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The Dow Jones Industrial Average could lose up to 400 points today as investors have begun pouring capital out of equity markets and into fixed income positions (bonds).
Here's why that's a red flag for the economy.
First, 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
- The United States bond markets are flashing a recession warning yet again. This morning, the 10-year U.S. Treasury bond yield slipped below that of the two-year yield. The so-called inversion of the yield curve has been a fairly reliable indicator of past recessions. The news hit banking stocks as lending firms face a more difficult business environment. Shares of Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C) were both off more than 2% in pre-market hours.
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- Although the United States has delayed the implementation of new tariffs on China, concerns about the latter's economy made headlines this morning. Industrial data from China for July showed that its manufacturing growth increased by just 4.8% compared to the same period last year. That figure was well below economists' expectations. Meanwhile, investors are questioning why the Trump administration delayed tariffs. The president said that he didn't want to fuel rising costs of goods during the holiday shopping season. However, the statement contradicts previous statements that argued that China and not American consumers would face the price of rising tariffs.
- Oil prices dropped Wednesday after the American Petroleum Institute reported a surprise increase in domestic inventories. Today, the Energy Information Institute will report its official inventory levels. The API report – which indicated a 3.7-million-barrel increase for the week – erased gains fueled by Trump's decisions to delay tariffs on China.
Stocks to Watch Today: TLRY, M, CBS, VIAB
- Shares of Tilray Inc. (NASDAQ: TLRY) plunged more than 10% in pre-market hours after the cannabis giant fell short of earnings expectations on Thursday. Although the firm reported higher than expected revenue, its adjusted per-share earnings loss of $0.32 was wider than Wall Street forecasts. But the news wasn't all that bad. The firm said it could soon be announcing a series of new supply deals in the coming months.
- Shares of Macy's Inc. (NYSE: M) bombed in pre-market hours after the firm fell well short of earnings expectations. The firm reported weak profits and revenue due to heavy discounting during the spring shopping season to shed inventory. The company also slashed its annual forecast. Its EPS figure of $0.28 was $0.17 short of Wall Street estimates. Same-stores sales growth was also below analysts' forecasts.
- In deal news, CBS Corp. (NYSE: CBS) and Viacom Inc. (NASDAQ: VIAB) have finally agreed to merge. The two media companies have been discussing a deal for nearly three years, but executives struggled to reach terms. The deal reportedly gives its executive committee a larger balance sheet and more access to capital. It has set off speculation that it might purchase another major media outlet like Lions Gate Entertainment Corp. (NYSE: LGF) or Discovery Communications Inc. (NASDAQ: DISCA).
- Look for earnings reports today from Cisco Systems Inc. (NASDAQ: CSCO), Agilent Technologies Inc. (NYSE: A), CACI International Inc. (NASDAQ: CACI), NetApp Inc. (NASDAQ: NTAP), and Vipshop Holdings Ltd. (NASDAQ: VIPS).
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