US open: stocks retreat as investors await Yellen speech, dollar falls
US equity markets retreated on Friday as investors awaited a key speech by Federal Reserve chair Janet Yellen and a slew of comments by other central bank officials, while the dollar fell.
The Dow slid back passed 21,000 after surpassing the mark on Wednesday.
At 1549 GMT, the Dow Jones Industrial Average was down 0.14% at 20,974.29, the S&P 500 fell 0.19% to 2,377.33 and the Nasdaq was 0.2% weaker to 5,849.28.
Meanwhile, oil prices gained with West Texas Intermediate up 0.81% to $53.04 per barrel and Brent crude rose 0.81% to $55.53.
In currency markets, the dollar fell 0.04% against the pound to 0.8149, was down 0.57% versus the euro to 0.9464 and was flat against the yen a 114.42.
Investors were looking for further signals an interest rate hike at the Fed’s next meeting on 14-15 March was imminent, with several Fed officials due to speak on Friday.
The market-based probability of an interest-rate hike are currently above 75%, compared to around 30% a week ago.
Chicago Fed President Charles Evans and Richmond Fed President Jeffrey Lacker are currently speaking on a panel at a University of Chicago event in New York, while board member Jerome Powell will speak at 1615 GMT. Vice Chair Stanley Fischer will deliver a speech at 1700 GMT and Yellen is due to speak at 1800 GMT.
On the data front, Markit's services purchasing managers’ index dropped from January’s 14-month high of 55.6 to 53.8 in February. This was the lowest reading in five months and below the long-run series average of 55.3.
The Institute for Supply Management’s non-manufacturing index rose to 57.6 in February from 56.5 the previous month, above the 56.5 consensus forecast. This was the highest reading since October 2015.
Craig Erlam, senior market analyst at Oanda, said: “The week has already been dominated by the US central bank, with a large number of Fed officials making public appearances ahead of the blackout period – which starts tomorrow – and voicing their support for a rate hike very soon. Investors may have been slow on the uptake to begin with but the last week really has driven home the coordinated message that not only is a rate hike imminent but that it could come at the meeting in two weeks.
“The dollar is taking a breather ahead of these speeches, as well as the two important services PMI readings, having rallied strongly since the start of February as markets fell back in line with Fed expectations. Whether the dollar is able to build on these gains in today’s session will depend on just how hawkish policy makers are.”
In corporate news, Snap surged 14.59% following its debut on the New York Stock Exchange on Thursday, when it closed at $24.53 a 40% rise on its issue price, valuing the company at around $28.4bn.
Michael Hewson, chief markets analyst at CMC Markets, said: “Snap is likely to remain in focus after a solidly positive start to its first day of trading as a public company. The level of enthusiasm for a company that remains a long way from making a profit and has little in the way of assets remains surprising, but is indicative of a market looking for new areas to make a return, with the shares rising strongly for the second day in a row. The company now has a market cap larger than eBay, what can possibly go wrong?”
Caterpillar rose 0.24% after it said on Thursday that a raid by federal authorities was likely due to a tax issue.
Big Lots was up 4.08% after the company beat profit expectations but missed on revenue.