US open: Stocks retreat following previous Trump gains

US stocks retreated after previous gains following Donald Trump’s election victory, as investors’ confidence of a rate hike from the Federal Reserve grew.

The Dow Jones Industrial Average dropped 0.23% to 18,879.54 points and the S&P 500 decreased by 0.06% to 2,179.02 points, but the Nasdaq edged higher by 0.41% to 5,297.10 points at 1541 GMT.

On the data front, the US producer price index was flat in October on weak services, following September’s 0.3% increase, and below the 0.3% consensus forecast.

In the year to October, the index increased 0.8%, the biggest gain since December 2014, following a 0.7% rise last month, and below the 1.2% last year.

While US industrial production also remained unchanged in October following a 0.2% drop in September, economists had expected output to rise 0.2%.

September’s figure was revised down from a previously-reported 0.1% increase. Manufacturing output increased 0.2%, while mining climbed 2.1%, its biggest rise since March 2014.

Chris Williamson, chief business economist at IHS Markit, said even though factories stepped up production less than expected in October, the shortfall is unlikely to dissuade the Fed hiking interest rates in December.

“The resilient economic growth at the start of the fourth quarter, a strengthening labour market and signs of inflation creeping higher mean the Fed looks almost certain to hike interest rates again on 14 December. Inflation rose to a near two-year high of 1.5% in September and financial markets are pricing in further upward pressure on prices resulting from the stimulative policies likely to be introduced by president-elect Donald Trump.

He said he expected rates to gradually rise to 1.25% by the end of 2017 as the Fed tightens policy in response to a steady acceleration of economic growth and rising inflation, however it remains to be seen how businesses and consumers will react to the surprise election result.

In commodity markets, gold on Comex rose 0.27% to $1,227.80 per troy ounce at 1443 GMT.

Oil prices slipped as the head of the International Energy Agency said that global oil demand would not peak before 2040, despite promises made at the climate change summit in Paris last year to cap greenhouse gas emissions.

Brent crude fell 0.64% to $46.65 per barrel and West Texas Intermediate was down 0.79% to $45.45 at 1441 GMT.

In currency markets, the dollar was down 0.03% against the yen to 109.17, but was 0.1% higher verses sterling to 0.8038 and rose 0.18% against the euro to 0.9343.

In corporate news, shares in Lowe’s Companies dropped 1.87% as the DIY store chain’s third quarter results missed expectations.

Revenue rose 9.6% to $15.74bn, compared to last year but below the consensus forecast of $15.86bn, while it earned 88 cents, down from the 96 cents estimated.

Whereas Target’s shares soared 7.94% as the retailer topped expectations. In the third quarter it earned $1.04 per share, on sales of $16.44bn, ahead of expectations of 83 cents on $16.3bn. Last year Target earned 86 cents on revenue of $17.61bn.

Elsewhere, LinkedIn’s shares were up 1.24% following a report that Microsoft has offered concessions to EU regulators to get the okay for its $26bn bid for the social network.

Later on the Fed’s Patrick Harker, a non-voting member, is due to speak in Philadelphia on the purpose of the central bank at 2230 GMT.