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Why the Dow Jones Industrial Average Is Falling Today

Money Morning Contributor

For Tuesday, Jan. 5, 2016, here’s the top stock market news and stocks to watch…

Stock Futures Today

dow jones industrial average
Dow Jones Industrial Average
futures forecast a 34-point decline as concerns about China continue to weigh on trader sentiment. Last night, the People’s Bank of China announced a $20 billion (130 billion yuan) injection of short-term funding into the nation’s financial sector. The central bank is attempting to reduce concerns after Monday’s sell-off that saw the Shanghai Composite Index fall more than 7%.

This morning, the Shanghai Composite fell as much as 3.2%, but closed down 0.26% for the session.

On Monday, the Dow fell more than 440 points in mid-morning hours before cutting losses and finishing down 276 points on the day. Meanwhile, the S&P 500 is off to its worst start since 2001.

Top News in the Stock Market Today

  • The Stock Market Today: On Tuesday, the markets are already reacting negatively to the results of Chinese markets as news of a massive capital injection renews concerns about the impact of stimulus to bolster the world’s second-largest economy. On the domestic front, a light economic calendar puts a focus on automotive stocks as the December Motor Vehicle Sales report drops in the morning hours. Economists project a slight decline of 18.10 million vehicles from November’s figure of 18.19 million units.
  • Oil Outlook: Oil prices continued to slide this morning as concerns about Chinese economic data and a stronger U.S. dollar weighed on traders. Concerns about China’s manufacturing sector and a bolstered dollar offset any geopolitical concerns stemming from the break in diplomatic relations between OPEC leaders Saudi Arabia and Iran. February WTI prices were down 0.5% at $36.56 per barrel. Meanwhile, Brent crude oil was off 0.6% at $36.97. Money Morning Global Energy Strategist Dr. Kent Moors explains that events in the Middle East are what really matter and has dubbed this new crisis “Arab Spring II.” Here’s what it means for oil prices.

Earnings Outlook: SONC, CMC

  • Earnings Report No. 1, SONC: After the bell, Sonic Corp. (Nasdaq: SONC) will report fiscal first-quarter earnings. The fast-food restaurant is expected to report a quarterly earnings report of $0.24 per share. Wall Street expects quarterly revenues of $145.02 million.
  • Earnings Report No. 2, CMC: Before the opening bell, Commercial Metals Co. (NYSE: CMC) will report fiscal first-quarter earnings. The company is expected to report an EPS of $0.25 on top of $1.26 billion in revenue.
  • Additional companies set to report earnings today include AEP Industries (Nadsaq: AEPI), Landec Corp. (Nasdaq: LNDC), and SUPERVALU Inc. (NYSE: SVU).

Stocks to Watch: ATVI, SWHC, TSLA, GILD, EXEL

  • Stocks to Watch No. 1, ATVI: Shares of video-game giant Activision Blizzard Inc. (Nasdaq: ATVI) slipped 0.3% on news that it purchased Major League Gaming. The deal will be part of its effort to create what it calls the “ESPN of e-sports,” a broadcast network dedicated to video games and tournaments.
  • Stocks to Watch No. 2, SWHC: Shares of Smith & Wesson Holding Corp. (Nasdaq: SWHC) surged 6.3% to an all-time high after the company hiked its revenue and adjusted profit projections for the current quarter and fiscal year. The company cited strong sales at the start of the annual gun-show season and its stock remains defiant ahead of President Barack Obama’s pending announcement on new gun-control reforms on Tuesday.
  • Stocks to Watch No. 3, TSLA: Shares of Tesla Motors Inc. (NasdaqTSLA) were flat this morning as Chinese stocks stabilized. On Monday, the TSLA stock price dipped 7% in intraday trading on news that it missed vehicle delivery expectations in 2015. The company reported 2015 total deliveries of 50,580 vehicles. Here’s everything you need to know about the TSLA stock price for 2016.
  • Stocks to Watch No. 4, GILD: Shares of Gilead Sciences Inc. (Nasdaq: GILD) were down 0.1% on news that the biotech giant has received priority review approval from the Food and Drug Administration for its experimental hepatitis C combination drug. Meanwhile, shares of Exelixis Inc. (Nasdaq: EXEL) gained more than 6.5% on news that biotech firm showed positive results from a recent Phase 3 drug trial.
  • Stocks to Watch No. 5: MSFT: Shares of Microsoft Corp. (Nasdaq: MSFT) slipped nearly 1% on news that the company is being investigated by Chinese regulators over an anti-trust probe.

Today’s U.S. Economic Calendar (all times EST)

  • Gallup US ECI at 8:30 a.m.
  • Redbook at 8:55 a.m.
  • 4-Week Bill Auction at 11:30 a.m.
  • 52-Week Bill Auction at 11:30 a.m.

What Investors Must Know This Week

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