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The Dow Jones today is projecting a neutral open as traders are getting mixed signals on the trade war front.
This morning, Chinese state media warned readers that any new tariffs on the nation's goods would be devastating for global stock markets. At the same time, U.S. officials remain optimistic about reaching a deal. More on that below.
Here are the numbers from Tuesday 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.
The Top Stock Market Stories for Wednesday
- U.S. President Donald Trump said on Tuesday that his administration would be flexible with a self-imposed deadline on when to raise tariffs on Chinese goods. Trump said that the March deadline was not a "magical date" and suggested he would be willing to extend the deadline. Last week's talks between the United States and China did not reach any breakthrough. The two nations are still off on issues like technology transfers and cybersecurity measures.
- Today, investors are paying very close attention to statements from Federal Reserve Chair Jerome Powell. This afternoon, Powell and the central bank will release notes from its January meeting. Investors recognize that the central bank is likely to hold off hiking interest rates for the near future. However, the bigger story today is what the central bank plans to do with its massive $4 trillion balance sheet. The Fed's balance sheet swelled to as much as $4.5 trillion after a decade of quantitative easing. Wall Street expects that the Fed will comment on its plans to end "balance sheet normalization" by December 2019.
- Oil prices are back near 2019 highs after global oil cartel OPEC continued to cut supplies, and U.S. sanctions are hitting Iranian and Venezuelan production. WTI oil prices are sitting just under $56 per barrel, while Brent crude oil is sitting just below $67. Saudi Arabia is expected to reduce its shipments of light crude to China and other Asian markets starting in March. Those cuts have led BNP to hike its oil price forecasts higher for 2019. BNP projects that WTI crude will hit an average of $66, while Brent crude will reach $73 per barrel.
Money Morning Insight of the Day
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Stocks to Watch Today: LC, CVS, LUV, GS
- CVS Health Corp. (NYSE: CVS) leads a busy day of earnings reports before the bell Wednesday. Unfortunately for the benefits manager, shares plunged 7.5% after the firm fell well short of revenue expectations and reported a weak full-year outlook. The company raised concerns about the stability of its long-term care business.
- Shares of LendingClub (NYSE: LC) slumped more than 5.5% after the bell Tuesday. The company reported weak fourth-quarter earnings and issued lackluster 2019 guidance. The loan giant reported earnings of $0.03 per share on top of $181.5 million. Wall Street had expected earnings of $0.02 on top of $181.9 million.
- Shares of Southwest Airlines Co. (NYSE: LUV) plunged 4.3% after the airline received a downgrade from Goldman Sachs Group Inc. (NYSE: GS). The airline is dealing with several service disruptions that have affected its bottom line. Also, the Wall Street bank is worried about profit margins for its new flights to Hawaii.
- Today, look for more earnings reports from Agilent Technologies Inc. (NYSE: A), Albemarle Corp. (NYSE: ALB), Avis Budget Group Inc. (NASDAQ: CAR), Boston Beer Co. Inc. (NYSE: SAM), Gannett Co. Inc. (NYSE: GCI), Garmin Ltd. (NASDAQ: GRMN), GoDaddy Inc. (NASDAQ: GDDY), HollyFrontier Corp. (NYSE: HFC), Noble Corp. Plc. (NYSE: NE), Owens Corning Inc. (NYSE: OC), Southern Co. (NYSE: SO), and Sturm Ruger & Co. Inc. (NYSE: RGR).
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.