US open: Markets fluctuate amid disappointing inflation and housing data

US stocks fluctuated on Wednesday amid a disappointing inflation report and weaker-than-expected housing data.

Just before 10:00 in New York, the Dow Jones Industrial Average was down 0.19%, while the S&P 500 and the Nasdaq rose 0.16% and 0.11% respectively.

US producer prices fell 0.8% month-on-month in January, driven by a 24% drop in gasoline prices from the previous month.

The fall took the annual producer price index inflation down to 0.0% from 1.1%, with the index having been as high as 1.6% in January.

“The stronger dollar appears to be having some impact too, with core final demand goods prices falling by 0.2% month-on-month,” said Paul Ashworth, chief US economist at Capital Economics.

“As with the drop in energy prices, however, the impact of the stronger dollar on price inflation will be temporary.

“Given that the Fed is targeting the inflation rate in one or two years' time rather than the current rate, this is not a reason to delay the first interest rate hike, which we expect in June.”

Meanwhile, US housing starts fell by 2% month-on-month in January to reach an annualised rate of 1.065m, according to the US Department of Commerce.

The consensus forecast had been for a decline of 1.7%.

However, that was more than compensated for by an upwards revision to the previous month’s data, which now shows a rise of 7.1% on the month instead of the preliminary estimate of 4.4%.

The Fed at 19:00 GMT publishes minutes of its meeting on 27-28 January when the US central bank signalled an interest rate hike in June.

“So long as the Fed minutes continue to imply that the Fed will look past the low levels of headline inflation as transitory, expectations should be maintained for a mid-year rate hike,” said CMC Markets analyst Jasper Lawler.

“The minutes may risk sounding more dovish if slack in the labour market or the strong US dollar are highlighted as big concerns in the face of strong jobs numbers.”

In corporate news, Hilton Worldwide Holdings fell 1.33% after announcing before the bell that its fourth quarter adjusted earnings slightly missed estimates, while Marriot fell 0.92% ahead of its quarterly results.

Actavis fell 0.70% despite raising its profit guidance for 2015, while Rackspace Hosting rose 2.67% after announcing late on Tuesday that its profit had risen sharply.

Oil prices tumbled, with Brent crude losing 2.4% to just over $61 a barrel, while West Texas Intermediate lost 2.6% and was trading just above $52 a barrel.

Gold futures slid 0.05% to $1,208.00p, while the dollar lost almost 0.5% against the pound but gained 0.2% against the euro and was largely unchanged against the yen.