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The DJIA Index closed with a 27-point loss Wednesday, failing to hold onto earlier gains. The decline comes a day after markets saw their broadest sell-off in two months over concerns of a pending interest-rate hike.
The dollar rose again today, gaining more than 1%. It's now at a 12-year high against the euro.
Today our Capital Wave Strategist Shah Gilani joined FOX Business' "Varney & Co." to discuss how a strong U.S. dollar affects stocks – and reveal which is the best stock to buy now to take advantage of the dollar's surge…
Dow Jones: 17,635.39, -27.55, -0.16%
S&P 500: 2,040.24, -3.92, -0.19%
Nasdaq: 4,849.94, -9.85, -0.20%
What Moved the DJIA Index Today: Investors remain focused on when the U.S. Federal Reserve will raise interest rates and await release of stress tests results for 31 U.S. banks at 4:30 p.m. today.
Domestic crude oil prices closed slightly higher today. Earlier in the session, WTI prices slipped to their lowest levels since February 26 after the Energy Information Administration released its weekly inventory report. Domestic inventory levels have hit a new record for nine consecutive weeks.
Now, check out the other top market stories – plus get our new profit tip for investors:
- Under Stress: After the bell, the nation's 31 largest banks will attempt to pass the second part of the Federal Reserve's annual stress tests. Shares of Citigroup Inc. (NYSE: C), Goldman Sachs Group Inc. (NYSE: GS), and Morgan Stanley (NYSE: MS) were all up ahead of the results. By passing the test, certain financial institutions may be able to boost their dividend, increase buybacks, and engage in other ways to maximize returns to investors. Money Morning Capital Wave Strategist Shah Gilani reveals what's really at stake for the financial system as the Stress Test Theater boots up again.
- Bird Flu Fears: Shares of chicken producers and processors tanked this afternoon on news that the U.S. government confirmed multiple cases of H5N2 avian flu in turkey stocks in Missouri and Arkansas. Although turkeys are the only animal affected, investors are concerned the flu could affect chicken stocks due to their proximity to migratory routes. Shares of Pilgrim's Pride Corp. (NYSE: PPC) fell 4.39%. Shares of Sanderson Farms Inc. (Nasdaq: SAFM) slipped 4.22%, while Tyson Foods Inc. (NYSE: TSN), the top supplier of chicken to KFC and many other fast-food restaurants, cratered by 5.61%.
- Cable Confusion: Shares of DirecTV (Nasdaq: DTV) slipped 0.58% today on news that the Federal Trade Commission has filed a civil lawsuit against the company alleging it engaged in deceptive marketing practices. According to the federal suit, DirecTV failed to provide enough insight in its advertisements on how much customers will face in charges after promotions or additional discounts expire. This also includes payment practices of failing to inform customers that they would receive credit card charges for premium channels at the expiration of a promotional offer. The company released a statement today challenging the government's accusations.
- Stock Upgrade: Shares of SanDisk Corp.(Nasdaq: SNDK) gained 3.2% on the day. The bump comes a day after Goldman Sachs Group Inc. (NYSE: GS) added the chip maker's stock to its "Conviction Buy" list. Goldman believes the firm maintains an attractive valuation level and likes its expanding gross margins.
- An Apple a Day: Shares of Apple Inc.(Nasdaq: AAPL) were down 1.82% this afternoon on news that the company's online sales systems were knocked out of commission. The company's systems status for iTunes, iBooks, and the app stores for iOS and Mac were down for all users this afternoon. Meanwhile, investors still seem mixed on what to make of the company's new Apple Watch, its first product launch in nearly six years. So, can AAPL still reach a $1 trillion market cap in the coming years? That's the question our Tech Specialist Michael A. Robinson answered on FOX Business' "Varney & Co." this afternoon. Watch the interview to find out where he believes Apple stock will be by Labor Day 2016.
Money Morning Tip of the Day: Don't listen to pundits warning of a tech stock "bubble." Today's Nasdaq is nothing like it was during the dot-com era. Tech stocks will keep beating the broader market.
Today's tip comes from Money Morning Tech Expert Michael A. Robinson:
Last week the Nasdaq Composite Index crossed the 5,000 level for the first time in 15 years.
The bears say this is proof we're living through another tech-stock "bubble" – and that a collapse like the dot-com debacle of 2000 is close at hand.
But the gloom-and-doomers are wrong. There is simply no comparison between today's Nasdaq and the go-go years of the Roaring '90s.
First, let's compare the pace of tech investing then and now. Back in the dot-com era, it took the Nasdaq just 49 days to rise from 4,000 to 5,000, a climb of 25%.
This time around, it has taken nine times as long – or 455 days – to do the same thing. The Nasdaq closed at 4,017 on Nov. 26, 2013, and closed at 5,008 on March 2.
Second, despite a much larger economy and 15 years of inflation since then, tech stocks are substantially cheaper today than they were in the late '90s.
Price/earnings (P/E) ratios illustrate this. By that stock-value standard, tech stocks today are 81.7% cheaper than they were in the late '90s.
At the height of the dot-com rally, Nasdaq stocks traded at 175 times earnings. Today, that figure stands at 32 – making today's stocks five times cheaper than they were then.
Finally, when we take inflation into account, the Nasdaq is well below its previous high. In 2000 dollars, the index would have to hit 6,908 to have the same value as back then, for an additional rally of 38%.
The bottom line: Tech stocks are nowhere near overheated. There are still plenty of ways to profit.