US open: Mixed start to trading as Powell testimony continues
Wall Street trading began with some mixed results on Tuesday, as optimism over Sino-US trade relations faded and investors eyed Federal Reserve chairman Jerome Powell's testimony before the US Senate.
At 1530 GMT, the Dow Jones Industrial Average was down 0.17% to 26,048.05, while the S&P 500 had eeked out a 0.02% gain to 2,796.76 and the Nasdaq was 0.05% firmer at 7,558.27.
The Dow opened 43 points lower ahead of testimony from Federal Reserve chairman Jerome Powell on the state of the US economy.
Powell said the economy was healthy but has been sending "conflicting signals" that have led to the Fed's "patient approach" towards future interest rates changes.
"While we view current economic conditions as healthy and the economic outlook as favourable, over the past few months we have seen some crosscurrents and conflicting signals," Powell said.
On the data front, new housing starts in the States fell sharply at the end of 2018, amid broad-based weakness, but some of the report's details pointed at strength ahead.
According to the Department of Commerce, the annualised pace of starts dropped by 11.2% month-on-month to reach 1.078m and was left standing 10.9% beneath their year-ago level.
The consensus forecast had been for a reading of 1.255m.
On the other hand, housing permits, which are considered by many to be a good lead indicator for activity, increased by 0.3% versus November to reach an annualised clip of 1.322m.
Elsewhere, US house price growth eased back in December, according to the S&P/Case-Shiller National Home Price Index.
The 20-city index was up 4.2% on the year, slowing down from 4.6% growth the month before and missing expectations for 4.5% growth.
Las Vegas, Phoenix and Atlanta reported the highest year-over-year gains among the 20 cities. Las Vegas led the way with an 11.4% year-over-year price increase, followed by Phoenix with an 8% rise and Atlanta with a 5.9% increase.
David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said: "The annual rate of price increases continues to fall. Even at the reduced pace of 4.7% per year, home prices continue to outpace wage gains of 3.5% to 4% and inflation of about 2%. A decline in interest rates in the fourth quarter was not enough to offset the impact of rising prices on home sales.
Lastly, the Conference Board's Consumer Confidence Index increased in February, following a decline in January.
The Index now stands at 131.4, up from the 121.7 recorded a month earlier.
"Consumer Confidence rebounded in February, following three months of consecutive declines," said Lynn Franco, senior director of Economic Indicators at The Conference Board.
"The Present Situation Index improved, as consumers continue to view both business and labour market conditions favourably. Expectations, which had been negatively impacted in recent months by financial market volatility and the government shutdown, recovered in February. Looking ahead, consumers expect the economy to continue expanding. However, according to The Conference Board's economic forecasts, the pace of expansion is expected to moderate in 2019."
In corporate news, shares in electric car maker Tesla were down 1.46% after the Securities and Exchange Commission asked a federal judge to hold chief executive Elon Musk in contempt over a tweet he made last week.
On 19 February, Musk tweeted: "Tesla made 0 cars in 2011, but will make around 500k in 2019. Just a few hours later, however, he tweeted again: "Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k."
RBC Capital Markets said: "The fact that he issued a follow-up, correcting tweet (written with Tesla's securities counsel, which itself implies that counsel may have thought the first tweet inaccurate or problematic) may take the harshest potential outcome off the table. We do not know how long this legal episode could last, but we think it’s likely to be an overhang on the stock."
Elsewhere, Home Depot was down 2.6% in pre-market trade as the retailer's fourth-quarter earnings and sales fell short of analysts' expectations, while Caterpillar was down 2.43% after being hit with a double-downgrade by analysts over at UBS.
Macy's shares were up 2.34% after revealing it would cut 100 management jobs as it looks to trim costs and improve profitability amid declining sales.