The Dow Jones Industrial Average Slides Ahead of December Federal Reserve Meeting

Garrett Baldwin

The Dow Jones Industrial Average will go flat as investors prepare for a rate decision from the U.S. Federal Reserve.

Markets largely anticipate that the U.S. central bank will leave interest rates untouched during the final FOMC meeting of the year. The Fed had slashed interest rates during its three previous meetings to provide support for the U.S. economy.

Before we get into this story and more, here are the numbers from Tuesday for the Dow, S&P 500, and Nasdaq:

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

• This morning, the battle between the Federal Reserve and U.S. President Donald Trump is back on full display. While investors should be celebrating rare congressional progress on a trade deal to replace NAFTA, they will be left to absorb a coming tweet from President Trump when the Federal Reserve makes its decision on interest rates later this afternoon. The Fed is expected to halt any additional cuts after knocking out about half of the rate increases it had enacted over the previous two years. President Trump, however, is pushing for the central bank to lower rates further.

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• Next up, investors are hoping for an eleventh-hour trade deal between the United States and China. The White House still plans to slap new tariffs on China, should the two sides fail to reach a deal before the Dec. 15 deadline. The Trump administration is scheduled to slap 15% tariffs on about $169 billion in Chinese goods this weekend. However, The Wall Street Journal reports that both nations are working to delay those tariffs as they progress toward a deal. Delays continue to center around technology transfers and intellectual property. The U.S. also wants China to purchase at least $40 billion in agricultural goods.
• Saudi Aramco is now the largest public company in the world. Shares of the Saudi state-owned company surged by 10% after its public debut on the nation's stock exchange today. The price rally to 35.2 Saudi riyals ($9.38) gives the company a staggering valuation of $1.88 trillion. Saudi Arabia listed just 1.5% of its shares, but the billions it raises from the float will be critical to the future of the country. Saudi Arabia is attempting to diversify its economy away from an overreliance on oil production.

Stocks to Watch Today: GME, CVX, CS

• Shares of GameStop Corp. (NYSE: GME) fell more than 12.9% after the gaming retailer fell well short of earnings expectations Tuesday. Despite a massive buyback of company stock, shares plunged on news that year-over-year sales slumped by a staggering 26%. The company continues to suffer due to digital direct sales from console producers and an ongoing shift toward streaming. The company cut its full-year EPS guidance to an eye-popping range of $0.10 to $0.20. Those figures are down from previous estimates of $1.15 to $1.30.
• Shares of Credit Suisse Group AG (NYSE: CS) are in focus after the company announced plans to repurchase roughly $1.5 billion in company stock in 2020. The firm says that it expects to return to profitability next year and start hiking dividends accordingly. The firm wants to distribute at least 50% of next year's net income back to shareholders in order to re-instill confidence in the struggling European banking giant.
• Shares of Chevron Corp. (NYSE: CVX) are generating buzz after the company reportedly announced plans to take a $10 billion charge on weak natural gas investments. Though the firm is optimistic about its expanding portfolio of oil fields in the Permian Basin, it has slashed funding for natural gas projects in Appalachia and in Canada.
• Look for earnings reports from Lululemon Athletica Inc. (NASDAQ: LULU), Photronics Inc. (NASDAQ: PLAB), American Eagle Outfitters Inc. (NYSE: AEO), United Natural Foods Inc. (NASDAQ: UNFI), and Tailored Brands Inc. (NASDAQ: TLRD).

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Garrett Baldwin

About the Author

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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.

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