US open: Stocks waver ahead of Trump inauguration, Yellen speech

Ahead of Donald Trump’s inauguration, US stocks wavered on Thursday, after a torrent of economic data and earnings from Bank of New York Mellon, with investors also eyeing another speech from Federal Reserve chair Janet Yellen.

The Dow Jones Industrial Average and the S&P 500 were both down 0.15% to 19,774.40 and 2,268.46 respectively, and the Nasdaq flat at 5,558.97 at 1510 GMT.

Meanwhile, oil prices advanced ahead of the Energy Information Administration’s crude oil stockpiles report at 1600 GMT.

Brent crude was up 1.08% higher at $54.51 and West Texas Intermediate was higher 1.14% to $51.67 a barrel.

In currency markets, the dollar was down 0.32% versus the pound to 0.8114, up 0.21% against the euro to 0.9428 and gained 0.55% versus the yen to 115.28.

Michael Hewson, chief market analyst at CMC Markets, said: “US markets have continued to trade cautiously ahead of tomorrow’s inauguration of Donald Trump as US president. The inability to retest the recent highs has once again seen investors step back as we saw a fairly subdued open.

“Last night’s speech by Fed chief Janet Yellen about the prospect of further US rate rises has also seen US yields push up to one week highs, while giving the dollar a brief boost … While last night’s comments could be considered hawkish they haven’t really shifted the dial that much in terms of the expectations about the number of rate rises we might get this year, and while the Fed may well want to raise rates more than once, events could well contrive to thwart that ambition, given tomorrow’s inauguration of Trump.”

Elsewhere, the European Central Bank stood pat on interest rates and the asset purchase programme, while ECB president Mario Draghi struck a dovish tone on inflation, saying there were no signs yet of a convincing upward trend in underlying consumer prices.

Interest rates on main refinancing operations, the marginal lending facility and the deposit facility were left at 0.0%, 0.25% and -0.40%, respectively, while asset purchases will continue at a monthly pace of €80bn until the end of March before tapering to €60bn a month until the end of December.

On the US data front, initial jobless claims fell by 15,000 to 234,000 for the week ended 14 January, from the revised up 249,000 the previous week. The consensus forecast was for a rise to 251,000.

Housing starts were up 11.3% in December from November to a seasonally-adjusted annual rate of 1.226m, beating expectations for a smaller increase to 1.2m. On the year, starts were up 5.7%. November's starts were revised up to 1.10m from the previously reported 1.09m.

The Philadelphia Federal Reserve's manufacturing survey index for current activity rose to 23.6 from a downwardly-revised 19.7 in December, comfortably beating expectations for a drop to 15.8.

On the corporate front, Bank of New York Mellon was down 2.47% despite reporting that third quarter profit rose 29% to $822m. The bank earned 77 cents per share in line with expectations, while revenue rose 1.75% to $37.9bn, but was below forecast of £3.85bn.

Union Pacific Corp was up 3.57% as it said that fourth quarter profit grew 2% to $1.14bn. It earned £1.39 per share, which was above the $1.34 expected, while revenue fell 1% to $5.17bn.

Netflix was 4.92% higher following the release of better-than-expected quarterly results late on Wednesday, as the streaming company said it added 7.05m subscribers in the fourth quarter.

American Express and IBM earnings due after the close and Fed chair Janet Yellen at is due to speak at Stanford University later in the day.