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The Dow Jones futures are down 152 points ahead of the opening bell as investors try to make sense of last week's decision by Republicans not to hold a vote to replace Obamacare. Investors are hoping Trump's team is able to transition quickly to other policy priorities; however, there are distinct risks to this speculation.
On Friday, the Dow fell nearly 60 points after Speaker of the House Paul Ryan informed President Trump that Republicans did not have the necessary votes to repeal and replace the Affordable Care Act. Ryan pulled the bill out of the House.
The decision to pull the vote has raised doubts about Trump's ability to get his other policy priorities completed in the months ahead. Trump still wants to pass tax reform, deregulatory policies and a $1 trillion infrastructure program to bolster U.S. economic growth.
Let's look at the numbers from Friday for the Dow, S&P 500, and Nasdaq:
Dow Jones: 20,596.72; -59.86; -0.29%
S&P 500: 2,343.98; -1.98; -0.08%
Nasdaq: 5,829.99; +11.04; +0.21%
Here's a look at today's most important market events and stocks, plus a look at Monday's economic calendar.
What's Ahead for the Dow Jones Industrial Average Today
The Dow Jones Industrial Average is projecting a 20,428 open as investors weighed the stability of the the U.S. economy after Friday's failure to vote on healthcare. It was just a few weeks ago that the Dow sat at record levels, and the Trump administration was bragging about it. Now, markets are worried that the honeymoon is over.
Friday's defeat of healthcare reform could have a profound impact on President Trump's other pressing priorities. Trump's team wants to engage in corporate tax reform by August. However, economists anticipate that a lack of healthcare reform - and the expected fiscal savings that would accompany it - would make it harder for President Trump to fulfil his campaign promise to reduce the U.S. corporate tax rate down to the 15% he promised on the campaign trail.
In addition, investors are having doubts about the timing of a potential infrastructure program to "rebuild America." Steel stocks were hit the hardest due to increased pessimism. Shares of AK Steel Corp. (NYSE: AKS) and United States Steel Corp. (NYSE: X) were both off roughly 4%.
This Classic American Stock Is Our Top Pick in 2017
Energy stocks are in focus after the Trump administration announced it had approved permitting for the Keystone XL pipeline. The $8 million project had been held up for eight years by the Obama administration, which argued that the environmental consequences of the project outweighed the economic benefits.
Crude oil prices were dipping as concerns about rising U.S. production offset chatter that OPEC is considering an extension to its production cuts. On Friday, Baker Hughes Inc. (NYSE: BHI) announced that the number of U.S. production rigs increased for the 10th consecutive week. The news came the same day that Goldman Sachs Group Inc. (NYSE: GS) announced that it expected U.S. production to increase by 235,000 barrels per day (bpd) during the first half of 2017.
The WTI crude oil price today dipped 1.04%. Brent crude fell 0.77%.
But the big news is the ongoing speculation over interest rates.
Later today, two members of the U.S. Federal Reserve will speak on monetary policy and the state of the U.S economy. Chicago Federal Reserve Bank Chair Charles Evans and Dallas Federal Reserve Bank President Dennis Kaplan will both give talks today, and investors will be looking for clues into the timing of the next interest rate hike by the central bank.
The problem is that a stock market crash could be on the horizon as the U.S. Federal Reserve is moving forward with interest rate hikes. According to the CME FedWatch Tool, the markets are expecting at least two more interest rate hikes this year. Interest rates could rise above 1% for the first time in nearly a decade. That has investors wondering when the next stock market crash is coming.
Money Morning breaks down a number of historical patterns and keeps investors in the know on the risks and opportunities on the horizon. Here's what you need to know...
Stocks to Watch Today, March 27, 2017:
- Shares of Twitter Inc. (NYSE: TWTR) added more than 1.4% Friday on news that the company is exploring a paid-premium model in order to boost revenue. The company has struggled to bolster user growth in recent quarters. The firm is also struggling to handle a wealth of trolling, threats, and other unruly behavior that is impacting its reputation.
- In earnings news, shares of Cal-Maine Foods Inc. (Nasdaq: CALM) are in focus as the processing company prepares to report quarterly earnings before the bell. Wall Street expects that the company will report earnings per share (EPS) of $0.83 on top of $401.8 million in revenue.
- Meanwhile, shares of GameStop Corp. (NYSE: GME) will try to recover after falling more than 13% during Friday's trading session. The video gaming retailer reported quarterly sales declines across all major segments including a 19.3% drop in its new software sales. The company also said that it plans to close roughly 2% to 3% of its global storefronts, a sign that brick and mortar sales continue to decline.
- Look for additional earnings reports from Red Hat Inc. (NYSE: RHT), SYNNEX Corp. (NYSE: SNX), and G-III Apparel Group Ltd. (Nasdaq: GIII).
Today's U.S. Economic Calendar (all times EDT)
- Dallas Fed Manufacturing Survey at 10:30 a.m.
- Four-Week Bill Announcement at 11 a.m.
- Three-Month Bill Auction at 11:30 a.m.
- Six-Month Bill Auction at 11:30 a.m.
- Two-Year Note Auction at 1 p.m.
- Chicago Federal Reserve Bank Chair Charles Evans speaks at 1:15 p.m.
- Dallas Federal Reserve Bank President Dennis Kaplan speaks 6:30 p.m.