Stock market futures for Wednesday, Nov. 12, forecasted a 74-point decline in the Dow Jones Industrial Average, and from yesterday's close (Tuesday) with retail earnings and bank regulatory settlements on tap. On Tuesday, the Dow Jones closed at its fifth-consecutive record high. The Index may have only added a little more than one point, but a small rally prior to the closing bell continues the market's positive momentum. The S&P 500 Volatility Index (VIX) - the market's volatility gauge - increased nearly 2%.
Today, keep an eye on the market's reaction to Japan's possible delay in hiking its national sales tax. With the Nikkei reaching a seven-year high this morning, President Shinzo Abe is considering a vote that would potentially delay a hike in the tax scheduled for October 2015. It's also worth paying attention to events surrounding social media giant Twitter Inc. (Nasdaq: TWTR). The company will host a meeting today in San Francisco for stock analysts that will feature speeches from Chief Executive Officer Dick Costolo and Chief Financial Officer Anthony Noto.
Here's what else you should know - including your "Money Morning Tip of the Day" - to make your Wednesday profitable:
Politics at Play: According to multiple reports on Capitol Hill, Senate Democrats may vote in the lame duck session to approve the completion of the TransCanada Keystone Pipeline. The infrastructure project, which has been held up for six years by the Obama administration and Senator Harry Reid (D-Nev.), would connect crude oil producers in Canada and the U.S. side of the Bakken shale field to refineries along the coast of the Gulf of Mexico. Although President Obama could still veto the plan, the vote could help Louisiana Democrat Sen. Mary Landrieu's chances of protecting her Senate seat during a runoff election on December 6. Shares of TransCanada Corp. (NYSE: TRP), the operator of the pipeline, were flat in pre-market hours.
Banks Behaving Badly: U.S and British regulators announced they have reached a $3.4 billion settlement with five global banks over allegations that they manipulated the international currency trading markets. Regulators reached settlements with HSBC Holdings Plc. (NYSE: HSBA), Royal Bank of Scotland Group Plc. (NYSE: RBS), UBS AG (NYSE: UBS), Citigroup Inc. (NYSE: C) and J.P. Morgan Chase & Co. (NYSE: JPM). U.K. bank Barclay's Plc. (NYSE ADR: BCS) pulled out of the settlement at the last minute and will attempt to forge its own negotiations with regulators in the near future.
Another Big IPO: Shares of Alibaba Group Holding Ltd. (NYSE: BABA) were up 1.2% in pre-market hours on news that the company earned $9.3 billion on Chinese holiday "Singles' Day." The company also said it is currently exploring a potential initial public offering for Alipay, the world's largest payment processor with more than $150 billion in transactions last year. That puts the division ahead of only PayPal, which will soon be spun off from eBay Inc. (Nasdaq: EBAY). The company also received a boost on reports that it is courting Apple Inc. (Nasdaq: AAPL) to bring its payment processing unit, Apple Pay, to China.
Merger Mania: It looks like Yahoo Inc. (Nasdaq: YHOO) is finally putting some of its money from the Alibaba IPO to work. Yesterday, the company announced plans to purchase online advertising firm Brightroll for $640 million. The news comes just a day after a Reuters report emerged that two of the company's top 10 shareholders have been disappointed by CEO Marissa Mayer's efforts to turn around the company. The report indicated there has been a greater effort in recent months to push Yahoo to reach an agreement with AOL Inc. (NYSE:AOL).
Oil Prices Today: Crude oil prices fell again as global supplies continue to outpace demand. December futures of WTI crude, priced in New York City, slipped to $77.30 per barrel. Meanwhile, Brent prices, the global benchmark priced in London, dropped more 0.5% to settle at $81.20 per barrel. With Brent prices at a four-year low, all eyes turn to the November 27 Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria. During the meeting, the producing nations will look to forge an agreement, settle differences, and possibly cut production by 500,000 barrels per day to stave off a continued downturn in prices.
Earnings Reports: Stay tuned for earnings reports from Macy's Inc. (NYSE: M), Encana Corp. (NYSE: ECA), Energizer Holdings Inc. (NYSE: ENR), ADT Corp. (NYSE: ADT), Pinnacle Foods Inc. (NYSE: PF), Canadian Solar Inc. (Nasdaq: CSIQ), SeaWorld Entertainment Inc. (NYSE: SEAS), Cisco Systems Inc. (Nasdaq: CSCO), and J.C. Penney Co. Inc. (NYSE: JCP)
Philadelphia Federal Reserve Bank President Charles Plosser speaks at 3 a.m.
MBA Purchase Applications at 7 a.m.
Atlanta Fed Business Inflation Expectations at 10 a.m.
Wholesale Trade at 10 a.m.
4-Week Bill Auction at 11:30 a.m.
52-Week Bill Auction at 11:30 a.m.
10-Yr Note Auction at 1 p.m.
Minneapolis Federal Reserve Bank President Narayana Kocherlakota speaks at 1:30 p.m.
Money Morning Tip of the Day: The excitement surrounding Chinese e-commerce giant Alibaba rightfully has the investing world abuzz. But as enthusiasm builds for online payments, there's one iconic vendor that is sounding the death knell: Sears Holding Corp. (Nasdaq: SHLD). The beleaguered department store has posted billions in cumulative losses since its troubles began in 2011, and what's more worrying is that it's considered selling 200 to 300 of its 712 company-owned stores to a real estate investment trust (REIT). On news of the possible REIT sale, shares jumped. But the news is hardly as encouraging as the 31% lift it got. If you're a SHLD shareholder, our Money Morning Special Contributor Michael E. Lewitt tells you what you need to do now...
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.