US open: Stocks mostly higher as investors eye Powell speech

(Sharecast News) - US stocks were mostly higher in early trade on Tuesday as investors eyed a key speech by Federal Reserve chair Jerome Powell later this week. At 1600 BST, the Dow Jones Industrial Average was down 0.3%, while the S&P 500 and the Nasdaq were up 0.1% and 0.5%, respectively.

CMC Markets analyst Michael Hewson said: "After yesterday's rebound, and the follow through in European markets today, US markets initially opened higher with earnings once again taking centre stage, while yields have taken a step back from their recent highs.

"Sentiment also got a bit of a lift by chatter that a discussion on the Fed's inflation target being reset to 3% might take place at Jackson Hole this weekend. If this were to happen, then it would mean that the central bank need not be as aggressive in returning inflation to target if the target were raised from 2% to 3%.

"The risk in doing that is that inflation expectations become unanchored, and inflation becomes stickier than it should be, which is precisely why it won't happen. The time to have done it was when inflation was below 2%. Doing it now just suggests that policymakers think it will be too hard a task to achieve the 2% target. That's not really a message you want to send, which is why it's a daft idea."

Ahead of Powell's speech at Jackson Hole, US 10-year Treasury yields rose to 4.36% - a level last seen in November 2007.

"The US dollar basket has resumed its ascent and may soon trade in three-month highs, pushing the gold price back down again," said Axel Rudolph, senior market analyst at IG.

On the macroeconomic front, data released earlier showed that existing homes fell 2.2% on the month in July to 4.07m, coming in a touch below consensus expectations of 4.15m.

Kieran Clancy, senior US economist at Pantheon Macroeconomics, said: "The key constraint on sales continues to be a lack of supply; the number of existing homes for sale at the end of July was equal to just 2.9 months of sales, up trivially from June but unchanged, net, since February.

"This, in turn, reflects the disconnect between the current mortgage rate and the much lower average rate on outstanding mortgages. The gridlock will only be broken once the Fed starts signalling rate cuts next year, but existing home sales will continue to bounce along the floor in the meantime."

In equity markets, chid designer Nvidia was down ahead of second-quarter results on Wednesday.

Elsewhere, Lowe's was in the black after it reported mixed results but reiterated its full-year guidance.