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Major Averages Posting Modest Gains In Mid-Day Trading - U.S. Commentary


Stocks continue to turn in a lackluster performance in mid-day trading on Wednesday following the weakness seen in the previous session. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest gains on the day. The Dow is up 14.19 points or 0.1 percent at 24,194.83, the Nasdaq is up 8.29 points or 0.1 percent at 6,770.50 and the S&P 500 is up 0.40 points or less than a tenth of a percent at 2,629.97.

The choppy trading on Wall Street comes amid uncertainty about the economic impact of the Republican tax reform plan.

Traders have largely shrugged off a report from payroll processor ADP showing a slightly bigger than expected increase in private sector employment generating some positive sentiment.

ADP said private sector employment climbed by 190,000 jobs in November after surging up by 235,000 jobs in October. Economists had expected an increase of about 185,000 jobs.

A separate report from the Labor Department showed a significant increase in labor productivity in the third quarter.

The report said labor productivity jumped by 3.0 percent in the third quarter, unchanged from the preliminary estimate. Economists had expected the increase in productivity to be upwardly revised to 3.3 percent.

Meanwhile, the Labor Department said unit labor costs fell by a revised 0.2 percent in the third quarter compared to the previously reported 0.5 percent increase. Costs had been expected to rise by a revised 0.2 percent.

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Energy stocks are seeing considerable weakness, however, with a decrease by the price of crude oil weighing on the sector. Crude for January delivery is tumbling $1.28 to $56.34 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 3.2 percent and the NYSE Arca Natural Gas Index is down by 2.9 percent.

Gold and biotechnology stocks have also moved to the downside, while some strength is visible among trucking and tobacco stocks.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Wednesday. Japan's Nikkei 225 Index slumped by 2 percent, while Hong Kong's Hang Seng Index plunged by 2.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the French CAC 40 Index closed just below the unchanged and the German DAX Index fell by 0.4 percent.

In the bond market, treasuries have shown a strong move to the upside due to their appeal as a safe haven. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3 basis points at 2.326 percent.

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