The Dow Jones today is trying to rebound from a Wednesday rout that followed the unsurprising decision by the U.S. Federal Reserve to raise interest rates.
Investors remain extremely grim about the prospects of the Fed's plans to hike rates two more times in 2019. The hike comes at a time when the central bank reduced its growth estimates for the U.S. economy.
The Fed also indicated that it will continue to reduce its balance sheet, despite the prospects of lower economic growth.
Here are the numbers from Wednesday for the Dow, S&P 500, and Nasdaq:
Did Fed Chair Jerome Powell use a rate hike to stick it to U.S. President Donald Trump? Some economists (like yours truly) argue that Powell was set to raise rates in December despite criticism from President Trump. However, the central bank has made it a point that it remains independent from the whims of the executive branch. Fed Chair Powell signaled that his team plans to raise interest rates at least two more times next year. However, the Fed's projection of lower economic growth is especially concerning, as earnings reports over the next two quarters could trigger further declines in the stock market. The euphoria is over.
While the Dow Jones settles to a 2018 low, U.S. oil prices fell another 3% on concerns about global oversupply. The WTI oil price fell to as low as $45.62 this morning, the lowest level of 2018. Ongoing concerns about rising interest rates, a stronger U.S. dollar, and higher U.S. shale and Russian output continue to rattle the market. The sudden drop in recent months could trigger debt problems for U.S. and foreign producers who had expected oil prices to remain well above $80 for the balance of 2019.
A busy day of earnings reports will be highlighted by Nike Inc. (NYSE: NKE). This will be the company's first full quarterly report since it hired former NFL quarterback and social activist Colin Kaepernick to a major marketing campaign. Shares of Nike stock are facing bear market territory after falling nearly 20% since an all-time high set on Sept. 21.
Stocks to Watch Today:
In deal news, Altria Group Inc. (NYSE: MO) has taken a 35% stake (or $12.8 billion) in e-cigarette giant Juul. The news comes just weeks after the tobacco giant took a 45% stake in cannabis producer Cronos Group Inc. (NYSE: CRON). Juul, which comprises roughly 75% of the e-cigarette market, now holds a valuation of roughly $38 billion. Shares of MO stock added 0.7% in pre-market hours.
Shares of Walgreens Boots Alliance Inc. (NYSE: WBA) slumped nearly 2% in pre-market hours despite news that the health benefits company topped Wall Street earnings and revenue expectations. The firm reported earnings per share of $1.46, topping consensus forecasts by $0.03. The company also announced plans to slash costs by roughly $1 billion. However, no company can escape the Fed's recent forecast for lower growth in 2019.
Speaking of Walgreens, Alphabet Inc. (NASDAQ: GOOGL) announced that its Verily unit will be partnering with the health benefits firm on several projects aimed to reduce healthcare costs and improve patient treatment. The primary focus for the two companies will center on medication adherence - or ensuring that patients take their medications as prescribed. Failure to adhere to medication guidelines costs the U.S. healthcare system a whopping $100 billion to $289 billion per year.
Look for earnings reports from Accenture Plc. (NYSE: ACN), BlackBerry Ltd. (NASDAQ: BB), and ConAgra Brands Inc. (NYSE: CAG).
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.