The Snapchat logo is seen on a banner outside the New York Stock Exchange (NYSE) in New York City, U.S., November 16, 2016. REUTERS/Brendan McDermid
NEW YORK: US stocks edged up at the open on Thursday after Federal Reserve chair Janet Yellen said the central bank could raise interest rates “relatively soon”.
Yellen is scheduled to testify on the economic outlook before the congressional Joint Economic Committee at 10am ET (1500 GMT).
Investors, however, will be more interested in her view on the economic impact of President-elect Donald Trump’s proposed fiscal policies.
US stocks had been on a tear since Trump’s surprise victory last week, with the Dow closing at a record level four days in a row.
The rally lost steam this week with investors seeking clarity on Trump’s campaign promises and bracing for higher interest rates.
Trump’s proposals to cut taxes and raise infrastructure spending are expected to boost economic activity and inflation, raising the possibility of more interest rate hikes. That sent the dollar index to a near 14-year high.
“The market is still adjusting to the reality of the elections and what that might mean,” said Eddie Perkin, chief equity investment officer at Eaton Vance.
“I think the market has gotten a little bit ahead of itself - there is an expectation that inflation is coming, that rate hikes are coming, but I’m not completely convinced of that.”
Perkin said the US$1 trillion infrastructure spending proposed by Trump may be toned down by Congress and will be spread out over several years.
At 9:35am ET the Dow Jones industrial average was up 8.97 points, or 0.05%, at 18,877.11.
The S&P 500 was up 2.54 points, or 0.12%, at 2,179.48.
The Nasdaq Composite index was up 5.54 points, or 0.1%, at 5,300.12.
Nine of the 11 major S&P 500 sectors were higher, with the energy index’s 1.07% rise leading the advancers.
Oil prices rose about 1.5% as expectations of an Opec deal to limit production outweighed evidence of global oversupply and rising inventories.
Oil major Exxon was up 0.9% and Chevron 1.2%. The stocks were among the biggest influences on the Dow and the S&P 500.
A rate hike at the Fed’s meeting next month is a foregone conclusion, according to several analysts. Traders are pricing in an 81% chance of a December move, according to Thomson Reuters data.
US consumer prices recorded their biggest increase in six months in October, data showed. The Consumer Price Index increased 0.4% last month after rising 0.3% in September.
In other data, US housing starts surged to a more than nine-year high in October and the number of Americans filing for unemployment benefits fell to a 43-year low last week.
Cisco fell 5.6% to US$29.83 after its current-quarter forecast fell below analysts’ estimates.
Wal-Mart Stores fell 3.5% to US$69.08 after the world’s largest retailer reported lower-than-expected quarterly comparable sales.
Advancing issues outnumbered decliners on the NYSE by 1,709 to 873. On the Nasdaq, 1,327 issues rose and 877 fell.
The S&P 500 index showed eight new 52-week highs and one new low, while the Nasdaq recorded 65 new highs and eight new lows. - Reuters
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