Dow Jones Industrial Average Futures Higher After Fed; Dollar Soars

Why Another Weekly Win Could Be Ominous for the Dow

Dec 15, 2016 at 9:14 AM
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Dow Jones Industrial Average (DJIA) futures are higher, as stocks look to bounce back from yesterday's post-Fed sell-off. After the central bank lifted interest rates and called for three more rate hikes in 2017, the U.S. dollar index touched a 13-year high this morning, weighing on commodities. At last check, front-month gold futures are down 2.6% at $1,133.20 an ounce, while January crude oil futures have dropped 1.9% to $50.06 per barrel. On the economic front, weekly unemployment claims came in at a three-week low at 254,000 -- just above estimates of 250,000 -- while the consumer price index (CPI) edged 0.2% higher in November, in line with expectations. In addition, the Philadelphia Fed manufacturing index rose to a two-year high, as the Empire State manufacturing index jumped to its highest point since April. 

Continue reading for more on today's market, including: 

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Futures on the Dow Jones Industrial Average (DJIA) are nearly 41 points above fair value.

5 Things You Need to Know Today
  
  1. The Chicago Board Options Exchange (CBOE) saw 849,456 call contracts traded on Wednesday, compared to 495,316 put contracts. The resultant single-session equity put/call ratio rose to 0.58, while the 21-day moving average remained at 0.59.
  2. Twenty-First Century Fox Inc (NASDAQ:FOXA) has agreed to a $14.6 billion purchase of British television company Sky Plc. Rumors of a buyout attempt surfaced last week, with FOXA confirming a preliminary deal on Friday. FOXA is up 3.5% in electronic trading.
  3. Drugmaker Eli Lilly and Co (NYSE:LLY) is trading 3.8% higher ahead of the bell, after delivering an upbeat 2017 forecast, with its profit and sales outlook coming in ahead of expectations. Still, LLY has a ways to go before closing its bear gap from late November, when the firm's Alzheimer's drug failed a late-stage trial
  4. Mondelez International Inc (NASDAQ:MDLZ) is 4.5% higher in pre-market trading -- and back in the buyout-buzz hot seat -- after rumors of a takeover attempt by Kraft Heinz Foods Co (NYSE:HNZ) were denied by an unnamed source, who said MDLZ is unaware of any potential M&A offers. 
  5. The Fed balance sheet is slated for release. Jabil Circuit (JBL), Adobe Systems (ADBE), Oracle (ORCL), and Sanderson Farms (SAFM) are all due to present earnings.

Buzz Stocks Dec 15

Overseas Trading

Stocks in Asia settled predominantly lower, following the Fed's first interest-rate hike of 2016, and plans for an additional three hikes in 2017. Hong Kong's Hang Seng dove 1.8% to end at a four-month low, pressured by a sell-off among real estate, financial, and commodity stocks. This was exacerbated by the fact that Hong Kong's dollar is pegged to the greenback, which jumped on the Fed decision. Elsewhere, China's Shanghai Composite dropped 0.7%, while South Korea's Kospi landed a hair below the flatline, after the Bank of Korea kept its interest rate unchanged for a sixth straight month. Japan's Nikkei outperformed, relatively speaking, adding 0.1%, as a weaker yen boosted auto stocks and other exporters.

European markets are mostly higher, with financial stocks rising rapidly on the hawkish Fed announcement -- though the stronger dollar is pressuring mining shares. Traders are also digesting Markit's eurozone flash manufacturing purchasing managers index (PMI) -- which rose to a 68-month high -- and data indicating new car registrations rose 5.8% year-over-year within the trade bloc. Keying in on the indexes, the French CAC 40 and German DAX are up a respective 0.6% and 0.4%, while London's FTSE 100 is off just 0.1%.

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