US open: Stocks flat ahead of Fed, investors in Treasuries play it safe

A weaker-than-expected reading on US consumer prices sent US government bonds sharply higher, as the data sowed doubts about the likely pace of central bank rate hikes later in the year just hours before it was expected to raise them for a second time in 2017.

At 1532 BST, the Dow Jones Industrial Average was exactly flat at 21,329, while the S&P 500 was off by 0.08% to 2,438 and the Nasdaq Composite was lower by 0.04% at 6218.

With economists almost certain interest rates would be lifted by another 25 basis points to between 1.00 and 1.25%, the focus was expected to be on what Fed Chair Janet Yellen has to say about any future hikes, especially on the heels of Wednesday's CPI data.

The headline rate of CPI dipped by 0.1% in May when compared to the month before, while the annual pace of advance declined from 2.2% in April to 1.9% for May, according to the Bureau of Labor Statistics.

At an annual rate of 1.7% so-called 'core' prices also undershot forecasts for a gain of 1.9%.

Thursday's figures led Blerina Uruci at Barclays Research to tell clients: "Today's soft inflation report reduces our conviction that the Fed will be able to raise rates for a third time in December. While we maintain a December rate increase in our baseline, it is conditional on evidence that inflation is resuming its firming trend."

On a related note, in an interview with Marketwatch former Minneapolis Fed chief Narayana Kocherlakota said he did not believe the US jobs market was at so-called full employment.

In parallel, the Department of Commerce announced that US retail sales volumes fell by 0.3% on the month (consensus: 0.0%).

However, upwards revisions to data for prior months helped to offset the weakness.

Against that backdrop, the yield on the benchmark 10-year US Treasury note fell sharply, by nine basis points to 2.12%.

In corporate news, shares in electric car maker Tesla were higher following news that its Model X SUV has been given a five-star safety rating and after Ron Baron, the founder of Baron Capital, told CNBC the stock could jump by more than 50% by next year.

Altice, the broadband provider, set a price range of between $27 to $31 for the initial public offering of its shares.

Dow Jones - Risers

Travelers Company Inc. (TRV) $127.49 1.10%
Johnson & Johnson (JNJ) $132.90 0.67%
Visa Inc. (V) $95.69 0.64%
Unitedhealth Group Inc. (UNH) $182.17 0.62%
Boeing Co. (BA) $191.95 0.45%
3M Co. (MMM) $209.94 0.40%
Coca-Cola Co. (KO) $45.21 0.39%
Microsoft Corp. (MSFT) $70.89 0.34%
General Electric Co. (GE) $28.52 0.26%
McDonald's Corp. (MCD) $150.18 0.24%

Dow Jones - Fallers

Chevron Corp. (CVX) $106.85 -1.18%
JP Morgan Chase & Co. (JPM) $86.52 -0.86%
American Express Co. (AXP) $80.00 -0.74%
Exxon Mobil Corp. (XOM) $82.39 -0.69%
Goldman Sachs Group Inc. (GS) $222.97 -0.55%
E.I. du Pont de Nemours and Co. (DD) $83.51 -0.44%
Walt Disney Co. (DIS) $106.09 -0.44%
Caterpillar Inc. (CAT) $105.46 -0.27%
Intel Corp. (INTC) $35.83 -0.15%
Pfizer Inc. (PFE) $32.55 -0.11%