost.
• The ongoing saga of prominent Saudi journalist Jamal Khashoggi's fate remains a top story for both international diplomacy and the financial markets. Many U.S. and European CEOs have pulled out of a major financial summit on tap in Riyadh next week. Khashoggi was reportedly killed in the Saudi embassy in Turkey last week, but details remain uncertain – yet reportedly gruesome. International Monetary Fund Managing Director Christine Lagarde is the latest high-profile attendee to withdraw her appearance from what is known as "Davos in the Desert." U.S. Treasury Secretary Steven Mnuchin is still slated to attend, but may also withdraw as new details of the journalist's disappearance (and reported murder) become clearer.

Three Stocks to Watch Today: NFLX, IBM, X

• Shares of Netflix Inc. (NASDAQ: NFLX) surged nearly 10% after the company crushed earnings expectations on Tuesday afternoon. The digital streaming giant reported earnings per share of $0.89, a figure that was $0.23 ahead of Wall Street expectations. The company also bounced back from last quarter's weak subscriber growth to report the addition of 6.96 million new users for the third quarter. Netflix also expects that net subscriber additions in the fourth quarter will reach 9.4 million.
• IBM Common Stock (NYSE: IBM) slipped 4.5% after revenue fell 2.1% from the year earlier. Although the company also reported earnings of $3.42 per share (topping estimates by $0.02), the revenue miss was the first after three straight quarters of year-over-year growth. Before that stretch, IBM had been mired in a six-year losing streak on the revenue front.
• President Trump's tax cuts and ongoing steel tariffs have been a boon for employees in the sector. According to reports, union workers at United States Steel Corp. (NYSE: X) struck a deal that will see them receive their largest wage hike in six years. The wage pact is reportedly worth a 14% cumulative wage hike for employees. X shares were up 0.2% in pre-market hours.
• Look for earnings reports from Kinder Morgan Inc. (NYSE: KMI), Abbott Laboratories (NYSE: ABT), United Rentals Inc. (NYSE: URI), U.S. Bancorp (NYSE: USB), Badger Meter inc. (NYSE: BMI), and Winnebago Industries Inc. (NYSE: WGO).

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Garrett Baldwin

About the Author

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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.

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