The daily business briefing: November 17, 2021
Yellen urges lawmakers to act to prevent default on Dec. 15, Retail sales surge despite high inflation, and more
Yellen tells lawmakers to act or U.S. could default on debts Dec. 15
Treasury Secretary Janet Yellen told Congress on Tuesday that the federal government probably will run out of ways to avoid a first-ever debt default around Dec. 15. That's 12 days later than she predicted in October when Congress passed a stop-gap $480 billion increase in the federal debt limit. Yellen urged Congress in a new letter to act fast to eliminate any possibility of a potentially catastrophic default on the nation's obligations. "To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible," Yellen wrote in a letter to congressional leaders. Yellen has repeatedly warned lawmakers that letting the government default would probably trigger a recession.
Retail sales surged in October despite high inflation
Retail sales rose by 1.7 percent in October, a significant improvement compared to September, the Commerce Department reported Tuesday. The surge, which came despite new data showing consumer confidence at a 10-year low, came as Walmart and Home Depot reported third-quarter sales that beat expectations. Consumers spent mostly on goods, including cars, electronics, fitness equipment, and other big purchases, rather than services. The data showed that despite complaints about rising gas and grocery prices, Americans are willing to pay more as they return to more normal lives with coronavirus infections down since the summer surge. "The fact is, the world shut down for the better part of 2020 and people have savings because they haven't been out and about," said Mark Cohen, director of retail sales at Columbia Business School. "They have a lot of disposable cash — and now that things are coming back to normal, they're going to dispose of it."
Lucid's market value surpasses Ford's before debut of its 1st EV
Lucid Group's market value shot higher than Ford's on Tuesday after the high-end electric-vehicle startup's leaders said reservations for its first cars had surged, sending its shares rising by 24 percent. Lucid's stock gains brought its market capitalization to $89.9 billion, just below General Motors' $90.9 billion. The company on Monday reported a third-quarter net loss of $524 million as it started vehicle production and hired more sales and service employees. Lucid said the reverse merger deal it used in the summer to go public raised $4.4 billion, enough to ramp up and launch its first model, the Lucid Air, in 2022. Also on Monday, MotorTrend picked the Lucid Air for its Car of the Year award, the first time a new car maker's debut model had won the honor.
Lowe's sales beat forecasts as Americans continue fixing up homes
Lowe's on Wednesday reported better-than-expected sales and raised its full-year forecast due to sustained high demand from builders and contractors. Big-spending home-improvement professionals have been investing in tools and snapping up materials as Americans, encouraged by rising home prices, invest in sprucing up their houses and apartments. Lowes said same-store sales rose by 2.2 percent in the third quarter. Analysts had expected a 2.9 percent decline, according to IBES data from Refinitive. Larger home improvement rival Home Depot on Tuesday reported a 6.1 percent increase in sales, also beating predictions. Lowes said sales for the 2021 fiscal year should reach $95 billion, up from its previous forecast of $92 billion.
Stock futures little changed ahead of more retailers' earnings
U.S. stock index futures were mixed early Wednesday ahead of more retail earnings. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down by less than 0.1 percent several hours before the opening bell. Futures for the tech-heavy Nasdaq rose by 0.1 percent. The three main U.S. averages closed higher on Tuesday after the Commerce Department reported that retail sales rose 1.7 percent in October, faster than economists expected despite high inflation. The Dow rose by 0.2 percent, while the S&P 500 and the Nasdaq gained 0.4 percent and 0.8 percent, respectively. Home Depot and Walmart posted strong quarterly results on Tuesday. Investors will be watching for more signs of consumers' willingness to spend as more retailers report earnings Wednesday. Target and Lowe's reported better-than-expected results before the bell.