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The Dow Jones today will continue its climb after news that the United States and China would proceed with trade talks. This growth comes in spite of a U.S. jobs report that fell short of expectations.
I've got more on these developments below. Plus: the latest on Starbuck's Corp. (NASDAQ: SBUX) CEO Howard Schultz's potential run for president.
Here are the numbers from Thursday for the Dow, S&P 500, and Nasdaq:
|Index||Previous Close||Point Change||Percentage Change|
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 Friday
- Once again, investors believe the market is up triple digits on news that the United States and China are poised to engage in trade talks in October. The reality is that China and a number of other countries are going back to the well to introduce new stimulus measures. China's central bank announced this morning that it was slashing reserve requirements for the third time this year. The nation is doing all it can to stimulate its economy after certain analysts projected that GDP could fall to 6.0% or lower in 2019. The nation is on track for its weakest annual GDP in 27 years.
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- This morning, the U.S. Labor Department said that the nation created 130,000 new positions in August. That figure was below the 150,000 new positions anticipated by economists. The official unemployment rate remained at 3.7% as we had projected. Labor force participation increased to its highest levels since August 2013, while wages increased by 3.2% year over year. But the more important number that people should know is the alternative measure that includes discouraged or underemployed workers in the United States, which offers a better proxy of real-time conditions in the economy. That figure increased from 7% to 7.2% last month. Last month saw a sharp uptick in people working part-time due to current economic conditions.
- Pay close attention to a speech today by Federal Reserve Chair Jerome Powell. While the markets expect that the Fed is going to cut its benchmark interest rate later this month, traders want some level of confirmation as we barrel toward the Sept. 17-18 meeting. The recent rally has relied on the assumption that trade negotiations are coming and that a rate cut is guaranteed. Any small jitter or statement that shakes such confidence could fuel a Friday afternoon sell-off.
Stocks to Watch Today: BABA, SBUX, BAC
- The slowdown in China has given some of its largest companies a window to take part in M&A activity. Yesterday, Chinese e-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA) snapped up rival Kaola for $2 billion. The deal will give Alibaba a larger portal to sell imported products across the country. China's e-commerce market will hit roughly $1.935 trillion this year, according to eMarketer.
- Democrats are breathing a sigh of relief this morning after Starbuck's Corp. (NASDAQ: SBUX) CEO Howard Schultz announced he will not run for president in 2020. The executive was exploring a third-party candidacy – most analysts believe he would have cut into votes for the Democratic candidate. Schultz said he would have run as a "centrist independent, outside of the two-party system."
- Bank of America Corp. (NYSE: BAC) stock is flat this morning after the giant bank received a downgrade from KBW. Analysts at the research firm said it expects the Fed to cut rates in the face of an ongoing trade war. Lower rates will impact the lending operations of Bank of America and squeeze margins, according to the research report. KBW said that its expectation of an economic jolt from the recent rate cut has not materialized as expected. The group cut its price target for BAC stock from $36 per share to $29.
- Look for earnings reports from Brady Corp. (NYSE: BRC) and Genesco Inc. (NYSE: GCO).
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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.