US open: Stocks fall after record highs as investors eye earnings; inflation data in focus

US stocks fell in early trade on Monday following another record close at the end of last week as the dollar rebounded, with investors digesting the latest inflation and spending data ahead of a busy week.

At 1530 GMT, the Dow Jones Industrial Average was down 0.2% to 26,566.90, while the S&P 500 and the Nasdaq were off 0.3% to 2,865.74 and 7,489.06, respectively.

Figures out earlier showed consumer spending rose 0.4% in December following an upwardly-revised 0.8% increase the month before, marking the biggest rise in household spending since 2011 and in line with expectations.

However, this came at the expense of the savings rate, as total savings fell to $351.6bn from $365.1bn a month earlier. The savings rate dropped to 2.4% from 2.5% in November, marking the the lowest since September 2005.

Elsewhere, the personal consumption expenditures index nudged up 0.1% last month, while the core rate that excludes food and energy was up 0.2%. On the year, the PCE index fell to 1.7% from 1.8%, while the core index was flat at 1.5%.

Spreadex analyst Connor Campbell said the inflation data was "solid". He pointed out that even though at 0.2% the latest core PCE price index still leaves the annual rate below the Federal Reserve’s 2% target, the greenback has continued its comeback.

"From Tuesday onwards the week has a bombardment of economic news for investors to try and parse, including Donald Trump’s State of the Union address, the first Federal Reserve meeting of 2018, the global manufacturing PMIs, a non-farm Friday and a string of updates from the world’s biggest companies, including Apple, Alphabet, Amazon and Facebook. That’s a lot to process, especially for the dollar, which may face a battle to hold onto its fragile turnaround."

In corporate news, Dr Pepper Snapple surged 25% after agreeing to merge with Keurig Green Mountain to form a beverage company with annual revenue of around $11bn.

Avon Products rallied following a report that activist investors are joining together to look for a buyer, while fuel cell company Ballard Power Systems gained ground following a positive outlook for 2017 results.

Aerospace and defence contractor Lockheed Martin advanced as its fourth-quarter revenue beat expectations and the company said profit will rise in 2018.

Abeona Therapeutics racked up strong gains as its cell therapy received a regenerative medicine advanced therapy designation from the Food and Drug Administration.

On the downside, shares in Apple dropped following reports that the technology giant could cut production of its iPhone X.

Marathon Petroleum gushed lower despite announcing a 15% dividend increase to 46 cents per share, while Wynn Resorts was in the red again following a report that chairman and chief executive Steve Wynn is facing sexual assault accusations.