US open: Sticky inflation, earnings dampen stocks early on

(Sharecast News) - US stock markets opened mostly lower on Tuesday with sentiment dampened persistent inflation and a weak start to fourth-quarter earnings season.

By 1452 GMT, the Dow and S&P 500 were down 0.6% and 0.1%, respectively, as the benchmarks pulled back from record highs set on Monday. The Nasdaq, which set a two-month high the previous session, opened flat.

Data out before the opening bell showed that the annual rate of US consumer price inflation was unchanged for the second month in a row at 2.7% in December.

"Energy prices are no longer dampening inflation and in recent months energy prices have picked up, after falling in the middle of last year. This suggests that there is no clear disinflation trend in the US economy right now," said Kathleen Brooks, research director at XTB.

"Elevated wage growth, combined with a strong economy, could keep price pressures above the target rate for the foreseeable future."

The release comes amid heightened tensions between Donald Trump and the Federal Reserve as the US president continues to call for lower interest rates to spur economic growth. The Fed, however, has shown caution on the back of consistent price pressures.

These tensions escalated this weekend after the Department of Justice launched a criminal investigation into Fed chair Jerome Powell regarding comments made to Congress about renovation cost over-runs at the Fed's headquarters. Powell accused the government of attempting to disrupt central bank independence through "political pressure or intimidation".

Meanwhile, the start of earnings season got off to a negative start, with heavyweights JPMorgan Chase & Co and Delta Airlines falling following their quarterly numbers.

JPMorgan shares were 2% lower early on despite profits coming in ahead of expectations, though net income still fell to $13bn from $14bn previously. Revenues rose 7% year-on-year to $45.8bn, as a 5% decline in investment banking fees was offset by a 17% surge in markets revenues.

Delta fell 1.5% after underwhelming the market with record revenues of $58.3bn last year as premium traveller growth outpaced sales of economy tickets. The company, however, forecast adjusted earnings per share of between $6.50 and $7.50 this year, which at the midpoint missed the consensus estimate of $7.25.