US open: Market little changed as US producer prices rise

US stocks were flat on Tuesday, amid a muted market reaction to inflation data and better-than expected-data from Germany.

Just before 10:00 in New York, the Dow Jones Industrial Average was 4.43 points down at 17,643.32 , while the S&P 500 gained 3.15 points to 2,044.47 and the Nasdaq was 4.21 points up at 4,218.000

US producer prices rose in October, largely thanks to a spike in an erratic category that measures profit margins for wholesalers and retailers.

The 0.2% month-on-month rise in producer prices and 0.4% month-on-month gain in prices were both larger than the consensus forecasts of -0.1% and +0.1 respectively and although headline producer price index (PPI) inflation fell to 1.5% from 1.6%, core PPI inflation rose from 1.6% to 1.8%.

“The question is whether this is temporary as wholesalers and retailers just haven’t got round to cutting their prices yet, or whether they are hoping that the strength of demand will mean they don’t need to,” said Paul Dales, senior US economist at Capital Economics.

“Our feeling is that a lot of the widening will be reversed in the coming months, although the strength of demand will mean that a more gradual and modest widening in margins takes place over the next year.”

A survey from ZEW showed improved German sentiment on the economy, while Japanese Prime Minister Shinzo Abe revealed plans to call a snap election and to delay a planned sales-tax hike by 18 months, after data showed Monday the country fell into a recession.

Urban Outfitters fell after announcing late on Monday that its earnings fell 33% during the three months to October, while Home Depot slid slightly after reaffirming guidance for 2014 and announcing earnings per share of $1.15 in the third quarter.

Dick’s Sporting Goods retreated after its profit dipped due to weakness in its gold and hunting segments, while Manchester United was largely stable despite posting lower revenues across all segments for its September quarter.

The 20-time English champions’ revenue suffered as the club failed to qualify for the Champions League for the first time since the 1995-96 season.

The dollar fell against the pound, the yen and the euro, while gold futures advanced to $1,197.30.

The yield on the 10-year US Treasury note fell one basis point to 2.33%, while the yield on the 30-year note shed two basis points to 3.05% and the yield on the five-year treasuries dropped one basis point to 1.61%.

The prices of West Texas intermediate and Brent crude continued to fall, with both losing just under a percentage point and trading at $74.9 and $78.5 a barrel respectively.