US stocks to open higher ahead of CPI and durable goods data
US stocks paused on Wednesday as some of the larger names including Apple and Hewlett Packard dragged the S&P 500 and Nasdaq 100 lower while firmer oil prices gave the Dow Jones a tiny boost.
Hewlett Packard attributed some of the blame for missed earnings to the strengthening of the US dollar in the past few months and brought other prominent tech names with large international businesses down with it including Apple, IBM and Microsoft.
Apple dropped 2.6% on Wednesday as profit-taking kicked in after a very strong run into a market cap of over $775bn since its record-breaking 4th quarter earnings. The success of the iPhone means Apple is deserving of its strong performance. Given the current high price of the stock and associated high expectations; the upcoming release of the Apple Watch in April may bring with it bigger risks than rewards for shareholders.
Since Janet Yellen’s testimony on Tuesday the US dollar has been under pressure, while US treasuries and commodities have been in demand.
Despite a build in US oil inventories, oil prices finished the day higher in a sign that the weakness of the US dollar is beginning to play a bigger role while higher inventories at the current levels are starting to get priced in.
CPI figures today could exacerbate the theme of a weaker dollar given the expectations for a further drop in headline prices. A further fall to -0.6% month-over-month will only push out Janet Yellen’s timeframe for the first rate hike as the Fed waits for signs inflation is going to pick up.
Durable Goods is expected to see some improvement in January to grow 1.7%, having fallen throughout the fourth quarter of 2014.
Gap, JC Penney, Kohl’s and Herbalife all report earnings on Thursday.
Futures suggest the:
S&P 500 will open 2 points higher at 2,115 with the
Dow Jones expected to open 6 points higher at 18,230 and the
Nasdaq 100 5 points higher at 4,445.
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