What’s up in Markets : Retail Earnings, Shelton’s Fed Bid and Housing Data

The Federal Aviation Administration is set to clear Boeing 737 MAX for flight again. Donald Trump’s nominee to the Fed board fails to get Senate support; Lowe’s, Target, TJX and Nvidia report earnings; housing starts and building permits data are due, and the U.S. government puts out its weekly oil inventories report. Here’s what you need to know in financial markets on Wednesday, November 18th.

Shelton nomination to Fed stumbles

President Donald Trump’s pick for the Federal Reserve board of governors, Judy Shelton, failed to gain enough support for a full vote on her nomination, in what was taken as a sign that the Republican Party is starting to distance itself more from outgoing President Donald Trump.

A procedural vote to timetable a final call on Shelton’s nomination failed after a number of GOP Senators declined to back her.

The development comes against the backdrop of a lengthening list of failures by Trump’s attorneys to challenge the election results of earlier in the month. Only one out of 24 motions brought by Trump’s lawyers have been accepted by various state courts, while a number of Trump attorneys have resigned their mandates rather than pursue the President’s claims.

The President continued to make his claims of electoral fraud via Twitter, and fired Cybersecurity and Infrastructure Security Agency Director Chris Krebs, a Republican, who had vouched for the integrity of the election last week.

Boeing 737 MAX set to be cleared for flight

U.S. regulators are set to clear the Boeing 737 MAX for flight again after a hiatus of nearly two years. The aircraft, which was Boeing’s biggest money-spinner until two fatal crashes in 2018 and 2019, returns to an aviation market that is virtually unrecognizable from the one of 20 months ago.

Whereas airlines around the world had lined up to place orders for it and the comparable Airbus model before the pandemic, they’re now doing whatever they can to cancel or defer those orders, while selling and leasing back many of their other aircraft to reduce costs.

Airlines and leasing companies have already cancelled over 10% of their orders for the plane. Boeing estimates the grounding and the crashes have cost it some $20 billion to date.

The Federal Aviation Administration is likely to publish the orders granting the right to fly in the course of Wednesday, according to various reports.

Stocks set to open higher

U.S. stock markets are set to open modestly higher, struggling for direction as the market weighs the ongoing surge in Covid-19 cases across the country against the prospect of widespread distribution of vaccines next year.

By 6:30 AM ET (1030 GMT), Dow 30 futures were up 74 points or 0.3%, after the underlying index had fallen over half a percent on Tuesday in response to signs of a slowdown in consumer spending.

The weak retail sales data for October will sharpen the focus on housing starts and building permits data for the month, which are released at 7:30 AM ET. The housing market has been an isolated source of strength in the economy so far this year, but may start to cool as mortgage rates – which have fallen by around 100 basis points this year – start to show signs of bottoming out.

The S&P 500 futures contract was up 0.2% and the NASDAQ futures contract was up 0.3%.

Retail earnings continue

The flurry of retail earnings continues, with Target, TJX and Lowe’s (NYSE:LOW) all reporting on Wednesday. Target led the way with a substantial beat over expectations, posting adjusted earnings per share of $2.79, compared to the $1.60 expected.

Lowe’s reported earnings in line with forecasts, despite a healthy beat on the top line.

Chipmaker Nvidia will report after the closing bell, while Trip.com will also report in the course of the day.

Oil inventories due as OPEC+ stays coy on output

The U.S. government will release its official oil inventory report for last week at 10:30 AM ET, as usual. The report will be cross-checked against figures from the American Petroleum Institute on Tuesday which showed a build of over 4 million barrels in crude stocks last week.

U.S. crude futures were up 1.2% at $42.16 a barrel by 6:30 AM ET, while Brent futures were 1.2% higher at $44.30, shaking off the API numbers on the notion that the OPEC+ group of producers will put off their current plan to hike output at the start of next year.

A meeting of OPEC+ technical experts on Tuesday failed to give any clear recommendation on output policy to ministers, as some had hoped, but language coming out of the meeting reassured many that the group is alert to the risk of causing a new glut.

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