3 Market-Moving Events Dow Investors Should Watch This Week

Watch for economic data as well as the beginning of earnings season to set the tone for the Dow Jones Industrials.

Jul 6, 2014 at 7:01PM

Long after Fourth of July celebrations end, investors can expect fireworks for the Dow Jones Industrials (DJINDICES:^DJI) this week, as earnings season officially begins. Yet with all the attention that Alcoa (NYSE:AA) and Wells Fargo (NYSE:WFC) will get when they report on Tuesday and Friday respectively, you still need to pay attention to a couple key pieces of economic news as well. In particular, the Fed will release its minutes from the latest meeting of the Federal Open Market Committee, and a report from the Energy Information Administration on the status of oil inventories could have implications for the strong-performing energy sector. Let's take a closer look at what investors are expecting to see from these key events this week.


Aluminum wheel. Source: Alcoa.

Earnings season begins
Neither Alcoa nor Wells Fargo is in the Dow, but their results will have dramatic implications for Dow stocks and other companies throughout the stock market. For Alcoa, investors expect the aluminum giant's recovery to continue, with Alcoa's decision to specialize in higher-margin value-added products reaping rewards over simply producing commodity-grade aluminum. With strong demand from the aerospace, automotive, and heavy-vehicle industries for aluminum components, Alcoa hopes that its strategic shift will keep it on track to boost profits and make the Dow Jones Industrials regret having dismissed the company from their ranks.

Wells Fargo, meanwhile, is likely to deliver slightly better earnings per share to investors despite a drop in revenue. Higher interest rates could continue to weigh on Wells Fargo's mortgage business, but investors have been impressed by the bank's ability to avoid the worst of the fallout from the financial crisis and find new ways to make money. With a combination of bank-branch downsizing to save on costs and non-mortgage consumer loans to keep margins high, Wells Fargo aims to become the most valuable bank in the stock market.

Federal Reserve Building. Source: Wikimedia Commons.

What the Fed will say
On the economic front, investors will scrutinize the FOMC's latest meeting minutes to try to figure out the thought process for monetary policy-making. Currently, most commentators expect the Fed to continue its gradual reduction of quantitative easing purchases, but the wildcard is when the Fed will actually move to increase the Fed funds rate and thereby push short-term interest rates higher.

Opinion is mixed on when the Fed will raise rates, precisely because other economic data have been so inconsistent lately. On one hand, first-quarter economic conditions were horrible, with a huge drop in GDP and hundreds of companies reporting negative impacts from the bad weather and other causes. Looking forward, though, we've seen numerous signs of a return to more typical levels of economic activity more recently, and leading indicators pointing to a better future have some expecting the Fed to act sooner than later. Most expect rates to rise at some point next year, and that could end up being a key inflection point for the Dow Jones Industrials.

Oil prices heading higher?
Finally, the EIA report on oil inventories will have an impact on the Dow because of the key role that gasoline prices have on Americans' household budgets. Gasoline prices over the holiday weekend were at their highest levels since 2008, and few expect conditions pushing gas prices upward to go away anytime soon. Yet with U.S. consumers having gotten used to prices near the $4-per-gallon mark, there's reason to believe that the Dow Jones Industrials won't suffer even if inventories shrink and argue for higher prices ahead.

After solid gains for the Dow, watch to see if the average can hold the 17,000 level. Bad news could lead investors to head for the exits after such a long rally, although continued good news could sustain the upward streak even longer.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Dan Caplinger owns shares of Wells Fargo. The Motley Fool recommends and owns shares of Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers