US open: Stocks hesitantly higher on weak inflation data

Stocks opened higher in the US for the first time in days on Friday, with investors brushing off much of the geopolitical concern seen on Thursday, and instead focussing on weak inflation data.

Nasdaq 100

20,513.36

07:25 20/11/24

-0.83%

-171.23

That weak data was seen as an encouraging sign that the Federal Reserve would keep interest rates lower for an extended period of time.

At 1506 BST, the Dow Jones Industrial Average was up 0.24% at 21,896.75, the S&P 500 added 0.2% to 2,443.07 and the Nasdaq Composite was ahead 0.4% at 6,244.32.

According to the Labor Department, the consumer price index was up only 0.1% in July, missing expectations for a 0.2% improvement in the reading.

“The Federal Reserve’s recent concerns over sluggish inflation were confirmed today, as below-forecast results compounded a difficult week for the US economy,” noted UFX.com managing director Dennis de Jong.

“Despite unemployment falling to a 16-year low last week, this has been offset by disappointing wage growth, economic uncertainty following President Trump’s ongoing feud with North Korea and now subdued inflation in July.

“For all the time that inflation remains at 1.7%, below the 2% target, Fed Chair Janet Yellen is unlikely to increase interest rates, and that means there’s a possibility that the benchmark for borrowing rates will not be increased again this year.”

Market expectations for a rate hike in December fell on the release of inflation data, with only 38% of investors expecting the Fed to raise rates at that point, according to CME Group’s FedWatch.

On Thursday, US equities suffered their worst session in three months as tensions continued to sizzle between Washington and Pyongyang.

President Donald Trump continued his war of words overnight, tweeting that military solutions were now “fully in place … locked and loaded, should North Korea act unwisely.”

Trump was widely criticised earlier in the week for his comments that North Korea would face “fire and fury” in response to any aggression towards the US - comments which he later described on Thursday as “not tough enough”.

The CBOE Volatility Index, which purports to measure the level of fear in the market, continued to creep up before Wall Street opened.

It reached a level of 16.9 on Friday morning - its highest since the presidential election last year.

On the corporate front, social media firm Snap missed expectations, missing revenue forecasts and posting a bigger-than-expected loss, sending its stock sliding.

Chipmaker Nvidia was also on the back foot, as investors looked past its positive earnings on Thursday evening and instead honed in on its server-chip business expectations, which a number of market watchers considered were too high.

Retailer JCPenney tumbled after it reported a larger-than-expected second quarter loss, while more upmarket department store chain Nordstrom was ahead in early trading after it beat earnings expectations in a release late on Thursday.

Dow Jones - Risers

Apple Inc. (AAPL) $157.94 1.69%
Cisco Systems Inc. (CSCO) $31.30 0.95%
Merck & Co. Inc. (MRK) $62.66 0.77%
Home Depot Inc. (HD) $154.99 0.72%
McDonald's Corp. (MCD) $157.73 0.71%
Johnson & Johnson (JNJ) $133.80 0.53%
Unitedhealth Group Inc. (UNH) $193.59 0.53%
Visa Inc. (V) $99.89 0.41%
Microsoft Corp. (MSFT) $71.67 0.36%
Caterpillar Inc. (CAT) $113.45 0.27%