US open: Stocks largely unchanged as investors mull potential March rate hike

US equity markets struggled to find direction on Thursday, unable to maintain yesterday's record highs as investors mulled a potential interest rate hike by the Federal Reserve in March and the dollar weakened.

The Dow Jones Industrial Average and the Nasdaq were both flat at 20,605.61 and 5,819.17, respectively and the S&P 500 was down 0.15% to 2,345.73 at 1519 GMT.

Meanwhile, oil prices were mixed, with West Texas Intermediate up 0.18% to $53.21 per barrel and Brent crude down 0.05% to $55.72.

The main indices gained on Wednesday after Donald Trump said “massive” tax plans would be announced in the “not-too-distant future”. In a meeting with retail executives, the US President said his plans would lower rates "substantially" for both individuals and businesses.

Jasper Lawler, senior market analyst at London Capital Group, said: “If investors were looking for signals of extreme sentiment, perhaps they needn’t look any further than the US president himself. Trump tweeted about the confidence and optimism behind the new high in the stock market on Thursday, perhaps incidentally calling a short-term top in doing so."

While Craig Erlam, senior market analyst at Oanda, said rate hike expectations have become much more hawkish over the last couple of days, with expectations of a March hike rising to 31% on Wednesday from around 13%, and chances of a hike in May now above 50%.

Lawler added: “Odds of a US rate rise have improved to about 50/50 since Fed Chair Janet Yellen’s testimony to congress. Nonetheless, the dollar looks a little top heavy and has rolled over in the past two days. Vice Chair Stanley Fischer was on the wires on Thursday, stating the US economy is headed toward the Fed’s 2% target. US rate-setters haven’t quite dispelled the idea that they are in wait-and-see mode over Trump’s fiscal plans.

“So far so 2016; the Fed hikes in December, skips March, market volatility spoils plans to go in June, there are elections in autumn and another year has gone by.”

In currency markets, the dollar was down 0.26% against the pound to 0.8003, fell 0.57% versus the euro to 0.9380 and was 0.59% weaker against the yen to 113.49.

In corporate news, Cisco Systems was 3.24% higher after it reported better-than-expected results late on Wednesday.

On the down side, media company CBS Corp shaved off 1.27% and food giant Kraft Heinz was 4.29% weaker after beating analysts’ expectations.

Dean Foods dipped 8.02% after quarterly profit missed expectations and it posted a downbeat outlook for 2017.

Wendy’s fell 5.72% after the fast food company’s fourth quarter sales rose but profit fell.

On the data front, US initial jobless claims were up 5,000 to 239,00 from the previous week’s unrevised level. Analysts had expected claims to jump to 245,000. The four-week moving average came in at 245,250, up 500 from the previous week’s average, which was revised up from 244,250.

US housing starts fell 2.6% in January to a seasonally-adjusted annual rate of 1.25m from December’s rate, which was revised up to 1.28m from 1.23m. Analysts had expected starts to come in at 1.23m. On the year, housing starts were up 10.5%.

The Philadelphia Fed manufacturing index surged to 43.3 from 23.6 in January, remaining in positive territory for seven consecutive months and smashing expectations for a decline to 18.0. Meanwhile, the index for current new orders increased 12 points from January, while the shipments index was up eight points.