US open: Stocks little changed as inflation hits Fed target

US stocks were little changed on Friday after data revealed that inflation hit the Federal Reserve’s target for the first time in nearly five years.

At 1554 GMT, the Dow Jones Industrial Average declined 0.18% to 20,691.94, while the S&P 500 and Nasdaq were flat at 2,367.60 and 5,917.47, respectively.

Meanwhile, oil prices retreated, with West Texas Intermediate down 0.27% to $50.21 a barrel and Brent crude 0.49% to $52.70.

The US personal consumption expenditure (PCE) deflator rose to 2.1% year-on-year in February, exceeding the Fed’s 2% target for the first time since April 2012, and the core PCE deflator rose 1.8%.

This suggested that the Fed may continue with raising interest rates this year, as in early March when it hiked rates by 25 basis points to between 0.75% and 1% due to an improved economy and higher inflation.

Private consumption was up 0.1% in February and fell 0.1% in real terms, while personal income gained 0.4% and real disposable personal income added 0.2%, lifting its year-on-year rise to 2.3%. The rate of personal savings increased 5.6%.

Craig Erlam, senior market analyst at Oanda, said that the PCE price index is the Fed’s preferred measure of inflation and the increase “would surely increase the possibility of a rate hike in June, especially with the Fed having to consider the possibility of substantial fiscal stimulus towards the end of the year”.

New York Fed president William Dudley told Bloomberg earlier that “a couple more hikes this year seems reasonable” and if the US economy was stronger than expected then the Fed could “do a little more, and if it’s weaker than we expect, we could do a little less”.

Fed presidents James Bullard and Neel Kashkari, the only official to dissent on the hike in March, will also speak later in the day.

In other economic data, the Chicago purchasing managers’ index rose to 57.7 in March from 57.4 the month earlier - a reading above 50 indicates expansion.

The University of Michigan consumer sentiment index was revised to 96.9 in March, from a preliminary reading of 97.6 and from 96.3 in February.

In currency markets, the dollar fell against its main rivals but was on track for its first weekly gain since earlier this month.

The greenback was flat against the pound at 0.8014, was down 0.1% versus the euro to 0.9359 and 0.32% weaker against the yen to 111.56.

In corporate news, Amazon rose 1.06% to a third straight record high after analysts at Loop Capital initiated coverage on the online retail giant to ‘buy’ and set a $1,100 target price.

Blackberry surged 14.46% after the technology company cut losses and said that it anticipates that it will be profitable on an earnings per share basis in 2018.

Akari Therapeutics jumped 21.26% after one of its treatments for a rare and chronic blood disorder was granted ‘fast track designation’ by the US Food and Drug Administration.

FMC Corp climbed 14.85% after DuPont said it will sell part of its crop protection business to the company for $1.2bn and for FMC’s health and nutrition business.