US open: Stocks open at record highs as investors eye Fed speeches

Following the Presidents Day holiday, US stocks opened at record highs on Tuesday buoyed by retail stocks, while the dollar strengthened as investors eyed key economic data and speeches by Federal Reserve presidents.

On opening, the Dow Jones Industrial Average, Nasdaq and S&P 500 all added 0.2%.

At 1542 GMT, the Dow was up 0.58% to 20,744.27, the Nasdaq rose 0.43% to 5,863.91 and the S&P 500 added 0.57% to 2,364.59.

Meanwhile, oil prices advanced with West Texas Intermediate up 1.31% to $54.75 per barrel and Brent crude 1.45% firmer to $57.01.

In currency markets, the dollar was up 0.19% against the pound to 0.8039, rose 0.71% versus the euro to 0.9488 and gained 0.4% against the yen to 113.55.

Philadelphia Fed president Patrick Harker told Market News International that he would support an interest hike in March if there was evidence of price pressures on inflation and in the employment costs index.

While Minneapolis Fed president Neel Kashkari said that the labour market has “more to run” suggesting that interest rates should not be raised quickly, Reuters reported.

Craig Erlam, senior market analyst at Oanda, said that the dollar was boosted by an increase in hawkish commentary from Fed officials which has forced investors to re-evaluate their expectations for the March meeting.

“Expectations for a rate hike at the meeting remain quite low but they have picked up considerably and recent comments from Patrick Harker who claimed a rate hike in March is not off the table - echoing similar views of other officials including chair Janet Yellen last week – are driving these moves.”

San Francisco Fed President John Williams is due to speak in Idaho at 2030 GMT.

In corporate news, Home Depot was up 0.92% after its fourth-quarter sales and earnings came in ahead of analysts’ expectations.

Macy’s rose 0.84% after the department store beat earnings expectations but fell short on revenue and will cut its store count.

Wal-Mart Stores added 2.78% after it topped fourth quarter earnings forecasts, which was the retail behemoth's best in more than four years.

Apple rose 0.54% after Morgan Stanley reiterated the technology giant’s overweight rating but raised the stock price target to $154.

On the down side, US-listed shares of HSBC slumped 5.56% after the bank delivered a reported profit before tax for 2016 of $7.1bn that was down 62% on the prior year.

Kraft Heinz shares were down 3.27% in pre-market trade as investors in the US got their first chance to react to news over the weekend that it has abandoned its takeover plans for London-list consumer goods group Unilever, whose US-listed shares tanked 8%.

On the data front, Markit’s flash US composite output index – which measures activity in the services and manufacturing sectors – fell to 54.3 in February from 55.8 the previous month. Still, this was above the 50 mark that separates contraction from expansion for the twelfth consecutive month.

Meanwhile, the index for services business activity declined to a two-month low of 53.9 from 55.6 in January, undershooting consensus estimates for a reading of 55.8.The manufacturing index printed at 54.3 from 55.0 the month before, missing expectations for a reading of 55.3.