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The Dow Jones Industrial Average is down today as the odds of a Fed rate cut fall by 66%. But that's just one of many global economic worries.
News from the U.S. Federal Reserve, China, and the Middle East all point to recession. More on this in a minute.
First, here are the numbers from Friday 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 Tuesday
- On Monday, oil prices had their largest one-day jump in more than a decade. An attack on Saudi Arabia's crude production has some analysts projecting the idea of $100 per barrel later this year. The attacks knocked about 5% of global production offline, and new reports signal that the damage is more extensive than previously thought. The Trump administration blamed Iran for the attack but said Trump wishes to avoid military conflict with Tehran. Iran has responded this morning by stating it will not negotiate with the United States under any conditions. Both Trump and Iranian President Rouhini are expected to attend the United Nations General Assembly next month. However, a directive from the nation's supreme leader, Ayatollah Ali Khamenei, ruled out negotiations. The chatter only heightens tensions across the Middle East.
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- The Federal Reserve kicks off its two-day meeting on monetary policy. For the last two months, traders have speculated that the U.S. central bank will slash interest rates for the second time this year. However, the odds of a rate cut – according to the market – have fallen to 66%. Expect a lot of speculation and big bets over the next two days.
- While the markets expect a rate cut by the U.S. central bank tomorrow, the story has less to do with Jerome Powell and his team. Instead, the focus will be on U.S. President Donald Trump, an ardent critic of the Federal Reserve. Trump wants the Fed to cut rates to the bone, and some speculate that the president is cheering for negative interest rates. Trump has criticized the Fed while other major central banks like the European Central Bank, the Bank of Japan, and the Peoples Bank of China continue to slash rates and introduce new stimulus measures to bolster their struggling economies.
- Things continue to devolve in Britain over the Brexit. On Tuesday, the United Kingdom's Supreme Court begins three days of hearings. The topic: Prime Minister Boris Johnson's case for suspending Parliament. The court will likely hear testimony and give its decision by next week. Johnson has been pressed to reach a deal to avoid a "Hard Brexit." The question is if he is even trying anymore.
- A 2020 recession has many Americans worried about the economy. A new survey from ABC/Washington Post showed nearly the same result as the 69% opinion observed in November 2007, some months before the global financial crisis. Americans are worried about the U.S.-China trade wars. Pessimism is high despite an economic climate of low unemployment. Roughly 60% of people also felt that they would have to pay higher prices because of the trade wars.
Stocks to Watch Today: KHC, FDX, SNE
- Warren Buffett's bet on Kraft Heinz Co. (NYSE: KHC) certainly looks weak. His partner in the deal that formed the company – 3G Capital – has sold 25.1 million shares, according to an SEC Filing. The private equity group still owns 245 million shares. However, KHC stock has underperformed. Shares of KHC were off 3.3% in pre-market hours.
- FedEx Corp. (NYSE: FDX) announced plans to hike its shipping rates starting on Jan. 6, 2020. The firm said it will not hike rates ahead of the holiday shopping season. Overall increases are pegged at 4.9% average for jet-service delivery. Ground transport rates are set to increase by an average of 5.9%. FedEx will report earnings after the bell Tuesday.
- Sony Corp. (NYSE: SNE) has rejected Dan Loeb's breakup plans. The Third Point Capital manager had pressed for the Japanese tech giant to spin-off its image sensors business and focus more on its entertainment business. Loeb built up a $1.5 billion stake in the firm and pressed the firm to conduct a large assessment of how it could unlock shareholder value.
- Look for additional earnings reports from Adobe Inc. (NASDAQ: ADBE), Chewy Inc. (NASDAQ: CHWY), Apogee Enterprises Inc. (NASDAQ: APOG), and Apex Global Brands Inc. (NASDAQ: APEX).
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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.