The markets are relatively flat as investors wait to hear Federal Reserve Chair Janet Yellen’s comments at 3 p.m. ET.  There is lots of data out today, and may provide more support for rate hikes if inflation and rising prices continue at the current pace. 

U.S. industrial production rose 0.8% in December after falling 0.7% in November, the biggest jump in two years due in part to the largest increase in utilities (up 6.6%) since 1989 as temperatures normalized after November’s unseasonable warm weather.  Manufacturing was up 0.2%, and while mining production was flat in December after having been down for 6 quarters, it surged 11.9% in the 4^th quarter and was up 3.4% annually.  

Industrial production is still rather soft and slipped to annual rate of 0.6% in the fourth quarter, while year over year, it increased 0.5%.

Overall, capacity utilization rose to 75.5%. Capacity utilization increased 0.6% in December for the industrial sector, but is 4.5% below its long-run average (1972-2015 average), and was up 0.1% for the manufacturing sector, 3.7% below its long-run average.    

On the consumer front, the U.S. Consumer Price Index was in line for December with an increase of 0.3%.  Prices for gasoline and rent attributed to the largest year over year increase in CPI, up 2.1%, since May 2014, and above the Fed’s target of 2%.   

Also in economic news was the latest homebuilder sentiment read from the National Association of Home Builders, down 2 points in January from the 6 point bump up in December, and now stands at 67 compared to 61 in the prior year period.

• Current sales conditions -3 points to 72
• Sales expectation in the next 6 months -2 points to 76
• Buyer traffic – 1 point to 51.

Goldman Sachs and United Health have lead the Dow lower, with the S&P and Nasdaq barely in the green. Advancers trail decliners slightly today 1397/1414 on the NYSE and 1375/1462 on the Nasdaq.  While the market rally attempt fell short for the DJIA, I like the chances of it closing higher today more than I did yesterday, in part to earnings and news of the confirmation hearings.

Let’s keep our powder dry for the remainder of the session.