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Major Averages Close Mixed Following Lackluster Session - U.S. Commentary

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Following the weakness seen in the previous session, stocks turned in a lackluster performance during trading on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages ended the day on opposite sides of the unchanged line. While the Nasdaq rose 14.16 points or 0.2 percent to 6,776.38, the Dow dipped 39.73 points or 0.2 percent to 24,140.91 and the S&P 500 edged down 0.30 point or less than a tenth of a percent to 2,629.27.

The choppy trading on Wall Street came as traders expressed uncertainty about the economic impact of the Republican tax reform plan.

Concerns about the possibility of violence in the Middle East also weighed on the markets as President Donald Trump announced he is officially recognizing Jerusalem as the capital of Israel.

Trump said in remarks from the White House's Diplomatic Reception Room that the U.S. would also begin preparations to move its embassy from Tel Aviv to Jerusalem.

"I have determined that it is time to officially recognize Jerusalem as the capital of Israel," Trump said. "While previous presidents have made this a major campaign promise, they failed to deliver. Today, I am delivering."

Trump said he has determined that the move is in the best interests of the U.S. and the pursuit of peace between Israel and the Palestinians.

Traders 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 ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Energy stocks saw considerable weakness, however, with a decrease by the price of crude oil weighing on the sector. Crude for January delivery tumbled $1.66 to $55.96 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index slumped by 2.8 percent and the NYSE Arca Natural Gas Index plunged by 3.3 percent.

Gold stocks also moved to the downside despite a modest increase by the price of the precious metal, while some strength was visible among tobacco, software, and trucking 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 saw further upside due to their appeal as a safe haven. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 2.330 percent.

Trading activity on Thursday may remain somewhat subdued as traders look ahead to the release of the closely watched monthly jobs report on Friday.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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