The Dow Jones today faces decline on renewed jitters about the state of the U.S. economy. The U.S. Federal Reserve's most recent minutes showed it expects that COVID-19 will "weigh heavily" on the American economy.
The Fed is likely to use "outcome-based" forward guidance. It will set new targets on inflation and unemployment before it raises interest rates again. More on this below.
Here are the numbers from Wednesday for the Dow, S&P 500, and Nasdaq:
Now here are what I think will be the most important market events and stocks on Friday morning.
The Top Stock Market Stories for Monday
- U.S. President Donald Trump's administration could soon be back at the negotiating table. China's commerce ministry said Thursday that the two sides will return to trade talks again in the days ahead. The decision to talk trade comes the same month that Trump has ordered ByteDance to sell its U.S. TikTok operations due to concerns about data privacy. Meanwhile, China has slapped sanctions on 11 Americans. Among them is Senator Marco Rubio (R-FL), who criticized the CCP over its Hong Kong security law that limits the region's sovereignty.
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- COVID-19 cases across the United States topped 47,000 on Wednesday, a figure that represents about an 11% drop from the same period last week. The total number of cases since the onset of the breakout has now topped 5.5 million in the country, with total deaths surpassing 173,100. This morning, the World Health Organization warned that people in Europe may be "dropping their guard" about a resurgence of the pandemic. The nations of Germany and Spain have recently reported spikes in cases that have rivaled the numbers in April. Meanwhile, in the United States, teachers across the nation are proposing strikes to prevent a return to in-person teaching. A "safety strike" in Detroit is supported by more than 90% of members.
- Finally, we'll be keeping a very close eye on what's happening with the Federal Reserve. As I mentioned, the Fed released its minutes from the July FOMC meeting. The central bank said the pandemic "would weigh heavily on economic activity, employment, and inflation in the near term." The minutes showed consensus that Congress must offer more fiscal help to the American people at a time that enhanced unemployment insurance is expired. Delinquency rates on mortgage payments have reached levels not seen in more than a decade. The Fed plans to hold the overnight borrowing rate at 0%-0.25% until it's "confident that the economy had weathered recent events and was on track to achieve the Committee's maximum employment and price stability goals." This morning, the Labor Department said that the number of Americans seeking unemployment benefits topped 1.10 million, far more than the 923,000 expected by economists.
Stocks to Watch Today: NVDA, BABA, INTC, AAPL, CVX
- Shares of Nvidia Corp. (NASDAQ: NVDA) fell nearly 1% despite reporting record earnings. The chipmaker experienced a 50% increase in revenue during the June-ending quarter. However, the stock - which has jumped 100% in a year - didn't react to the news. Investors seem concerned that the price for Nvidia has tapped out and valuations for tech stocks are getting a bit frothy. Meanwhile, shares of Alibaba Group Holding Ltd. (NYSE: BABA) slipped more than 1.3% despite news that it topped earnings and revenue expectations for the fiscal first quarter.
- Shares of Intel Corp. (NASDAQ: INTC) were up more than 2.6% after the company announced plans to repurchase about $10 billion in stock. CEO Bob Swan said that the company's stock was trading "well below our intrinsic valuation." Shares of Intel stock have faced remarkable pressure since announcing a delay to its next generation processors. The news of delays, coupled with the loss of Apple Inc. (NASDAQ: AAPL) as a customer on certain tech products, has sent the stock in reverse.
- Remember Iraq? Well, U.S. companies are still rebuilding the nation's infrastructure. This morning, the Iraqi government announced $8 billion in agreements with Chevron Corp. (NYSE: CVX), General Electric Co. (NYSE: GE), Honeywell International Inc. (NYSE: HON), and Baker Hughes Co. (NYSE: BKR). The deals were announced ahead of the first-ever visit by Iraqi Prime Minister Mustafa al-Kadhimi to the White House.
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About the Author
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.